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Taxes, More Taxes and Debt

Columnist: Bob Andrews
January, 2014 Issue

Bob Andrews
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This January 2014 edition of “Open Trench” marks the beginning of its fourth year. The premise is the absurdity of construction zone signs that say “Open Trench.” Of course the trench is open. What self-respecting trench isn’t? Should the government make other signs that say “Covered Trench” or “Former Trench” or even “Trench Mouth”? “Open Trench” is a symbol of government redundancy, over-spending, over-regulation and waste.
Last month, I wrote about some “déjà vu all over again” situations in the world of open trenches. Here’s another major one.
Taxes, more taxes and debt: Consider Rohnert Park, where residents have just voted to extend a half-percent sales tax increase previously approved by voters in 2010. The original measure carried a five-year sunset provision, but—here’s a huge surprise—Rohnert Park now finds it can’t get along without the $3 million brought in each year by the “temporary” tax. Rohnert Park didn’t just renew the tax for another five years. Instead, the tax is now more-or-less permanent. It will continue forever unless the City Council votes unanimously to end it or someone pays to put another rescinding ballot measure before the voters. It appears that Rohnert Park still has budget deficits that will continue, despite the promised millions from the new Graton casino. Or did council members want to lock in the higher sales tax before significant casino revenues arrive? How many readers think the Rohnert Park City Council will ever vote to end the tax?
I found it interesting that The Press Democrat editorialized in 2010 against the proposed tax, writing that the City Council hadn’t adequately addressed one of the biggest chunks of the budget emergency that spawned the tax, namely the “unsustainable cost of pension benefits for police and firefighters.” Has that unsustainable cost been addressed in a meaningful way? You know the answer to that question already.
At any rate, all of this made me think again about taxes and debt. Rohnert Park’s sales tax—technically called “transactions and use tax”—soared to 9.5 percent in 2010, among the highest in the United States. It’s currently 8.75 percent, the same rate as Cotati, Santa Rosa, Healdsburg, San Jose and San Francisco. The rate is 8.25 percent in Petaluma and Cloverdale, and it’s 9 percent in Sebastopol, Beverly Hills and Los Angeles.
There are no fewer than 11 special sales taxes on the books in Sonoma County, including ones for the Transportation Authority (.25 percent effective April 2005), SMART train (.25 percent effective April 2009), Ag Preserve and Open Space (.25 percent effective April 2011), Cotati (.5 percent effective Oct. 2010), Healdsburg (.5 percent effective April 2013), Rohnert Park (.5 percent effective Oct. 2010), Santa Rosa (.25 percent effective April 2005 and .25 percent effective April 2011), Sebastopol (.25 percent effective April 2005 and .5 percent effective April 2013), and Sonoma (.5 percent effective Oct. 2012). Two other sales taxes had sunset provisions, including a .25 percent “Open Space” tax that ended in March 2011 after 20 years and a .125 percent Sebastopol tax that ended in March 2005 after two years.
Looking back at general election results for November 2010 and November 2012, it looks as if Sonoma County voters will approve pretty much every special tax or bond measure put on the ballot. I think of bond measures as taxes because the borrowed money must be repaid with taxpayer dollars, one way or another. In 2010, county voters approved no fewer than seven school district bonds, for Cloverdale, Sonoma Valley, West Sonoma County, Bennett Valley, Forestville, Piner-Olivet and Twin Hills. Voters also approved a sales tax increase for Santa Rosa, a Forestville Fire District special tax and a Transportation Authority special $10 vehicle registration fee.
In 2012, voters approved Governor Brown’s “Temporary Tax to Fund Education” (.25 percent sales tax increase theoretically ending in Dec. 2016), four separate school district parcel taxes, three school district bonds, a Sebastopol sales tax increase and a Rancho Adobe Fire District special tax.
You ask: What are the components of a typical sales tax rate? Well, there are 13 components in Santa Rosa’s sales tax rate of 8.75 percent. Eight of the components are part of the “state” tax rate of 7.5 percent, including two components totaling 3.9375 percent that go to the state’s general fund, and another .25 percent piece that pays off Economic Recovery Bonds (issued in 2004). Separate additional taxes are allocated to local public safety funds, education, local health and social services programs, “local revenue funds,” transportation funds, and to “city or county operations.” Then Santa Rosa has five more .25 percent pieces of the sales tax, including money for SMART, the Sonoma County Transportation Authority, Ag Preserves, police and fire and the ever-present General Fund.
How important are sales and use taxes? Santa Rosa’s current budget document declares that “Sales tax is the largest General Fund revenue source making up 31 percent of all General Fund revenues.” The tax brought in $25 million during the dark economic days of 2009 to 2010. The figure rose to $36 million in the 2011 to 2012 fiscal year and is predicted to rise to $38 million in the 2013 to 2014 fiscal year. This is the top amount garnered by any city in Sonoma County.
It isn’t surprising that California leads the nation in taxes, with the highest statewide sales tax rate of 7.5 percent, the highest gasoline tax of $0.72 per gallon (including an increase of $0.035 per gallon effective July 2013) and the highest personal income tax rate of 13.3 percent. Californians, and especially the residents of Sonoma County, just seem to love taxes, more taxes and debt.



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