As a former mayor of Davis and someone who has always been deeply committed to our City’s fiscal integrity, I would like to respond to the recently published article by the No on Measure Q team (Part 3 in a series).
Their article states that Measure Q would “double the extra sales tax from 1% to 2%” (the emphasis is theirs). The word “extra” is a strange way of characterizing the portion of our sales tax that stays here in Davis. As I explained in my recent letter to the Davis Enterprise, only a small percentage of the 8.25% sales tax we currently pay stays here in Davis. The State of California mandates that cities collect a minimum of 7.25% in sales tax, and the additional 1% we pay—often called the Davis portion—stays here in Davis. Measure Q would double that local portion by increasing it by 1%. This is a good thing! It means more of our tax dollars stay local, allowing us to meet community needs.
Their article incorrectly claims that Measure Q is a permanent tax that “never goes away.” California Law provides that a general sales tax may be repealed or amended by a majority vote of the people at any time. The opponents of Measure Q have been advised of their error numerous times, including by Michael Coleman, a widely recognized expert on municipal finance (he has literally written the book on municipal finance in California and is a Davis resident). Despite this, they continue to make this claim. I don’t know why.
The No on Measure Q team also wrongly claims that when Measure Q passes, every Davis resident will pay an additional $165 per year in taxes. To support their claim, they divide the $11 million that Measure Q is expected to generate by the 2022 Davis population of 67,000. This ignores the obvious fact that everyone who shops or eats at restaurants in Davis, not just its residents, will pay sales tax. This includes UC Davis students who live on campus and shop and dine downtown, their visiting family and friends, and others who come to Davis to enjoy its small-town charm. Measure Q’s opponents’ calculation seems designed to create alarm among those with fixed or limited incomes. However, food, medicines, and the single most significant monthly expense of most people—housing—are not taxed. Measure Q does not affect spending to meet these basic needs.
Those opposing this tax fail to acknowledge how multiple City Councils have sounded the alarm about the City’s budgetary needs over the past decade.
I think a bit of history is essential here.
In 2017, the Council developed a comprehensive, transparent fiscal model with significant community input. The model highlighted that the 2020s would represent considerable fiscal challenges for the City. And then we experienced a pandemic.
The pandemic brought one-time revenue from various sources, but these revenues were strictly restricted. And the inflation that followed in the pandemic’s wake significantly increased City costs for everything from asphalt to vehicle replacement parts.
But even before the pandemic, the Council proposed limiting the expansion of full-time staff positions, approved new revenue-generating businesses (hotels and cannabis dispensaries), and placed several tax measures on the ballot. These measures expanded the transient occupancy tax (hotel tax) and protected the parks tax. They brought in over $3 million in new revenue to the City. A parcel tax presented to Davis voters in 2018 to improve our roads and bike paths would have provided much-needed revenue. Despite the support of 57% of Davis voters, it failed to pass because it required a 2/3s majority vote.
This Council and prior Councils have been clear about our City’s challenges. They have used the tools at their disposal to try to address them. Now, this Council comes to you, the citizen voter, to challenge you about what is needed to maintain the services we all expect from city government.
This tax is a modest addition to your budget that will enable us to collectively get through the 2020s and move our City to a more secure fiscal position.
“The No on Measure Q team also wrongly claims that when Measure Q passes, every Davis resident will pay an additional $165 per year in taxes. To support their claim, they divide the $11 million that Measure Q is expected to generate by the 2022 Davis population of 67,000. ”
I agree with Robb here. Also, I think calculating that way is backwards. In order to pay an additional $165 per year in taxes (which frankly is not that much), one would have to spend $16,500 in taxable goods in the city in a year. Not sure how many would do that, but that’s why I have always calculated the other direction – if you spent $1000 in a year, you pay $10 in additional taxes. You have to spend a lot on taxable goods in the city to have it be a significant hit.
Robb Davis said … “Their article incorrectly claims that Measure Q is a permanent tax that “never goes away.” California Law provides that a general sales tax may be repealed or amended by a majority vote of the people at any time. The opponents of Measure Q have been advised of their error numerous times, including by Michael Coleman, a widely recognized expert on municipal finance (he has literally written the book on municipal finance in California and is a Davis resident). Despite this, they continue to make this claim. I don’t know why.”
