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Could Sacramento see a sales tax hike? Mayor envisions $3B fund for housing and amenities

Sacramento Mayor Darrell Steinberg proposed Thursday establishing a multibillion-dollar fund that would pay for local infrastructure, affordable housing, arts and culture amenities, as well as incentives to attract new industries to the city.

The mayor laid out his proposal during his first State of the City address at Memorial Auditorium. He said money could come from a new sales tax or by selling off some of the 4.5 million square feet of vacant land the city owns.

Public investment in projects should be matched 2-to-1 by the private sector, the mayor said, creating the potential for a $3 billion fund.

“With more capital, we can direct and lead more of the change we want to see,” Steinberg said. “We can say we will put up our resources if other jurisdictions, businesses or community groups commit to doing the same to address our community’s most pressing priorities. We can initiate more, instead of hoping that someone else will have the capacity to lead. A hope and a prayer is not an economic strategy.”

A one-half percent sales tax that funds core city services expires next year, and city officials are expected to ask voters to renew the tax on the November ballot. A general sales tax would only require a majority vote, and 64 percent of city voters approved the current tax in 2012.

Steinberg’s remarks indicated the city may ask voters to increase the sales tax to 1 percent and make it permanent to fund his ambitious plans. He also suggested he may propose the sales tax go beyond its current role of funding core city services like police officers and firefighters to also include infrastructure, the arts and housing.

The mayor mentioned some projects that would benefit from the fund: “a dynamic riverfront and railyards largely completed in five to seven years instead of 20 to 30 years”; a “housing boom” to support an influx of new workers; adding more homeless shelters and building 2,000 housing units for the homeless; and providing stable funding for arts in schools and police on the streets.

“We must increase the rate of economic growth in our city,” the mayor said. “That growth must be inclusive so that every neighborhood and family experiences its benefit.”

Steinberg’s campaign for the fund will begin soon. He said in his speech he will hold four public workshops over the next 45 days to discuss the idea and that he expects to provide his specific plans by the end of June.

Craig Powell, head of the local watchdog group Eye on Sacramento, called the mayor’s speech “Steinberg unhinged.” He said some of the problems Steinberg is seeking to address through the investment fund – including the housing shortage – are a result of burdensome government regulation and inaction.

“He seems to have zero appreciation of the burden that ever higher city taxes have on the hardworking folks who are trying to get by,” Powell said. “He cites the growing levels of poverty, but is simply unwilling to admit that one of the reasons for that poverty is the escalating burden of taxes. He believes higher taxes are solutions and he’s refusing to look in the mirror and recognize that many of these problems originate with ill-conceived government policies.”

While most of Steinberg’s speech was filled with optimism – he used the word “extraordinary” to describe the city and its future several times – the mayor also presented “some hard truths we must face squarely.” He said families in the city’s low-income neighborhoods lost jobs at a rate twice the national average between 2000 and 2012. He noted that more than 20 percent of city residents live below the poverty level and that 16.5 percent of young people in Sacramento are unemployed, the fourth worst rate among the nation’s 50 largest metro areas.

“While Sacramento has been identified as a low-cost area to live compared to other counties across the state, we have a real housing affordability crisis that is hurting our families, young people, artists, working adults and, of course, the homeless,” Steinberg said. “It will take a comprehensive approach to solve this problem.”

The mayor said the city must increase the supply of housing and must build affordable housing “in all parts of the city.” And he said property owners “who are unfairly taking advantage of a tight rental market in a way that can only be described as gouging, it must stop.”

Steinberg is expected to provide more details on his strategy for combating the housing crisis in the coming weeks.

Steinberg, a former Democratic state lawmaker, has been a critic of the Trump administration, and he continued that message during his speech.

“We don’t care how many stable geniuses want to tell us who does or does not belong in Sacramento,” he said. “We are a proud sanctuary city (for undocumented immigrants), we believe the American dream includes all dreamers.”

“More than ever, Sacramento is a city committed to giving every person – no matter how they look, what language they speak, or who they choose to love – a pathway to upward mobility and an affordable quality of life,” the mayor added. “A safe place to go to school, to get a job, to raise a family and to give back to the world.”

On a lighter note, Steinberg said the city will soon celebrate Greta Gerwig, a Sacramento native whose movie about her hometown, “Lady Bird,” won the Golden Globe for Best Motion Picture – Musical or Comedy.

Ryan Lillis: 916-321-1085, @Ryan_Lillis

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