Modesto City Council likely to vote on 1¢ sales tax Tuesday for ballot

kvaline@modbee.comJuly 6, 2013 

— The City Council is expected to vote Tuesday on whether to put a temporary 1 cent sales tax on the November ballot, which could bring in $156 million over its six-year life.

Supporters say the tax would let Modesto balance its general fund budget, hire more police officers and firefighters and restore services cut in the recession.

The tax would raise $26 million annually for Modesto's roughly $110 million general fund, which pays for public safety and other basics, such as parks. The general fund makes up about a third of the city's $344 million operating budget.

Unlike other city funds, the general fund nose-dived in the recession, losing about $20 million in revenues since the city's 2007-08 budget year. Much of the general fund's revenues come from sales and property taxes, which are strongly tied to the economy.

The council is likely to put the tax increase on the Nov. 5 ballot. Council members voted 5-2 at their June 25 meeting to authorize staff to prepare the documents for the ballot measure. Council members Dave Geer and Stephanie Burnside cast the "no" votes.

Geer said six years was too long for the temporary tax, and Burnside asked why the city was not considering a half-cent tax for public safety, which has strong public support. She has asked whether the city could make additional budget cuts.

Mayor Garrad Marsh proposed a half-cent tax for public safety in February but has since said the general fund needs more help.

City officials say they have made budget cuts as revenues fell. They say that without additional revenue, Modesto faces cutting roughly $11 million from its general fund next year, in the 2014-15 budget, which is to start July 1.


Services, programs in peril

Marsh says the cuts would be devastating and could result in the complete elimination of programs such as tree trimming, along with cuts to public safety.

"I'm telling people, 'Which hand do you want to amputate?' " he said.

Modesto officials say they have taken steps to live within their means:

• Many employees are paying all or much of their employee pension contribution. The city is negotiating with its remaining employee unions to do the same. The city is saving $1 million annually by passing these pension costs on to city workers.

Most employees have recently received their first raises in several years: 1.5 percent in exchange for paying more toward their pensions. But the pension contributions are greater than the raises, resulting in a pay cut of 5.1 percent.

Police and fire have been the exception. Members of the Modesto Police Officers Association, which represents about 190 officers and detectives, have seen their pay increase 17 percent since January 2008, though MPOA members now are paying more of their pension costs. And members of the Modesto City FireFighters Association have had their pay rise 14.5 percent since January 2008.

City officials say the contracts calling for these raises were negotiated before the bottom fell out of the economy.

• The city has eliminated 227 full-time general fund positions since the 2008-09 budget. Those cuts can be seen in public safety. The Police Department has lost about 20 percent of its sworn officers, from about 290 positions to about 230. The city had about 1,350 workers five years ago and now has about 1,150.

• Employees have taken furloughs that saved the general fund nearly $6 million since the 2008-09 budget, though there are no furloughs in the 2013-14 budget, which started July 1.


General fund draws on reserves

Modesto also has drawn down reserves to balance the general fund.

The city has diverted about $25 million from its employee benefits, workers compensation and fleet maintenance funds to its general fund over several years. Marsh said the city no longer can afford to borrow from these accounts.

Modesto has seen costs for employee pensions, health care and other items increase. These increases can be seen in police and fire spending from the general fund, which provides nearly all of the money for public safety.

The city spent $80.7 million from its general fund for public safety in its 2007-08 budget. Funding had dropped to $68.8 million in the 2011-12 budget, a decline of nearly 15 percent.

During that same time, the number of public-safety positions funded by the general fund fell from 571 to 425, a nearly 26 percent decrease. Modesto is spending more per public-safety worker as their numbers decline.

Modesto officials point out that the general fund has dropped by about $20 million since the 2007-08 budget. But general fund revenues were at a record $126.5 million that year. Modesto's general fund revenues have topped $120 million in only two years. The second was in the 2006-07 budget, when they were $120.4 million.

General fund revenues had averaged $107 million during the preceding four years. The city expects about $105 million in general fund revenue in its 2013-14 budget.


Predicted recovery years away

Marsh said no one expected the recession to be so deep and enduring. He expects the Modesto economy won't make a full recovery for five more years.

"Nobody in 2008 said we'd still be here in 2013," he said. "Even the most doom-and-gloom economist would not have said this would last a decade."

Marsh said the tax would be a temporary bridge until the economy fully recovers. He suggests using half of it for public safety improvements such as hiring 60 police officers, a quarter of it for fixing roads, and the rest for purposes such as economic development.

He said Modesto has not had enough police officers for many years and needs more to tackle such long-standing problems as gangs and auto theft.

Marsh said he believes the tax would make Modesto more prosperous because a safer city can better keep and attract business.

The City Council will meet Tuesday at 5:30 p.m. in the basement chamber, Tenth Street Place, 1010 10th St.

Bee staff writer Kevin Valine can be reached at or (209) 578-2316.


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