The reason why is very simple, and that reason has been provided to Michael Coleman as follows … “Michael, let me address the point you made. Correct me if anything I say is incorrect. The tax can indeed be repealed by a majority vote of the voters. However, the process to do that is both cumbersome and onerous. Putting the repeal question on a future ballot requires citizens to gather thousands of signatures or the repeal will never appear on a ballot. Compare that to the number of “signatures” that were required to put the tax on the ballot … three.
Bottom-line, Elaine’s statement is 99.9% correct, and the meaningful chance of a repeal happening is less than 0.1%.”
Michael did respond with only one correction as follows … “Matt, Actually 4 per state law re transactions and use taxes. And in this case the measure was placed on the ballot by unanimous vote of the city council.”
Bottom-line, the reason is one of equity and morality. The Council is allowed (by law) to act autocratically, but the taxpayers are not. Under normal circumstances the “autocratically” part would mitigated by the customary review process by the Finance and Budget Commission (FBC) in public meeting(s) with written staff reports describing the tax, but that did not happen for this tax. The public meeting(s) would give the taxpayers and voters an early exposure to what was being considered/proposed, so that when the City Council item staff report was published on Friday prior to the Tuesday Council meeting, it wouldn’t be like Athena springing fully armed from the head of Zeus.
But those three votes (actually it was five in this instance) putting it on the ballot by the Council represent thousands of voters. Another way you could get a repeal on the ballot would be for you to get three votes from the Council to put a repeal before the voters.
So I guess Robb’s criticism of your argument about perpetuity is correct.
Ron, read Robb’s comment again. He clearly says, “Despite this, they continue to make this claim. I don’t know why.” I then clearly explained why. Neither Robb nor I asserted either correct or incorrect.
The process I described is correct. The points you made are correct. But neither my points nor your points tell the whole story. Every reader of my points and your points is going to weigh those points differently and come to their own conclusion.
Michael Coleman, who is an expert in this area did not dispute the correctness of the process I described. All he did was correct the threshold number of Council votes needed to put the Measure on the ballot from 3 (the number I had used) to 4.
Numerous people in our community have described this tax measure as a “bailout of past irresponsible financial management by the City.” Numerous people in our community have described the choice that voters have as “being a choice between a bailout and an intervention.” That is a harsh description, but if the City had taken the time to educate the public about the nuts and bolts of the financial situation … describing how we got into this mess and how we can get out of it, then the opposition would be almost completely nonexistent. However, full disclosure and ongoing transparency have rarely been practiced by the City. Robb’s tenure as Mayor was one of the exceptions to that pattern.
I’d like to know how many sales tax increments have been repealed after passage?
Rob Davis said … “Those opposing this tax fail to acknowledge how multiple City Councils have sounded the alarm about the City’s budgetary needs over the past decade.”
Robb’s comment above is 100% incorrect. The No on Measure Q team has consistently and regularly said that the problem is that the City has no plan for addressing its financial problems. The City appears to be allergic to planning. It has no plan for dealing with its budgetary woes. It has no plan for maintaining its roads and capital infrastructure. It has no Economic Development Plan. It doesn’t even have a general Plan that is compliant with California state law. The No on Measure Q team has clearly said that it would support the tax if the City had a plan.
How the City recently spent the $19.7 million American Rescue Plan dollars clearly shows how Council spends additional money when it has it … and is a good indicator of how additional sales tax money will be spent if the voters pass Measure Q.
The detailed list of the spending can be accessed at https://www.cityofdavis.org/city-hall/city-of-davis-american-rescue-plan-arp
Here is a summary of that spending …
$3,795,000 was spent on Revenue backfill, Employee Furlough restoration, Three firefighters hired for staff ladder truck, and 4 changeable parking message boards
$1,080,000 was spent on Healthy Davis Together
$7,152,000 was spent on eleven Social Services programs
$1,815,000 was spent on Downtown projects like the closure of G Street
$2,470,000 was spent on new facilities/buildings but only $100,000 on maintaining the existing buildings.
$805,000 was spent supporting the Arts Alliance, the Chamber of Commerce and Explorit.
$0 was spent on maintenance of the streets or filling potholes.