Election 2012

HECTOR AMEZCUA / hamezcua@sacbee.com

Chamber of Commerce president Roger Niello.

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Sacramento pushes sales tax hike to bolster core services

Published: Tuesday, Oct. 2, 2012 - 12:00 am | Page 1B
Last Modified: Tuesday, Oct. 2, 2012 - 1:18 pm

Sacramento officials paint a gloomy picture of their city.

Perpetual budget deficits expected to last at least another year. A police force that's among the most understaffed in the nation – and the only major department in the country without a narcotics unit. No funding in sight to reopen public pools next summer.

Now, they're looking to voters for some relief.

The City Council has placed Measure U on the Nov. 6 ballot, seeking a six-year increase in the sales tax rate of half a percentage point, to 8.25 percent. In doing so, Sacramento is attempting to follow eight other California cities that passed tax hikes in June.

City officials cannot detail exactly how the estimated $28 million generated annually by the tax would be spent; doing so would trigger a two-thirds vote requirement. Instead, the city is seeking simple majority approval for a general tax that would bolster core services.

It's clear the focus would be on restoring public safety services that have been hammered during five years of cuts at City Hall. The police and fire budgets are the largest of all city departments, and the ballot language prominently lists police and fire services as among those that could be restored.

City Manager John Shirey said that while the city's finances are slowly beginning to recover, the main revenue streams that feed the general fund budget – sales and property tax – are still $26 million below their peak levels of a few years ago. As a result, the city has slashed more than 1,300 positions from its payroll.

"The general fund has never really recovered from the recession," Shirey recently told The Bee's editorial board.

Shirey said another driver of the city's financial woes is "the cost of people," particularly raises, pension contribution hikes and increases in health care benefits made by the city. But, he said, "(the tax increase) is intended to restore services, and it's not intended for pensions and salary increases."

Craig Powell, chair of the watchdog group Eye on Sacramento and the head of a political committee working to defeat the tax measure, questioned whether the city would spend the revenue wisely.

He said city officials have entered into questionable labor agreements with unions in recent years – including a four-year agreement reached last month with the plumbers union. That contract stipulates that plumbers will pay the full employee share of their pension contributions only when cops and firefighters do the same, and it also grants raises to plumbers if police and firefighters receive salary boosts.

"How can you trust (city officials) by plunking another $28 million into the general fund and think they're going to spend the money where they say they're going to spend it?" Powell said. "It is nuts to entrust this city with more tax revenue when it's going to get burned up in benefits."

Council members have linked the tax increase proposal with the city's push to wrestle increased pension contributions from unions, saying that effort shows the city has acted responsibly with its finances. Most unions agreed to pension concessions this year, but the city was unable to get increased retirement contributions from its police union, and more than a dozen officers were laid off this summer.

Despite the lack of an agreement with the union, a chief recipient of the new revenue would likely be the Police Department. According to Police Chief Rick Braziel, the Sacramento force is the second most understaffed among major U.S. cities. Many specialty units have been reduced or eliminated, and officers are able to follow up on just 8 percent of property crimes, Braziel said.

At the same time, this year has seen a sudden spike in crime, the chief said. Major crimes are up 9 percent in the city this year and gun violence has risen 56 percent as anti-gang units have been decimated, Braziel said.

While city officials argue that the tax revenue is needed to restore core services, opponents wonder about the financial impact of the plan.

The Sacramento Metropolitan Chamber of Commerce had asked that any hike be limited to a quarter percentage point for four years. Instead, the council opted to raise it by half a percentage point for six years.

Roger Niello, the chamber's president and CEO, said he is concerned that the city will face "a large cliff falloff" in revenue when the tax expires. He also said retailers in the city are worried about losing business to neighboring areas with lower tax rates.

If the measure passes, Sacramento's sales tax rate will be tied with Galt's for the highest in the region.

"The problem is there's competition both in Sacramento County and in Placer County," Niello said. "There's a lot of concern that the Galleria and new shopping centers in Roseville will be taking business away from Downtown Plaza and the like."

Shirey said studies have shown the tax rate will not affect where people shop.

"People will continue to shop price," he said.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Ryan Lillis



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