A public hearing last week paved the way for a June election to approve an increase to the local sales tax. The city council held the hearing as part of its regular meeting. The hearing was short and sweet, with no comments from the audience and no written testimony. City Manager Dr. Kindon Meik did provide a report outlining why the city considers it important to seek the additional sales tax revenue.
Facing continued general fund deficits, he said, the city council authorized NHA Advisors to conduct a fiscal sustainability report in February of 2015. The findings from that report were presented to the council over a year later, in May of 2016. The report showed a continuing downward trend in revenues, continuing over the next several years. At the end of the current fiscal year, in June, it appears from the city budget the general fund will gain about $16,000, leaving a balance of $1.937 million. That shifts to the negative beginning in the 2017-18 budget, with the city losing $431,159 in the general fund, leaving a reserve of just over $1.5 million. The negative trend continues in future years, with the fiscal year 20202021 showing the general fund finishing in the red by over $343,000. The following year, the city’s general fund is over $1 million in debt. Despite those finding, the council in July of last year opted not to seek an increase in the local sales tax. Instead, the city backed a countywide effort, known as Measure K, which would have imposed a half-cent sales tax increase countywide, with funding earmarked for public safety efforts. That initiative had failed in the June primary, by a very small fraction of the vote. It was placed back on the November general election ballot, where it competed with a long list of state measures, and national, state and local elections. Once again, it failed to reach the 66 percent required voter approval. Based on that election, and the city’s continued need for additional revenues, the council in January of this year discussed different ideas for adding to the general fund. The council decided to move forward with an additional one-cent transaction and use tax. The tax increase, if approved, will result in local consumers paying an 8.25 percent sales tax. The revenue for the city is projected to increase by $1-$1.2 million per year, according to Dr. Meik. The city will have to pay for the special election. Dr. Meik has estimated those expenses, along with associated costs at $45,000. In upcoming weeks, The Journal will delve into the proposed sales tax, how the revenues will help and where the spending from the account occurs.