A proposed “Quality of Life” sales tax or bond measure originally floated by Mayor Don Gage as a mechanism to fund city capital improvement projects has taken a turn to include funding for additional public safety positions and upgrades to emergency communications equipment.
On the heels of a poll showing a majority, or 79 percent of 400 Gilroy residents, either “agree” or “strongly agree” the City needs more money to bolster public safety, Gage says it’s up to the public to decide.
“People felt that they needed more police officers and more firefighters because they wanted better response times,” he said. “I try to get people away from the fact that my original idea was only an idea. But it’s up to the people, and if they’re willing to pay for it, they ought to get what they want.”
The polling was conducted between Sept. 30 and Oct. 9 by Oakland-based consulting firm FM3 Research to gauge residents’ receptiveness to a sales tax or bond measure – and what Gilroyans would pay up for.
When Gage first brought the concept before City Council last May, a tax or bond measure was floated as an overarching solution to address problems that have plagued Gilroy for at least 23 years, Gage said – since he was first elected mayor in 1991. This included fixing the 18 vacant or condemned unreinforced masonry buildings downtown, repairing streets and sidewalks buckled by street tree roots and an expansion of downtown’s Interim Center for the Arts, among others.
Councilwoman Cat Tucker said she’s “still not clear” on how she personally feels, but said the Gilroy Police Department should commit to sending officers where they’re most needed.
“If the voters are willing to pay extra money, we better darn well see some extra police,” she opined.
When the consultants presented the survey results Oct. 21 to Council, Tucker stressed that public safety is already the City’s priority and pointed to the fact that most – 68 percent, or $25.6 million – of Gilroy’s $37.6 million annual General Fund was spent on operating costs for the city’s police and fire departments in fiscal year 2013.
Those costs include salaries and benefits for sworn and non-sworn police and fire employees; contractual services and the allocation of equipment; and fleet and facilities, according to Gilroy Finance Director Christina Turner. Additional overhead, including retirement and contract costs, brings the total operating expenses of police and fire closer to 80 percent of Gilroy’s General Fund, she added.
Mayor Pro Tempore Perry Woodward isn’t pleased with that figure.
“Eighty percent is too high and we need to bring that down,” he said. “That’s why there is no money, in my opinion, for other things. We have these unsatisfied needs because we’re spending too much of the General Fund budget on police and fire.”
Woodward cited sidewalk repairs and assistance for owners of unreinforced masonry buildings – structures deemed unfit to survive a high magnitude earthquake – in the form of a City-owned, revolving account that can help pay for necessary URM repairs.
Gage said the potential ballot measure – whether a half-cent sales tax hike or a general obligation bond – will generate enough additional revenue to allow the City to secure a $60 million bond after passage. That would be paid off incrementally with the additional tax revenue and could cover the cost of tending to each project on the City’s list, including renovating the arts center downtown and creating more sports fields in neighborhood parks – in addition to more police and fire and an upgrade of emergency communications equipment.
City Council will vote in August on the form and on whether to move forward with the measure.
A sales tax measure has a lower threshold – just 50 percent of the votes cast, plus one vote.
But if City Council wants to earmark the new revenue for specific capital improvement projects, rather than funneling the money into the General Fund, it must do so through a general obligation bond which requires a two-thirds majority vote.
In survey results, a sales tax increase has the most support. And if it passes, Gage says residents will have to “trust the City and the City Council” to respect constituent priorities on which items are funded.
Currently, Gilroy’s sales tax rests at 8.75 percent. A half-cent increase to 9.25 percent would make Gilroy’s sales tax the highest in the County and could reign in an extra $5.9 million each year, according to Turner.
On the purchase of a $35,000 car, for example, the current sales tax in Gilroy would be $3,063. With a half-cent increase, the tax would rise to $3,238.
“When you start talking about taxing somebody on $30,000 or $40,000 by an extra half-cent, that’s a good amount of money,” noted Gilroy Toyota Sales Manager Jason Custodio.
Car buyers are taxed on their city of residence and not where they buy the car, Custodio explained, but he said the proposed sales tax measure would “definitely impact sales” at his dealership.
“We would see a spike in sales before the tax rate went up, and then a decrease in sales until people get accustomed to the tax increase,” he added.
Meanwhile, a 30-year general obligation bond could potentially garner $50 million for the City, after property owners pay an average of $167 in parcel taxes, Turner said.
Despite the fact the City already spends a majority of its General Fund on public safety, and acknowledging that 80 percent of local spending supports police and fire, Woodward sides with Gage in that the City will have a hard time paying for a beefed up public safety network as residential development expands.
Within the next 10 years, thousands of homes will fill the Glen Loma Ranch project and Hecker Pass Specific Plan Areas.
“The mayor is right when he says that the residential growth phase we’re about to go through is going to put a strain on our ability to maintain the current level of public safety,” Woodward said.
As it stands now, Gage says there’s not enough money in City coffers to support additional police protection, firefighter positions and pay for various infrastructure projects that have been left by the wayside since the Great Recession.
“There’s no money for firefighters or police. There’s no money to fix sidewalks, curbs and gutters,” he noted.
Oakland-based Lew Edwards Group – a consulting firm currently under a $126,500 contract with the City – is recommending City staff hold public presentations asking for community input on the potential measure “in the coming weeks.”
In an effort to garner more feedback from residents, the firm will also be mailing questionnaires asking for Gilroyans to suggest which areas of the City’s budget could benefit from additional revenue, Lew said. There is no timeline yet for when the questionnaires will be mailed.
According to a list of clients, in 2006 the Lew Edwards Group and FM3 Research helped the City of Manteca – roughly a two-hour drive northeast of Gilroy – pass a half-cent sales tax increase to help fund expanded public safety.
Since the Manteca measure was written to fund specific projects, such as the expansion of gang prevention services, the tax increase required a two-thirds vote to pass. And it did, by 70 percent, voting records show.
But Manteca city officials have the authority to amend the ordinance and potentially shift approximately $4 million in additional funding from public safety to any other area of the city’s budget without voter approval.
Within the full text of the measure is a provision that Manteca’s City Council can “amend or repeal this ordinance and any of its exhibits…without a vote by the people.”
Per California elections code 9217, an increase or an extension in the sales tax rate does require a vote, but if language is included in an ordinance that states City Council can amend or repeal” any section of the ordinance without a vote of the people, local government bodies have the authority to alter what the ordinance actually funds.
The Lew Edwards Group was successful in helping pass six of seven measures across California in 2013 and has helped pass 95 percent of the measures they were paid to research and campaign for, according to Lew.
-$36,500 for Oakland-based consulting firm Lew Edwards Group to assist the City in outreach, feasibility analysis, polling and results;
-$90,000: Additional costs associated with the Lew Edwards Group, including voter follow-up, preparing and sending out informational mailings;
-$54,300: Cost of placing the measure on the ballot.
-$180,000: Estimated total cost to place Quality of Life tax measure on the November 2014 ballot.
Potential revenue from Quality of Life Tax
-A half-cent sales tax increase would generate $5.9 million a year
-A 30-year general obligation bond (assessed at an average $167 annual parcel tax) would generate $50-60 million
Source: The City of Gilroy; Santa Clara County Registrar of Voters
