Read My Lips: New Taxes!

The Chico City Council has begun a series of excruciating budget cuts in response to deficits and long-term debt levels of immense proportions. According to Brian Nakamura, the new City Manager who was brought in last year to clean up our budget mess: “This probably is the darkest time for the city of Chico.” Facing a $4.8M budget deficit and $24M in debt, the Council approved a new budget in June that laid off dozens of city employees (including 19 positions in the police department), drastically cut capital improvement projects, reduced hours for park access, cut park staff and facilities, put essential maintenance services on hold, forced rolling closures of fire stations, and generally engaged in a full scale slash-and-burn operation.

The response to our budget crisis was one-dimensional, and demonstrated a lack of political courage to forge a balanced solution. Mr. Nakamura, in his characteristically cautious (yet sanguine) fashion, framed the discussion for the June budget discussion by saying, “There are only two ways to build a healthy community, and that is to grow the community, financially, responsibly, and also make the necessary reductions we need.” To most of us, that kind of comment is fairly inscrutable; he was essentially giving a nod to the prospect of bringing in additional revenue, but only by growing the tax base, not the tax rate—more taxpayers, not higher taxes. Short of that, we must slash services.

In the September 17th Council meeting, it was revealed that the budget for Fund 400 (the capital improvements fund) was in the hole $700K more than previously thought. This, of course, will mean further staffing reductions to cover the shortfall. Later in the meeting, in light of this revelation, Mr. Nakamura withdrew his request to recruit for two staff positions that had already survived the budget cut: the City Engineer, and an Economic Development Manager. This was an especially ironic turn of events, given that economic growth is key to his long-term plan.

Nakamura explained, “Difficult as it may be, and understanding that one of the Council’s goals is economic development, which is the revenue side, which is very critical I believe, meaning increasing our tax base—not increasing taxes[!] but increasing our tax base, property taxes and sales taxes—it’s critical that we have the opportunity to forge economic development partners and opportunities. That said, given the recommendation for staff reductions, it’s very hard to move forward with recruitment for these positions.”

Essentially, we’re only going to consider revenue by growing the tax base, but the city is abdicating any input it might have into the process by failing to hire an Economic Development Manager.

The path we are on now is frightening—the beginning of a long period of economic stagnation, and doesn’t at all match the vision most Chicoans have for our home. We don’t want to live in a place where the police force is chronically overwhelmed, understaffed, and unable to respond to calls for help; where stabbings are on the rise and there is no adequate response; where large areas of the city go without any protection. We don’t want to live in a place where the crown jewel of our city—Bidwell Park—is closed, goes unmaintained, and becomes unsafe and inhospitable. We have aspirations for our city to live up to the reputation as the beautiful, welcoming, fun place it has always been: a great place to raise a family, a compassionate community that looks out for each other, a place with awesome recreation opportunities and a lively downtown. Fortunately, some of these things are due solely to the people who live here and our strong sense of community. But we also need to make ongoing investments in common infrastructure to lay the groundwork for the quality of life we are used to.

There is an another path we could choose—one that will allow us to restore essential services, increase public safety, and promote smart growth. It’s something that 142 cities and counties throughout the state (including many smaller than our own) have already done to shore up their finances and provide for the services their citizens demand: pass a local sales tax. 

Currently, the state collects 7.5% on all purchases, and distributes 1% back to the city or county where the sale was made. Chico collected about $17M through sales taxes last year—about 40% of the city’s total revenue. With a modest half-cent sales tax increase, the city would collect an additional $8M per year: more than enough to restore previous service levels, and even to add more police officers (which they needed prior to the cuts). This funding would also allow us to restore fund imbalances to their target levels within a few years. It is baffling to me that this has not been championed (or even mentioned) by any sitting City Council member as part of the solution. This is the only way for us to maintain essential services and the quality of life we want in our town—and yet the path they chose is based purely on austerity, even at the risk of endangering the public.

Of course, in order for us to trust the Council with these funds, they must come clean about the financial abuses of the past. Clearly, with the ongoing revelations about Fund 400, there has been some level of fraud and/or serious negligence on the part of City staff and perhaps complicity on the part of some Council members (past or present). We need a full investigation, and to hold guilty parties accountable for betraying the public trust. The Council are our representatives, and they should be much more assertive about demanding financial accountability and efficiency. No longer can they blame staff for everything when the entire nature of their job is oversight in the public interest.

We deserve better, Chico. Let’s all chip in a little to save our town, attract and retain innovative companies and smart people, and take pride in our home once more. Here’s how we get it done: call up your Councilmember, inform them that they have the power to put a measure on the November 2014 ballot for a local sales tax, and that you are willing to chip in to save our town. Tell them that if they won’t do it, we will do it ourselves by ballot initiative and vote them out of office.

If you want to be a part of the solution, please visit http://togetherchico.org 

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Matt Olson is a systems thinker, hacker, and social entrepreneur proud to call Chico home. He's a software engineer with a particular interest in using social business to address seemingly intractable problems. When it's time to relax, you'll find him on the roads and trails of the North State on his Homer Hilsen, playing bocce, or building robots with his boys.

Comments

  1. Denver Latimer says:

    Good work Matt. Keep up the fight. We have a long way to go to make this community a culturally exciting place that matches the physical beauty of the geography we have been blessed with. We can’t let people who don’t appreciate public artwork like the hands statues and stay in their living rooms playing Xbox control the conversation or our city’s growth.

