New taxes up for consideration at the Oakland City Council meeting (PDF) tomorrow include a marijuana tax (PDF) (covered thoroughly by Becks), a new parcel tax for park maintenance (PDF) (which I wrote about here), and, finally, a temporary sales tax hike (PDF).
Unlike the park parcel tax, the sales tax (proposed by District 4 Councilmember Jean Quan) is not earmarked for any specific purpose – it’s just money for the General Fund. This means that, unlike most local taxes, it will only require a yes vote of 50% to pass. This low threshold for passage makes it particularly appealing to lawmakers desperate for cash, and particularly vexing for citizens who are tired of feeding the City’s endless appetite for more and more of residents’ money. Half of people will vote for pretty much anything. (Perhaps you are wondering, if this is so easy to pass, why haven’t they done it already? It’s because they couldn’t. Until 2004, cities had to go to the State legislature (PDF) to get their own sales tax, now they can just put it on the ballot.)
The sales tax in Oakland is currently 9.75%. That includes the State-set rate of 8.25% (click here to see how that breaks down), .5% for Alameda County health services, .5% for ACTIA (county transportation stuff), and .5% for BART. The Council has a choice tomorrow night of placing on the ballot either a .25% increase or a .5% increase. The .25% increase would generate roughly $8 million annually for the City, and the .5% increase would generate around $16 million (about half a million of which would be given away to OO-funded programs under the Council’s “compromise”). There are currently two cities in the entire State of California that have a sales tax rate greater than 9.75%, so if we do end up passing the hike, we will be joining Pico Rivera and South Gate in a very exclusive little club.
Let’s see, what else? Oh, so technically this isn’t a sales tax, it’s a “transaction and use tax (TUT)” which is mostly the same in practice, although different theoretically – sales tax is a tax on the retailer selling you something, but a TUT is a tax on you for buying anything, and you’re supposed to pay your local TUT no matter where in the State you are. For practical reasons, the State mostly lets retailers just apply their local TUT to all their sales (it wouldn’t be realistic to expect the clerk at Amoeba to check my address and add an extra .5% tax to my purchase cause I live in Oakland). But there are exceptions. First, it you get something shipped to you, you are supposed to pay your local TUT no matter where you bought it. Second, if you are buying a car, you have to pay the TUT for the city the car is registered in, not the city you purchased it in. Half a percent of the cost of something pricey like a car is kind of a lot of money, and if this tax passes, you will not be able to escape that cost by running off to Vacaville or whatever for your purchase.
Allegedly, this tax (PDF) would last only for three years, to which I say: what-ever. There is no such thing as a temporary tax in Oakland, and if you support this because you think it will actually be just for a few years, you’re a fool. The pressures on the City’s budget are not going to be any less three years from now, folks. The economy will hopefully have recovered by then, but the City is going to have to start paying for Measure Y officers out of the General Fund, since Measure Y will run out of money, and we’re going to have to start contributing to PFRS to the tune of tens of millions of dollars per year. If this passes, in three years, it will be right back on the ballot, with the exact same threats of library and park closures if we don’t extend it. So keep that it mind.