City Beat

Sacramento mayor wants a permanent sales tax hike. Here's how much and why

Seeking to address the economic and social disparity facing many neighborhoods in his city – inequities he said were highlighted by the fatal police shooting of Stephon Clark in March – Sacramento Mayor Darrell Steinberg announced Thursday he will ask voters to raise the city’s sales tax to 1 percentage point through a November ballot measure.

Speaking at Sacramento City College, Steinberg said the tax “could change the economic arc of Sacramento” by funding affordable housing, services for the homeless, new libraries and “other citywide signature projects that currently linger on long waitlists.”

“A dream is just a dream, unless it’s combined with creative and bold action,” the mayor told an audience of roughly 100 people at the college’s performing arts center. “We need a true game changer in Sacramento, one that enables us to move beyond our current limits of just getting by as a city.”

Measure U, passed by city voters in 2012, is a half percentage point sales tax that Sacramento is using to pay for police officers, firefighters and parks. But the tax is set to expire next year, and City Hall leaders have long discussed how to replace the roughly $50 million in revenue it generates.

Instead of merely extending the tax at its current rate, Steinberg is proposing to double it and make it permanent, raising the total sales tax rate to 8.75 percent in the city when accounting for state and local sales tax components.

That would be the highest in the region - tied with tiny Isleton.

Someone buying a $1,000 appliance or computer in Sacramento would pay an extra $5 in sales tax compared to the current rate.

The tax measure is expected to draw support from the city's labor and development communities. Union leaders, builders, downtown business interests and several of Steinberg's colleagues on the City Council were in attendance for his speech.

"This is exactly what we've been asking for," said Darryl Rutherford, executive director of the Sacramento Housing Alliance. "We need a dedicated fund to build more affordable homes."

Timothy Davis, head of the city's police union, said it would be "devastating" for the city to lose the revenue generated by Measure U and expressed support for increasing the tax. "I think there's a lot the city is unable to do if we can't keep the community safe," he said.

However, taxpayer advocates are already alarmed by the proposal. Craig Powell of local government watchdog Eye on Sacramento said "this is first, last and always a pension tax."

The city’s pension costs are projected to increase from $82 million this year to $129 million in the 2023-24 fiscal year, according to budget documents.

"Just based on simple math, it is a certainty that this tax increase will go to fund exploding pension costs (for retired city employees) that the city has done nothing whatsoever to control," Powell said. "They can pontificate all day long about how they're going to spend this money in the neighborhoods, but there's no legal obligation for them to spend any of it on anything specific."

Steinberg stressed that he is proposing a general use tax – requiring a simple majority from voters – but laid out a series of ideas for what the fee could fund.

He said one quarter of the funding – or $25 million annually – could “create a capital fund that catalyzes innovation, job growth and more affordable housing.” That fund could reach $500 million over several years, the mayor said, and would require a match from the private or public sector of 4-to-1 before money flows to specific projects.

The fund could help seed projects like Aggie Square, a proposed technology campus near the UC Davis Medical Center on Stockton Boulevard. It could bolster the city’s depleted housing fund that supports affordable housing and pay for permanent housing for the homeless.

Another quarter of the revenue could pay for “neighborhood-based services, public safety and investments to prepare Sacramento’s youth for the 21st Century workforce,” the mayor said. That could mean universal preschool for 3- and 4-year-olds, paid internships and funding for arts education.

“We have shortchanged youth investments and community based organizations in our city for years,” Steinberg said. “It’s time to change that reality.”

The rest of the tax revenue would likely continue to fund core city services and expand community policing, community centers and code enforcement, Steinberg said.

Steinberg has not yet established a political campaign committee to support the tax measure and said the City Council will start discussing a potential ballot measure at its meeting Tuesday.

The mayor indicated that he will rely on a message of improving Sacramento’s neighborhoods – especially its disadvantaged neighborhoods - as he tries to convince city voters to increase their sales tax.

“The Stephon Clark shooting, our local and national tragedy, was about much more than the vexing and real issues of policing and race found in Sacramento and other American cities,” the mayor said. “It also shed a harsh light on the continued cycle of poverty, despair and generational trauma that is the reality for too many members of our community.”

South Sacramento activists said Thursday they were pleased by what they heard from the mayor, but want to hear more specific plans for how the tax would benefit low-income and minority neighborhoods.

Pastor Les Simmons, who helped craft the original Measure U in 2012, said community violence prevention programs were supposed to be a pivotal part of that funding, "but there have been a lot of questions in the community about whether that happened."

"This time around, our community wants that promise to be made good where it's not just a talking point," Simmons said.

Berry Accius, a community activist, asked "how is this going to build equity in the black community?"

"What does this mean for communities that have been marginalized? What does this mean in the moment of the Stephon Clark shooting?" he said.

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