Half-Cent Sales Tax Goes On Ballot
This November, in addition to Governor Brown’s state sales tax measure, voters in Culver City will be saying yes or no to a local measure that would place a one-half cent sales tax on merchandise sold in Culver City.
The resolution to place this measure, which contains a ten-year sunset clause, on the November ballot was passed unanimously at the City Council meeting Monday night.
The Council also passed a resolution declaring that a financial emergency exists in Culver City.
The vote came after the last of Chief Financial Officer Jeff Muir’s budget presentations for the community. Although the dialogue that followed the presentation yielded only one public comment, Mayor Andrew Weissman noted that the presentations over the last five weeks saw more than 70 people offer their opinions and ideas to the Council, many of them people who don’t usually come to Council meetings.
The grimness of the presentation and general perception of the dire state of the economy (with the much-publicized bankruptcies of several California cities in recent weeks) probably accounted for both the Council’s vote on the financial emergency and support for a sales tax.
Council members mentioned that their personal surveys of the public showed that the majority of Culver City residents supported a sales tax as a way of raising revenue to save essential services.
But both Muir and City manager John Nachbar cautioned that a sunset clause for a sales tax might result in the city being back in the same fix five years from now.
“The Chief Financial Officer and I do not believe we have a temporary problem,” said Nachbar. For this reason he suggested that a sunset clause of five years (which the Chamber of Commerce supported) would not be enough time in which to see the economy turn around.
“It’s five or ten years of one-time revenue,” added Muir. “In the end, it goes away. Costs will be going up. We know that there are costs that we won’t have control over.”
Citizens who spoke on the issue thought that the tax should be one-half cent as opposed to three quarters of a cent (despite the slight difference between one half and three quarters, the lesser amount, as one speaker put it, was a stronger “selling point.”) Several speakers asked that there be a public finance advisory committee to assist the Council.
The idea of a sunset clause, contrary to the cautions from Nachbar and Muir, was also seen as a plus in attracting voters.
Council members leaned toward the half cent option even though Jim Clarke and Mehaul O’ Leary admitted that they personally preferred the three-quarter cent option. However, they saw that voters would be more likely to opt for the half cent amount.
When everyone was on the same page with the half cent option, the problem of the sunset clause remained. “We should provide a sunset clause but more than five years,” said Clarke.
O’ Leary initially did not want the sunset clause because he feared the risk of losing the revenue source.
Meghan Sahli-Wells said she would be “comfortable” with ten to fifteen years as a sunset.
Jeff Cooper, who thinks of himself as an “optimist,” was not sure he could be optimistic about the economy improving in five years and therefore wanted to see a sunset clause of “at least ten years.”
“A sunset of five years is unrealistically short,” said Weissman. “Infinity might be too long---but we need a realistic time for [the tax] to settle in.”
While it would be possible for the Council to vote to end the tax at some time in the future, making the sunset clause unnecessary, consensus was that it was more prudent to create a clause at this time, with a clearly defined cut-off date that could be changed by Council vote if the economy rebounded in a few years.
There was some concern about the expiration date for the clause. With the tax scheduled to take effect on April 1, 2013, the date of March 31, 2023 was chosen as the exact date for the termination of the tax.
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