In June, voters will decide to re-authorize a half-a-percent sales tax increase. The measure will maintain Davis’ sales tax at 8.75 percent, while sales tax on campus remains 8.25 percent.
In 2004, residents approved this .05 percent increase, which will expire on December 31, 2010. If passed, the measure will continue until 2016.
“Renewing [the tax] is important to maintain an adequate level of management for city services,” said Paul Navazio, the city’s finance director.
Since the implementation of the increase, the sales tax has annually generated $3 million in revenues, which is approximately 8 percent of the city’s entire general purpose fund. The general purpose fund supports public safety – police and fire – city personnel, such as the City Council, as well as parks and recreation.
“It’s especially hard to cut $3 million out of the budget when we’re on the heels of reduction,” Navazio said. “Jobs would be cut from eliminating this revenue, along with facility and program closures.”
A July 2007 city poll gauged voter sentiment, finding 77 percent approved the measure.
“There is less buy-in when proposing a brand new concept,” Navazio said. “Citizens are more hesitant to approve a tax they know little about that directly affects their day to day life. Sticking with the increased sales tax shows its revenue has been necessary for maintaining basic expenditures.”
Alternative taxes have been proposed, such as a utility user tax, but require greater detail and time to construct.
If the measure does not pass, the next opportunity to pass something similar is 2012. The California Constitution only allows a general purpose tax to appear on the same ballot for a city council election.
Other cities in Yolo County which implemented an increase in sales tax are West Sacramento and Woodland, which also stand at 8.75 percent. West Sacramento re-authorized their policy until 2033.
With a 4 to 1 vote from City Council, the measure made it onto the June ballot. The opposition was councilmember Lamar Heystek, who also opposed the bill in 2004.
In a written statement in late December, Heystek said extending the tax increase will fall short of expectations, and a complete financial overhaul is the best way to move forward.
“We cannot simply ask citizens to continue funding, what I consider, an unsustainable model for the sake of buying time,” Heystek said in the statement. “The time is now to make structural changes to our budget and to our compensation model.”
Councilmember Sue Greenwald, who supports the measure, said the increased sales tax provides a bridge in the funding for the city – but only represents a short term solution. She believes it is a feasible way to sustain enough revenue to utilize an appropriate level of city services under the harsh economic climate.
“Re-authorizing this bill is what we have to do right now in order to enjoy the high quality of life here in Davis,” Greenwald said.
MICHAEL STEPANOV can be reached at email@example.com.