Tax measures could be a hard sell in virus era

Cities face huge financial challenges from pandemic — but so do voters

Like many cities, counties and school districts in the Bay Area, Union City is in a pickle and hoping against hope taxpayers will vote to bail it out.

The city faces a multimillion-dollar budget deficit that’s getting worse by the day because of the coronavirus pandemic, and the parcel tax that’s been its lifeblood since 2004 to help fund police and fire services is about to expire because residents voted in March to not renew it.

In desperation, the City Council is going back to voters Nov. 3, this time asking them to pass a new 5% utilities tax. Never mind that a poll this summer showed only 44.5% of informed likely voters would support it — short of the simple majority needed to pass.

“Personally, I never like having to ask people to kick in more money,” Mayor Carol Dutra-Vernaci said Thursday. “We know that we

have a financial challenge, and we know that we keep getting phone calls with residents who say, ‘I want this service, I want that service.’ So this is their opportunity to weigh in. Should they choose no, then those cuts will be made.”

Throughout the region, local governments, schools and special districts whose revenue streams have been pinched by the pandemic are dangling a plethora of ballot measures pushing new or extended parcel taxes, sales tax increases, higher hotel room taxes and new or additional utility users taxes with the underlying message that their defeat threatens basic services.

Across Alameda, Santa Clara, Contra Costa and San Mateo counties, about 65% of the tax measures are general taxes, meaning they need approval of only a simple majority vote and can be spent however elected leaders decide, even for employee salary increases, regardless of what they promise.

Some of the measures don’t have expiration dates.

While elected officials say

the money is badly needed, some political observers note that voters — many of whom have seen their jobs vanish and income dwindle from shelter-in-place orders — aren’t as likely as in better days to pass the hat.

“It’s going to be a harder sell than usual this year for tax and spending measures,” Mark Baldassare, president and CEO of the nonprofit Public Policy Institute of California, said Tuesday. “Most voters are going to be looking at these measures carefully and thinking about, ‘What do we actually need most to get by?’ ”

In Concord, the City Council is asking voters to double a half-cent sales tax in place since 2010 to one cent and make it permanent.

Mayor Tim McGallian said Tuesday that the money is needed to maintain basic services, especially repairing and maintaining streets, though he acknowledged it also could be spent on pension and benefit debts.

“Those types of things are a part of our general fund no matter what,” McGallian said.

He also defended asking voters to remove time limits on the tax. “Not having this silly sunset allows us to bond against certain things, to be able to make things happen sooner,” he said.

Concord is reducing its budget by about $10 million this year and has cut more than 200 staff positions since the last recession, McGallian noted. “Definitely we can keep cutting, but to what detriment?”

But in San Jose, Santa Clara County supervisors last month couldn’t muster up enough votes to place a 5/8-of-a-cent sales tax measure on the ballot, in part because of the bad timing. It needed four votes to get on the ballot and fell short by one.

Supervisor Joe Simitian, who voted to halt the proposed tax in its tracks, said he was concerned about the ballooning county budget and lack of a guarantee that the money would be used as promised.

Plus, he couldn’t get behind a regressive tax measure during an economically difficult time for so many.

“The people who can least afford to bear the burden end up shouldering the cost. These are working people who are hanging on by a thread,” Simitian said Thursday in an interview.

Alan Auerbach is an economist and director of

the Burch Center for Tax Policy and Public Finance at UC Berkeley.

“Governments have to make very difficult choices between raising taxes on people who may be in more difficult situations, as opposed to cutting spending in some cases on groups that also may be suffering more,” Auerbach said.

“I don’t think there’s a simple answer to it.”

In Alameda County, the Board of Supervisors is asking voters to approve a new half-cent sales tax for 10 years.

Supervisor Wilma Chan said the money is needed to continue crucial safety net services during the pandemic, such as testing, distribution of food and personal protective equipment, and leasing motels to house homeless people to help them avoid getting COVID-19.

“Is this the best time to try to tax people? No,” Chan said Tuesday.

“But unless the federal government or the state are able to come forward with ongoing money, we have an obligation to not let people die on the street, so that’s why we’re doing it. It’s a very dire situation,” she said.

“I think that all of these taxes would have been here anyway” if the pandemic hadn’t happened, Marcus Crawley, head of the Alameda County Taxpayers Association, said Tuesday.

“All of the governments around here have a huge pension deficit problem. They’ve got to either reform the pension deficit, or like a Ponzi scheme, keep getting more and more taxes, and diverting more and more taxes,” Crawley said.

When asked whether some of the sales tax money could end up going toward pension and benefit packages, Chan said, “I don’t think that’s the intention of the board in terms of this tax.

“Obviously if we have extra money to spend on these services, then it makes it easier for us to deal with our employees,” she said.

In Daly City, the council is asking voters to approve a new half-cent sales tax to raise about $6 million annually, calling it a “recovery and relief measure” that would “provide emergency funding” for a host of city services.

That doesn’t have an expiration date, however, and the Silicon Valley Taxpayers Association, in its written opposition argument, called it “an ordinary baitand-switch.”

“Emergencies do not last forever, but this tax will if passed,” the association wrote.

Asked Thursday why the tax needs to be permanent, Mayor Glenn Sylvester said he wasn’t aware the measure lacked a sunset date.

“I haven’t really read it completely. It was my understanding that if after a few years, if we want to maintain this tax, then we would have to come to the voters again,” he said.

Sylvester said if the measure passes, the city would use the money to restore some fire and police staffing, as well as paying toward several projects.

“Rahm Emanuel, when he was in the Obama administration, he said something about how you shouldn’t waste a crisis,” Auerbach said.

But even voters who completely trust their local representatives and believe the stated need is real may still balk at raising taxes.

“These are truly unprecedented times in terms of the fiscal and economic uncertainty generated as a result of the pandemic,” Baldassare said.

“People are going to be selective.”