Modesto City Council passes budget, discusses sales tax increase

The City Council passed Modesto’s $367 million operating budget Tuesday night, but not before its members had a lengthy – and at times lively – discussion on whether they should put a sales tax on the November ballot.

Mayor Garrad Marsh has spoken several times in recent months on what he says is the need for a sales tax if Modesto is going to provide its residents with adequate services, primarily in public safety. He reiterated the need for additional revenue Tuesday night while adding that Modesto has been fiscally prudent but has not fully recovered from several years of recession-driven budget cuts.

The clock is ticking for the mayor: The council has until July 3 to request that Stanislaus County put a tax increase on the November ballot, with two more council meetings scheduled before then.

The council discussion touched on whether the city needs a tax increase given that its revenues are improving, though city officials say expenses are growing faster; how to grow the economy so that when the tax ends, the city does not have to cut services; and whether the tax should be a general or specific one.

Marsh has said he favors a general sales tax because it requires a simple majority to pass. He wants to spend most of it for police and fire services and the rest on economic development and other essentials. But as a general tax, it could be used for any government purpose and subsequent councils could spend the tax on other priorities.

Councilman Dave Lopez – who is running against Marsh for mayor in November – made that point and said that’s why a public safety tax would be better if a tax were placed on the ballot. By law, the tax could only be spent on public safety. But because it’s a specific tax, it requires two-thirds voter approval to pass, a threshold Marsh has said he does not believe the city can meet.

Lopez added that a safer community would go a long way toward helping business and the economy.

The sales tax discussion comes after voters in November 2013 rejected Measure X, the city’s 1 percent general sales tax, which 49 percent of voters supported. A city-commissioned poll had shown strong support for the tax.

Officials now are considering a half-percent sales tax, which would bring in about $14 million annually.

Modesto receives less sales and property taxes per capita than comparable cities such as Fresno and Stockton, according to a presentation by Budget Manager Steve Christensen. His presentation also showed 84 percent of California cities have sales tax rates higher than Modesto’s 7.625 percent.

The council voted 6-0 to approve the city’s 2015-16 operating budget for the fiscal year that starts July 1. Councilman Dave Cogdill Jr. was not at the meeting.

The 2015-16 budget keeps Modesto at roughly its same level. But Marsh has warned that without additional revenue, the city faces making public safety cuts in the 2016-17 budget, including the potential closure of a fire station. City officials warned last year of the potential closure of a fire station, which the city managed to keep open.

The sales tax discussion was not the only lively moment Tuesday.

Earlier in the meeting when council members were making reports to the public, Councilman John Gunderson chided Councilmen Lopez and Tony Madrigal for talking to each other when it was Gunderson’s time to speak.

In other action, the council voted 6-0 to place the Stamp Out Sprawl campaign’s urban-growth boundary on the November ballot. The campaign gathered more than enough signatures to place the measure on the ballot. If the growth boundary passes in November, a citywide vote would be needed to approve development beyond the boundary.

Kevin Valine: (209) 578-2316