Kevin Valine

October 31, 2013

Modesto News Blog: Flexibility with tax may be a good thing for Modesto

Critics of Modesto’s Measure X don’t like that it’s a general tax, which means it can be spent for any general government purpose, even though the city intends to spend half on public safety, a quarter on roads, a tenth on reserves and the balance on parks, economic development and other purposes. But a fiscal expert says it may be a good thing that Measure X is a general tax. It gives Modesto the flexibility it may need to deal with new financial challenges.

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One of the criticisms of Measure X is that because it’s a general tax there is no ironclad guarantee the City Council will spend the tax as it has promised, with one half for public safety, one quarter for roads and the rest for other purposes.

But one expert on local government finance says that may not be a bad thing.

One thing Stockton, Vallejo and San Bernardino have in common – besides filing for bankruptcy – is that they suffered from what Michael Coleman calls ossification, or the lack of flexibility in dealing with their financial problems. Coleman operates CaliforniaCityFinance.com and is a fiscal policy adviser for the League of California Cities.

Coleman said the three cities were bound by requirements, such as charter provisions, that limited what they could do as their economic fortunes declined.

Measure X is a 1 percent, temporary sales tax that would end after six years. Coleman is not advocating that Modesto council members not honor their intent to spend the tax on public safety, roads and the other needs they have identified. But he said a city’s circumstances can change and a general tax gives a city the flexibility it needs to meet new challenges.

“If those needs change,” he said, “elected officials can make changes as necessary. That flexibility is important.”

But Coleman said before council members change their spending priorities they need to make the case for that in public and convince residents why a change in course is needed.

Oakdale offers Modesto residents an example of what can happen with a general tax.

Oakdale voters passed Measure O – a half-percent sales-tax increase for three years – in November 2011. Supporters said the tax would be used to maintain public-safety staffing and for parks and other purposes.

But since Measure O’s passage, Oakdale has faced a series of financial challenges that cut into its ability to keep public-safety staffing constant. The number of police officers has fallen from 21 to 19 and firefighters from 15 to 14, with two additional firefighters set to be laid off at the end of this year.

“It’s kept us out of insolvency, but we have not been able to hold the staffing numbers,” Oakdale Councilman Tom Dunlop said. “I warned everyone (before the tax was placed on the ballot) that we had a lot of other expenses chasing us, other than public safety.”

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