Steinberg on sales tax increase: ‘One penny could change the economic arc of Sacramento’
I’m going to vote for Measure U, the sales tax increase proposed for the City of Sacramento, but I’m not anxious to do it. I’m not jumping up and down about handing over more of my money to local government. I agree with critics who say the city has been far too generous in its labor contracts, particularly with police and fire.
I know the police and fire unions have way too much influence over the Sacramento City Council because they have the money to fund campaigns. And, yeah, there is no denying this very basic fact:
Sacramento is headed for big budget deficits that were not caused by a recession. Repeat: The looming deficits hanging over the City of Sacramento have nothing to do with financial headwinds beyond city control. These looming budget deficits are self-inflicted.
They are caused, in large part, by labor contract obligations that will exceed city revenue in less than two calender years. It’s a budget time bomb. It’s going to go off and it’s not going to go off just once. The projected deficit in fiscal year 2019-2020 is $47.3 million. The year after that, the deficit is estimated to grow to nearly $60 million. The year after that, it’s $74 million. Then $80 million. Then $83 million.
What does this mean? Deep, painful cuts to the police department, the fire department, parks, youth services and other programs that enhance life in Sacramento.
So why vote for Measure U? Because voting for it will slash these deficits to far smaller amounts. If Measure U passes and the half-cent sales tax the city approved in 2012 – the one set to expire early next year – is made permanent, Sacramento will face a $7.6 million deficit in 2019-2020. It will rise to $18.4 million the year after that. Then $23 million, $28 million and $29 million.
You read that right. Sacramento faces significant budget challenges even if Measure U is passed on Nov. 6.
But if Measure U doesn’t pass, Sacramento faces catastrophic budget cuts. If Measure U doesn’t pass, a city on the rise will be laid low.
It’s really that simple. If you don’t believe me, turn to page 41 of the recently approved city budget and read for yourself. It’s an amazing document and a testament to transparency in government. If you read it, you’ll see how pension costs, labor contract pressures and the potential loss of Measure U funds caused the city to approve a budget with minimal increased positions or additions to the general fund.
So why hasn’t Measure U been sold to the public as a “We-need-to-do-this-or-we’re-in-big-trouble” initiative?
Because playing defense is not how Mayor Darrell Steinberg rolls. He made Measure U about more than just maintaining the half-cent sales tax increase approved in 2012 and making it permanent. He successfully pushed to add another half cent to Measure U that would create a fund the city would use to spur job growth and help with affordable housing, homelessness, youth services, parks and libraries.
It’s the extra half cent that has Measure U advocates really worried that Steinberg has gone too far. That has opponents riled up about Sacramento’s sales tax going up to 8.75 percent by April 1. And it has Steinberg allies really nervous that voters will rebel because they feel Measure U is being promised to fix all that ails Sacramento when, in fact, it will go to offset city employee pensions.
If approved, distributing that extra half cent is going to be a food fight. The mayor has been doing community meetings non-stop all over town, selling Measure U. Special interests certainly will be lining up to grab their piece of that sales tax money.
If you’re going to vote “no” on Measure U because you don’t trust Steinberg or other politicians to distribute the money, then it’s not my place to suggest your feelings of frustration and politician-fatigue are foolish or misplaced. They aren’t.
But if you vote “no” out of spite or as a message to “the politicians,” then just know that you aren’t sticking it to them. You are sticking it to yourself. Because your no vote is going to mean massive, catastrophic cuts in the city budget. Your protest vote is going to hurt your city. Would we prefer other ways to maintain services and spur growth besides a sales tax?
Sure. Would we prefer Sacramento’s revenues – property tax, sales tax, etc. – be more robust? Of course.
But Sacramento has many reasons why it is pressed to provide more services than its revenues can cover. Sacramento is still in the nascent phase of diversifying its economy. Even though a great deal of progress has been made on downtown development. Even though property values have gone up since the construction of Golden 1 Center. Even though Steinberg and Councilwoman Angelique Ashby scored big by getting health insurer Centene to expand its operations in North Natomas by adding 2,000 jobs over the 3,000 they already employ.
The last thing Sacramento needs right now is an $83 million deficit in 2024.
If you want to be mad at the politicians for coming back to the well for Measure U when it probably should have been made permanent at that point, then get mad. That was back in the days of former Mayor Kevin Johnson. Get mad at him if you can ever spot him anywhere in Sacramento. Steinberg wasn’t on the council then. He inherited a city with big ambitions and an empty wallet.
Why isn’t Sacramento like, say, a booming Indianapolis? Well, Indy has invested millions of public dollars and also has huge endowments that Sacramento doesn’t have. And Sacramento doesn’t have diverse economies like Denver or Portland..
Sacramento also contends with Bay Area construction costs. Sacramento is being flooded with Bay Area natives, which has been a boon for property values. But that won’t last – or ever be leveraged for more growth – if Sacramento becomes the city that can’t afford to do much beyond cutting its budget.
Steinberg and most of his council colleagues are trying to avert the huge cuts and have money to grow. They are not wrong for trying to move the city forward.
In the next round of negotiations, do they have to gain concessions from labor partners? Yes. Do we all have to hold Steinberg and his colleagues accountable for any new priorities set with Measure U funds? Yes.
If you don’t trust how the second half cent of Measure U funds will be distributed, well, that fight still lies ahead. But if that lack of trust manifests itself in a “no” vote for Measure U, the only thing we’re going to be fighting over in Sacramento are budget cuts.
If you are an older person like me, vote “yes” on Measure U for the future of your city. Protest votes might feel good in the moment, but all they do is tear down what a new generation in Sacramento is poised to build up.