Children are a worthy cause, but Sacramento tax measure is flawed

City Councilman Jay Schenirer, who has focused on children’s needs, is promoting a measure to tax marijuana cultivation to fund programs for kids.
City Councilman Jay Schenirer, who has focused on children’s needs, is promoting a measure to tax marijuana cultivation to fund programs for kids. Sacramento Bee file

No doubt, the city should be doing better by Sacramento’s 120,000 children and youths, nearly a third of whom are poor.

But a proposed ballot measure to fund children’s programs by taxing marijuana cultivation is badly flawed – so much so that the City Council should vote Tuesday night against putting it before voters on June 7.

The measure calls for exempting marijuana cultivation and manufacturing from the city’s 4 percent business operations tax and levying a new 5 percent tax that would raise an estimated $5 million a year. After as much as 15 percent goes for administration and evaluation, at least 70 percent of the remainder would go to community nonprofits and as much as 30 percent would go to city departments. Services funded could include early childhood education, after-school and summer programs, sports and arts, job training and employment, and anti-violence and gang prevention programs.

If the council does put this before the electorate, it requires two-thirds of the votes cast for passage.

Councilman Jay Schenirer, the initiative’s main sponsor, says it will help children do better in school, jobs and life. In a Viewpoints article and a memo to fellow council members, he also argues that money invested now will reduce spending on police later.

The initiative is supported by advocacy groups for children and by many in the marijuana industry. While their hearts are in the right place, there are major problems with this approach.

This is ballot-box budgeting, almost always a bad idea.

As City Manager John Shirey warns in a memo to the council, the measure takes money out of the city’s general fund and puts it in a “lockbox” for a specific purpose, which is not wise financial management. He also recommends against creating a new children’s department, as Schenirer proposes, because it would add overhead expenses.

Schenirer is right that programs for children and youths should get a bigger slice of the pie. They now get less than 1 percent of discretionary spending in the city’s general fund, or about $2.5 million in 2014-15. They received $1.2 million of the $41 million raised by Measure U, the half-cent sales tax voters approved in 2012 to restore basic services slashed during the recession.

But council members should weigh children’s needs along with everything else during the budget process. It’s up to Schenirer and other advocates to make the case for spending more on children, though to be fair, they often don’t have as much political pull as, say, public safety unions. Counting fees and state and federal grants, the city spent $17.2 million in 2014-15 on children and youth services.

Another big problem with the measure is what policy wonks call a “nexus” – a link between what is being taxed and how the revenue is spent.

There’s a connection between soda taxes and children’s health programs, since overconsumption by kids causes obesity and diabetes.

There isn’t much of a tie for what amounts to a “sin tax” on a product that children aren’t allowed to use. The revenue estimate is based on 25 grows of 10,000 square feet, but if the council further limits where cultivation sites can go, the revenue could be far lower. So there’s a perverse incentive for the city to allow more grow sites to increase revenue for children’s programs.

That isn’t good public policy.

Politically, it would be easier for council members to let this go to voters. But they’re paid to make the tough calls. That means rejecting this initiative up front, while pledging to be more attentive to children in the budget.

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