Modesto News: Tax could be stretched thin

Posted by Kevin Valine on July 10, 2013 

— The city will ask voters in the Nov. 5 election whether they want to pay an additional 1 percentage point in sales tax.

If it passes, the temporary tax is expected to raise $26 million annually and $156 million over its six-year life for the city’s general fund budget, which mainly pays for public safety.

That seems like a lot of money, but it didn’t at Tuesday’s council meeting, where the council voted to put the tax on the ballot and discussed how the money could be spent:

City officials talked about using the tax to fix the structural deficit to the city’s general fund, which is roughly $11 million.


They talked about setting aside $1 million to beef up general fund reserves.

They talked about spending $3 million to start repaying the money they have borrowed from other city funds to balance the general fund. That borrowing has amounted to roughly $25 million in recent years.

They want to spend half of the tax proceeds on public safety, such as hiring more police officers. The annual cost of one police officer is roughly $100,000. So 30 more officers would cost about $3 million.

They want to fix roads.

And they want to pursue economic development activities that create jobs. (Good luck on this one. I think job creation involves factors that a city has little or no control over such as the educational level of its work force and quality of life issues.)

This is just a partial list of what city officials have talked about in how they could spend the additional tax money. And the list doesn’t include contingencies for any financial setbacks the city may face in the coming years.


They also need to develop an exit strategy for when the tax ends and they can’t count on the $26 million. Several audience members made this point at Tuesday’s council meeting as did Councilman Dave Geer.

Mayor Garrad Marsh has said the sales tax would serve as a bridge until the Modesto economy fully recovers and the city can count on additional revenues. But it’s hard to see that revenue growth equally what the tax generates.

City officials have made no decisions. They are starting to hold discussions on how they would spend the money if voters pass the tax increase. They also are discussing how they would cut next year’s budget if the tax fails.
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