Elections

The economy is booming. Why do so many Central Valley cities want to raise taxes?

Steinberg on sales tax increase: ‘One penny could change the economic arc of Sacramento’

Sacramento Mayor Darrell Steinberg speaks on Thursday, June 7, 2018. about a proposal to raise city's sales tax one cent.
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Sacramento Mayor Darrell Steinberg speaks on Thursday, June 7, 2018. about a proposal to raise city's sales tax one cent.

In the once tiny farming town of Kerman, the population is growing rapidly but the police department can’t afford to hire new cops.

Los Banos is adding hundreds of new residents each year and median home values have nearly tripled since bottoming out in 2010. But the city is struggling to afford services for its growing population.

And in Folsom, one of the wealthiest cities in the Central Valley, local officials boast about their city’s amenities – including bike trails and other outdoor activities – but acknowledge their aspirations to do more will be difficult to pull off without another steady revenue stream.

Even as the economy booms in many parts of the Central Valley, cities and counties say they can’t pay for the basic services their growing populations demand and expect. As a result, more than a dozen cities between Roseville and Fresno will ask voters next month to raise sales taxes to pay for more cops, to fill potholes, invest in the arts and develop disadvantaged neighborhoods.

Many of the cities with tax measures on the ballot have grown rapidly in recent years. Some are seeing an influx of new residents from the Bay Area. Others are well-established suburbs drawing families fleeing bigger Central Valley cities. And some are former farming towns experiencing new home development. The expansion has, in some cases, led to growing pains: rising crime, aging roads and packed schools.

Kerman, about 12 miles west of Fresno, has grown by roughly 10 percent since 2010 as it continues to transform from a quiet farming town into a suburb with a Walmart Supercenter.

“That’s going to be our future growth, we are going to be a bedroom community for Fresno,” City Manager John Kunkel said.

The city hasn’t added a police officer in three years, youth soccer teams struggle to find fields and residents have expressed support for a new senior center. The economy is “doing very well,” Kunkel said, but isn’t generating enough tax revenue to keep pace with the population growth.

A 1 percent sales tax increase would generate about $1 million a year, or nearly 20 percent of the city’s general fund budget.

“Our sales tax base is very steady, but the demand for services can’t keep up with it,” Kunkel said. “The concern for us moving forward is that if this doesn’t pass, we’ll have to ask our residents, ‘What services do you want us to cut?’”

Los Banos leaders are pitching a one-half percentage point sales tax. The city has grown by roughly 9 percent since 2010 thanks to its “location, housing affordability and small-town way of life,” according to a message city leaders wrote to residents while making their pitch for the tax.

That “small-town way of life” is apparently under attack. A wave of Bay Area transplants has moved into Los Banos, buying homes that are more affordable than those in coastal enclaves.

But city leaders say that many of those transplants are continuing to work in the Bay Area - and spend much of their money outside of Los Banos, depriving the city of needed tax revenue.

There’s also a perception that the city is becoming unsafe. Police Chief Gary Brizzee said in a press release issued by the city that crime, gangs and drugs were “filtering” into Los Banos from nearby cities. The city’s police force is roughly the size it was 30 years ago, city officials said.

While crime may be a concern, recent FBI figures show that both violent and property crime declined slightly in Los Banos between 2012 and 2017.

Public safety was also cited as a motivation for tax measures in Chowchilla, Coalinga and Lodi.

Other Central Valley cities are promoting their tax measures with big ideas in mind.

Sacramento Mayor Darrell Steinberg is leading a campaign for a one percentage point sales tax in the capital city. Measure U would make permanent a tax first approved in 2012 that is paying for cops, firefighters and other core city services. But it would also double that sales tax, creating a “game changer” for the city that would fund affordable housing, homeless services, job centers and “signature neighborhood projects,” according to the mayor.

Critics of Sacramento’s proposal argue a tax increase will do little more than fill the city’s future obligations to employee salaries and pensions. While Steinberg disputes that argument - saying the tax will grow the city’s economy and tax base - other Central Valley cities plan to use new taxes for pensions.

The tiny city of Fowler, just south of Fresno, is asking voters to approve a one percentage point sales tax increase in part to address “escalating pension obligations,” according to the ballot language.

A ballot measure in Folsom – seeking a one-half percentage point sales tax increase for 10 years – would finish parks projects, improve the city’s transportation infrastructure and invest in arts and culture programs.

“This isn’t being done out of fiscal desperation,” said Folsom Councilman Andy Morin. “We look at it as aspirational.”

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