Jul 16, 2008

Council backs half-cent sales tax measure

City to vote on emergency declaration on July 28

By Mark Abramson / Daily News Staff Writer

The sales tax in cash-strapped San Carlos could be going up following the city council's latest action on a plan to beef up revenues.

Council members reached a consensus Monday night, with Council Member Matt Grocott voicing opposition and Mayor Brad Lewis absent, to have city staff develop a half-cent sales tax measure for the November ballot and prepare the necessary documents for the city to declare a fiscal emergency.

The next step for the council could be to declare the emergency at its July 28 meeting, which would reduce the number of favorable votes needed to pass the measure from two-thirds to a majority. The council must vote unanimously to declare the emergency and Grocott has said he would not be in favor of doing so unless the city tightens its belt and makes cuts in addition to the $1.2 million it has already slashed this year. He has proposed cutting the assistant city manager to save $200,000 in salary and benefits and requiring organized sports leagues to pay to use city facilities.

"I'm sticking to my guns," Grocott said at the meeting. "To make the argument that we are in a fiscal emergency, I can't see it."

Council Member Omar Ahmad expressed frustration with Grocott's position.

"I find it offensive that someone would say, 'If you don't play my game, I'm going to hold everyone up,'" Ahmad said.

Vice Mayor Bob Grassilli said if the sales tax measure is not placed on the November ballot, it will probably happen in November 2009, when council member seats are up for grabs, reducing the threshold needed to approve a measure to a majority vote.

"If we don't do something fairly radical, our reserves are going to dissipate," Grassilli said.

Grassilli added that he does not think cutting two, three or four positions would solve the city's budget woes.

San Carlos officials in favor of hiking the sales tax said a revenue measure is needed because the city's budget problems are expected to continue without additional funds. They initially considered a utility user tax, but a recent poll of 600 residents indicated that 66 percent supported a 10-year half-cent sales tax increase, compared to 54 percent for a utility user tax. The tax bump would generate about $2.5 million annually, said Assistant City Manager Brian Moura.

A consultant has projected that without a revenue measure, the city will have to make $1.3 million in cuts next fiscal year and an additional $1.45 million in 2010-11.

According to City Manager Mark Weiss, revenues are not keeping pace with expenditures and the city lacks auto malls and large hotels to generate funds. Also, San Carlos is one of the only cities in San Mateo County that does not have a revenue measure in place, he added.

"A sales tax is most likely to be supported," said Larry Tramutola, one of the city's consultants on the measure. "It should be long enough that you get through your crisis."

About 54 percent of the survey respondents who own a business in San Carlos support a sales tax increase, said Tim McLarney, president of True North Research, the city's other consultant on the measure.

Resident Bonnie McClure said she would not support a sales tax increase. She said she could see someone who lives close to Belmont, like herself, or Redwood City going to those cities to save some money if a measure passes.

"I much prefer a utility tax," McClure said.



E-mail Mark Abramson at mabramson@dailynewsgroup.com.