City sales tax hike won’t cure all woes
Even if South Lake Tahoe voters support a sales tax hike in November, the city’s budget problems aren’t expected to be anywhere near solved and cutbacks loom large.
The South Shore city faces an estimated $3.1 million shortfall in the 2004-05 fiscal year that starts in October – with more than $500,000 of that shortfall coming from Gov. Arnold Schwarzenegger’s latest budget proposal due to the Legislature in June. On the flip side, it could have been worse.
Earlier budget deficit projections have come in at $2 million.
If the half-percent proposed increase to the current 7.25 sales tax is passed in July, the city stands to gain another $2 million – but there’s an expected delay before those funds trickle in, according to the State Board of Equalization.
“It’s frustrating. We need 1 percent, but as we saw in the survey, (the citizens) would never go for that,” Mayor Tom Davis said Wednesday.
Two-thirds of those polled said they would “definitely not” support a 1 percent increase in the sales tax.
Cuts in personnel are “possible,” City Manager Dave Jinkens said. But there are many variables.
The prospect of upcoming layoffs would come at a bad time with city leaders now bargaining with unions.
“I just want to be up front with people. We’re on a worst case scenario. To say that the sales tax will fix everything is fiction,” Jinkens said.
City leaders and many of the city’s 236 employees have been upset with year after year of budget concessions and doubling up on duties as residents expect the same level of service. Residents expressed their complaints in a community survey mailed in April – the results show bitterness among many who were polled.
The hardships have trickled into a disgruntled business community losing marketing funds at a time when tourism is more challenging to promote and the industry more competitive.
All in all, these are tough times.
“If tourism is our product and the streets are falling apart, and the buildings look like crap, then what are we marketing?” Jinkens said.
Moreover, the problems don’t end with the coming year.
In 2006, Measure Z expires – eliminating $1.1 million from city coffers that are collected from guests paying $1.50 more at lodging establishments in motel-room tax.
As soon as 2005, the governor’s new proposal, if passed by the Legislature, will take away $377,342 from the general fund and $150,000 in redevelopment funds. The latter will make it more difficult to pay back the city’s general fund for the $7 million borrowed to complete the Marriott-anchored Park Avenue project near Stateline.
On top of everything else, the city is holding its breath in anticipation of what happens with the Local Taxpayers and Public Safety Protection Act, a ballot initiative sponsored by the League of California Cities that calls for a constitutional guarantee that local governments will maintain their same level of funding from the state.
The governor has proposed that cities, counties, special districts and redevelopment agencies make a two-year contribution to solving the state’s budget deficit of $1.3 billion per year. In exchange, he pledges to lead a campaign to secure legislative and voter support in November for a different constitutional amendment with revenue and protections equivalent to or better than the Protection Act. The governor told League delegates he would not support its version this year.
“We’re not abandoning it because we don’t have an alternative initiative. The local initiative is going to be on the ballot. We look at it as a back up plan,” League spokeswoman Megan Taylor said.
And, the Legislature must sign off on Schwarzenegger’s compromise.
“We don’t want people to think sales tax is the end all. But the challenges, as difficult as they are, seem insurmountable. I find it gives me inspiration to find solutions,” said Councilwoman Kathay Lovell, who serves on the budget subcommittee.
– Susan Wood can be reached at (530) 542-8009 or via e-mail at email@example.com