  2. Stephanie Taber says:

    NO to any new tax until our union employees agree to cuts in their benefits that are close to the 40/45% mark.

  3. Larry Strand says:

    I am on board with this Matt… good job and count me in for help.

  4. Dain Sandoval says:

    I admire your plan if only because it is a plan. At least you’re trying and you are bringing up possible actions. My initial knee-jerk reaction to this or any tax is NO. However, my willingness to try it is a lukewarm MAYBE. I am able to read/listen to the argument with an open mind and have chewed on this idea for a few days so that I can speak from my own experience and not just regurgitate the standard responses.

    It is very hard for me to understand how a bump in the local sales tax will benefit the problem. Here are my reasons (again I speak only for me, and I speak as honest as possible) –
    I paid $3,600 alone in Property Taxes for 2012 and it goes up each year. That is almost two months pay for me. It is very un-sexy to be asked to pay anything more. I know Prop Taxes do little to help the city as a whole, but of all the landowners in Chico, all paying something – where does it all go? State and Federal taxes are also taking a fair chunk of my income. I don’t have dependents, I am single, I live within my means paycheck to paycheck. I have never missed a payment on bills, mortgage or credit accounts. I simply do not have excess funds. I shop savvy which brings me to my next sticking point – who will really be paying this sales tax? Anyone that makes a transaction in Chico will have this tax appended to the total, so certain restaurants and goods or physical services will pay in to the tax. I get that. But what about savvy shoppers like myself that go out of my way to find the best deal? My actions of not always shopping local may be killing the local economy, but that is not the topic here.
    Being frank: I will never buy a car, a suit, or electronic knick-knacks from any store in Chico when I can get a better deal out-of-town or online. There. I said it.
    So who is being relied on to pay the sales tax? I fear it is those that are less educated, less savvy, less able to use digital tools to gain their sweet deal: the poor. Those that are least able to afford computers, smartphones, or have cars to travel to the best deal are left in Chico to pay this new tax. There will be many that choose to support the feel-good nature of paying a bit more to bolster the plan, many from both sides of the political spectrum, but there is a very wide swath in the middle, like myself, identifying as neither Dem or Rep that are just trying to get by and will go to any lengths to get the best price – local services and town betterment be damned.

    Now for the willingness part. If this tax was passed I would demand that: (i have no formal gov training, so excuse me if I am not hip to how things work)
    – sunset clause, lets try it for 18 months
    – austerity measures remain in place until the books are balanced
    – Strict independent oversight – this money will NOT be used to go back to business as usual and can not be dipped into by any projects not related to debt payment or public safety.
    – funds not lumped in with other funds – separate account.
    – funds used strictly for debt payment and/or public safety.
    – no new spending or re-instated spending unless it is to reinstate public safety positions like police
    – pensions and contracts be inspected/re-negotiated – no one is sacred. We must not be bullied by outside unions or associations.

    The optimist in me says lets give it a try, the pessimist says it will never pass given our city’s voting track-record.

    Yet another plan: The PBS/Costco/Hobo model.
    Instead of this sales tax I would almost prefer that as part of my county property taxes, I was assessed an annual residence fee(tax) that went straight to the City of Chico. This money is not subject to touching by any commission or gov entity – not to grow programs, not to fund arts, not to pay salaries – just straight cash infusion to pay our debts. From each property/business owner – cough up $1, $5, $10, $25 hell $100 – I would feel good knowing that my membership fee was going to my city to take care of public works and safety.

    Tough spot we’re in, folks. I anxiously await the thrilling conclusion.

    1. Matt says:

      Thanks for the thoughtful reply, Dain.

      We definitely need to hold the city accountable for efficiency and value in spending our tax dollars. This is a process they are going through now — getting real and cutting spending. The problem is, we’re getting to the point where we’ve cut just about all we can. The only thing left to do is force concessions from employees, which certainly should be on the table, but that also can only go so far without making unreasonable demands.

      There are a lot of things I’d like to see the city do, such as hiring a badass economic development manager that can bring in more companies like Wanderful and Milestone Tech, those are decent jobs that will grow the local economy. We’re at the point now where we can’t even hire critical positions like this. Not to mention the PD, which I think everyone is in agreement needs more support.

      The reason I focused on a sales tax, despite misgivings about its regressive nature (I understand and sympathize with that viewpoint) is that, despite the difficulty we face in getting it passed, it’s still the easiest solution. Other cities have done it, so we have models to work from, it requires only a simple majority vote, and it’s easily understood by all. We can put in a sunset provision, and even appoint an independent board to audit the use of the funds. Property taxes are difficult to raise due to Prop 13, business taxes would be counter productive if the goal is to attract new businesses, liquor taxes would probably not be acceptable to a majority, and the margin for setting higher fees for various things isn’t big enough to cover the shortfall.

      Ideas around putting constraints on spending into the measure itself are interesting, but unfortunately changes the threshold for passage to a 2/3 majority, counter intuitive as that may seem. So we’re focusing on a general purpose tax that goes straight into the General Fund, and a citizen oversight mechanism to ensure the money is spent wisely. But if we think a 2/3 majority threshold can be met with a special purpose tax to pay down debt and boost public safety, that’s another approach I would support.

  5. Steve says:

    Im not as good as the writer above, but I do say NO new taxes. We are already paying a new school tax and soon will be paying for Obama care. Stop the madness and vote for people who can work with the money already provided by the hard working tax payers.