Council Proposes Sales Tax Increase While Ignoring Other Forms of Potential New Revenue

Gary Silbiger

With the economic recession continuing from 2008, Culver City’s Council passed a one-half percent sales tax increase at its July 16, 2012 meeting.  This permits an initiative to be placed on the November 6, 2012 ballot.  However, other revenue enhancements have been missing-in-action.  And not even a Public Finance Advisory Committee proposal was adopted.

As the last of the City’s 5 community meetings concerning a local sales tax increase was held on July 16, there was unanimous agreement by all Council members and City staff, with the assistance of a public survey, to propose a raise of Culver City’s sales tax one-half percent, although three-quarters of a percent was also considered.  The Council feeling was that a three-quarters percent increase would likely pass, but was not worth the small chance of defeat during this financial crisis.  Even Steve Rose, President of the Chamber of Commerce, submitted a statement in support of the one-half percent increase. 

The Council chose a 10 year sunset period for this sales tax increase although some Councilmembers original spoke of a 5 or 15 year sunset, or none at all.  The 10 year period won because some Council members felt 5 years would be too soon to determine the continuing need for this additional tax, and wanted the public to feel comfortable about a specific, rather than open-ended, termination of this program. 

Eight individuals spoke and 3 more submitted written responses at the July 16 meeting.  Council member Andrew Weissman commented that more than 70 people had attended the 5 community presentations.  Two of the speakers advocated for a Public Finance Advisory Committee which could demonstrate transparency and community involvement.  Crystal Alexander, former elected Culver City Treasurer, explained that people want to know how the tax will be used.  Meghan Sahli-Wells, the only vocal Councilmember in support of this Committee, stated that when a City asks for tax money, it should simultaneously have a resident finance committee leading to an open process.  Although there was Council talk of the worthiness of a Public Finance Committee, when Sahli-Wells asked if it could be part of the sales tax motion, Weissman said they would need more time to consider the nature of this committee, how it would be formed and staffed.  Weissman’s suggestion to skip the Public Committee at the Council meeting was consented to by Councilmember Jeff Cooper.  The Committee concept never found its way into the pending motion; this is not unusual for the City Council because it is often reluctant to empower the public by forming a resident committee..

So, when will a Public Finance Advisory Committee item be agendized?  Weissman suggested some time between the July 16 meeting and the election.  Sahli-Wells retorted it should be agendized sooner than later because the Committee could assist in advocating for the sales tax passage.  Now, 4 weeks later, the Committee item, a simple one to place on an agenda, has not seen the light of day.  If this is an indication of the Council’s interest in real public input – despite its 5 community discussions – I will be shocked if the Committee is formed as a viable advisory partner.

At the conclusion of the meeting, the Council unanimously passed a motion to place on the November 2012 ballot a one-half percent sales tax increase with a 10 year sunset period and a beginning date of April 2013 at the earliest.

Sales taxes are regressive taxes because everyone pays the same percentage of sales tax, regardless of income; and lower income buyers, who spend most of their money on necessities, spend proportionately a higher percentage of their income on sales tax than do wealthy people.  Yet, sales tax is a crucial source of revenue in our system, but if other sources of money are ignored, our city will underperform, services will be cut and denied, and the residents will surely suffer.

With lightning speed, the sales tax initiative was passed by the City Council.  But what about other ways of increasing City funds.  A short list includes:

• Recover 100% of the charges for city fees.  $660,000 in fiscal year 2011-2012 was not recovered for city fees because individuals were not charged.  Therefore, the money had to be taken from the General Fund.  When these city fees were first studied, more than $5,000,000 per fiscal year was lost.
• Create a list of every consultant, by department, and the money paid each year
• Don’t overpay department managers and cease giving perks like moving fees, loans, special leave and retirement conditions
• Evaluate each city credit card, city car use, gas payments, etc. with strict internal controls and oversight by a resident based finance committee
• Ask key cities to send its list of developer fees, taxes and other fees for comparison purposes
• Find the special funds that exist in Culver City – we’ve all read about California’s numerous special funds (with bulging money) unknown to the elected officials
• Review development fees to see which should be added and increased

It’s now time for the City Council to have a special meeting about other sources of revenues, just as it did for the sales tax initiative.  And it should take place now, not after the November election.

Gary Silbiger is the Co-Editor of the Culver City Progress Blog and the former Mayor of Culver City.