TAX NEWS - 2010

California Tax: Hike In San Bernardino Sales Tax Faces Pushback Over Measure Z Dissatisfaction

While he'll be the first to acknowledge that increased taxes are almost never a crowd favorite come Election Day, San Bernardino 6th Ward Councilman Rikke Van Johnson and some members of the council believe voters might go for a ½ cent sales tax hike to help the city bridge its $24 million budget deficit. The measure would elevate San Bernardino's sales tax rate to 9.5% which would become the highest in the county.

Having rejected two tax-raising measures last month, the City Council on Tuesday voted 4-3 directing City Manager Charles Neely to prepare a tax referendum for the November ballot over concerns of some residents and business owners who voiced dissatisfaction with how funds were spent from Measure Z a 2006 voter approved ¼ cent tax hike.

"The choice is grim, and we have to bite the bullet and ask the voters to support this," said Johnson Monday.

But getting voters to agree to the hike advertised as a means to preserve funding for the Fire Department, libraries and parks may be easier said than done.

City voters four years ago passed Measure Z intended to hire more cops, and fund supervised after-school and gang prevention programs for San Bernardino children. The measure also called for setting up a citizens review commission to keep a close eye on how the funds were disbursed.

In April 2009, an independent committee that looks at San Bernardino's use of Measure Z sales tax revenues reported that almost all of the money collected from the measure went directly to the Police Department.

From July 1, 2007 to June 30, 2008, the city allocated more than 92% or $4.8 million in Measure Z revenues on Police expenditures. About $93,000 went to fund crime prevention efforts under the banner of Operation Phoenix.

Voters also approved Measure YY, which was merely an advisory measure to show voters' intent that revenues be used to fund the Police Department as well as youth programs such as after-school activities and antidrug education. Subsequent budget woes have forced the Police Department to leave 25 positions vacant.

Some Westside residents like Jeanette and Jerry Huston argue officials have not lived up to promises to implement citizen oversight or fully fund gang prevention and after school programs. Sobbing quietly during a prayer vigil June 25 for 6-yearold Amarion Adams who was fatally shot June 13 during a drive-by shooting the couple questioned the wisdom of raising taxes to save parks and libraries over funding more anti-crime and drug programs to prevent more bloodshed.

"There is a perception out here that the city didn't tell the truth about Measure Z. We heard all this talk about creating employment and anti-crime programs to protect our children from gangs when in fact virtually all of the tax money went into police pockets and into the general fund to be used at the discretion of the Mayor and City Council," said Mr. Huston.

"We need more accountability not more taxes," said Angela Moore a friend of the Adams family. "Innocent children are still being gunned down. Our neighborhoods are still not safe despite Measure Z." "We need more than just 'boots on the ground'," said Jesse Nelson. "These kids need jobs not rhetoric." Mayor Pat Morris said Measure Z promises have been kept.

"Tax revenues generated from Measure Z were used to hire 40 additional police officers, the result has been a reduction in violent crime," said Morris. He cited a 4.5% drop in overall violent crime in 2008-09 and the success of the anti crime program Operation Phoenix and the Police Department's Community Police Academy, a 15 hour program conducted over seven-weeks. The program seeks to increase citizen community involvement and provide a better understanding of police work.

The council approved a $131 million general fund budget last week that is intended to pay for day-to-day expenses but hinges on finding a way to plug the deficit. New taxes would avert shutting down three library branches and laying off 76 police officers, 23 firefighters and other cuts.

Those cuts would be "catastrophic for the community," San Bernardino Police Chief Keith Kilmer wrote in a memo to the council.

"We are at a barebones operating level with current staffing. Cuts of this magnitude would effectively reduce the organization to staffing levels of two decades ago, beyond what is needed to police the community with any sort of effectiveness."

Still as the city struggles to keep critical government services afloat, some say the violent death of young Adams who was shot, just nine days before his kindergarten graduation from Rio Vista Elementary School pours salt in a festering wound and that could become a sticking point come Election Day.

"It's not a good time to ask anybody for more taxes but if we don't get this measure passed in November, there will be some tough consequences," said Johnson.

"City workers will lose jobs. Services will be cut. Existing anti-crime youth programs will be curtailed. Things will slow down. Potholes aren't going to get filled as quickly. Some street lights will have to go unrepaired. More brown in our parks and heaven forbid if we have to layoff police and fire personnel, emergency response times will suffer."

Johnson said if the sales tax passes, consumers would have to spend $1,000 before their sales tax would rise by an additional $5. The budget plan aroused protest from several business owners who fear higher taxes will drive customers away.

Johnson said he doesn't expect local businesses to flee or tourism to suffer as a result of the rate increase. Proponents of the hike estimate 70 percent of the new taxes would be paid by out-of-towners.