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By Ted Gaines–
Coronavirus disruptions are inspiring governments to employ every tactic available to ward off a Great Depression-style economic collapse. Whether it’s stimulus funds, Paycheck Protection Program loans, increased unemployment benefits, or rent forbearance, all the policies share the same goal of putting more money into consumer or business pockets so our weakened economy can regain its strength. Why is Citrus Heights doing the exact opposite with its proposed tax increase, Measure M?
The short answer is the city is facing a two-year budget problem. The good news is, despite today’s fiscal challenges, in two years, the city will begin to receive six million a year in additional, annual property tax revenues that currently go to the county. That money, if used wisely, should put Citrus Heights back on solid fiscal ground.
In the meantime, Measure M is not a wise solution and it is definitely not a two-year solution. It is an endless money grab, a tax with no sunset. This additional sales tax burden will fall on businesses and consumers indefinitely and will permanently diminish the city’s competitiveness.
M would double the city’s share of sales tax from one to two percent, with the intent of raising $12 million annually. That’s a lot of money out of the pockets of residents and local business. And, with the city budget currently at $34 million, that would be a massive 35-percent increase!
It’s no secret that California businesses, crushed by high taxes and costly regulations, are leaving the state as fast as they can relocate, fleeing to lower-tax, lower-cost-of-living, and more simply regulated states. That’s a government failure that’s driving out entrepreneurs and weakening our state.
The same phenomenon can happen among cities. With Measure M, Citrus Heights would saddle its businesses with higher taxes than Roseville or Folsom, for example, making it more difficult for the city’s merchants to keep customers at home, and making it more likely that business owners would relocate or expand in those competing areas, instead of Citrus Heights. Measure M would also fly directly counter to Sunrise Mall revitalization efforts, which are important to the city’s economic vitality.
To climb out of the COVID crater, Citrus Heights should be lowering taxes. They should be taking every step to make the city more attractive to businesses and more affordable to consumers. A healthy city budget starts with a powerful private-sector economy.
Even a healthy economy is not enough on its own, though. No amount of tax revenues will balance a municipal budget without spending discipline. Citrus Heights, a city of about 89,000 residents, has an estimated 10 or more public employees with annual compensations packages above $200,000, including one employee whose pay and benefits add up to more than $400,000 per year (see source).
That is a troubling sign for a city in economic distress. Lavish public employee salaries are an immediate budget problem but they portend higher pension spending for decades to come.
Despite the claims of Measure M proponents that the additional revenue will go to core city services, the truth is the money goes directly to the city’s general fund and could be spent on salary increases or the inevitable increases in pension payments that will flow from today’s inflated salaries. And, whatever promises local politicians make now, with no written guarantees in the measure, those promises won’t be enforced by their successors…one or two years from now, much less 20 years down the road.
The city needs to realize that its residents are already overtaxed. Californians already pay the highest gasoline taxes, highest state sales tax, highest personal income tax, and some of the highest property taxes in the nation, despite Prop. 13. Measure M is an unneeded pile-on, putting pressure on businesses and pushing consumers to neighboring cities.
And, with a sales tax being the most regressive of all taxes, hurting the poor and disadvantaged disproportionately, the NAACP and others strongly oppose Measure M. More than 12-percent of Citrus Heights residents live below the poverty level, and that was before the pandemic drove up unemployment and reduced worker hours.
Don’t sacrifice the city’s long-term future for a short-term problem. Don’t sacrifice your fellow residents. Don’t sacrifice your local businesses. Vote NO on Measure M.
Ted Gaines was elected to represent the Board of Equalization’s First District, made up of nearly ten million constituents in 30 counties of northern, eastern, and southern California. For more, visit www.boe.ca.gov/Gaines.
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