News

Santa Clara County supervisors propose sales tax to fill $250M deficit

Critics say added charge would further challenge workers already facing financial hardship

Santa Clara County Board of Supervisors President Cindy Chavez is proposing a sales tax measure to stave off big budget cuts. Photo by Magali Gauthier.

Santa Clara County's board of supervisors are looking into a sales tax measure to patch up a massive hole in the county's budget during the coronavirus pandemic, but it may not have enough support to even make it on the ballot.

County supervisors voted 3-2 Tuesday to consider next month a five-eighths percent (0.625%) sales tax for the November ballot. If passed, it would raise an estimated $250 million each year for the next five years, which proponents say will help the county respond to the COVID-19 public health crisis and stave off cuts to other vital services.

In a pitch for the tax measure, Supervisor Cindy Chavez said that the money will be invaluable for supporting low-income and minority communities that have been disproportionately impacted by the virus, particularly in East San Jose and the South County area. She acknowledged that a sales tax is not a perfect tool — it is regressive and burdens lower-income families — but said it would be a short, temporary source of money that doesn't depend on the shaky prospect of state or federal relief.

"This is such a historic crisis," Chavez said. "I am very concerned that without local response — without us taking our future into our own hands — that relying on the state or federal government to come and save us is just not a real thing."

But Supervisor Susan Ellenberg, who voted to at least consider the idea, said she had deep reservations about supporting a tax that burdens families dealing with unemployment, looming rent payments and food insecurity. And because it's a general use tax, there's no legal way to guarantee voters that the money will be spent specifically on COVID-19 relief efforts.

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"The impact of a sales tax will be felt most acutely by those small businesses and struggling families and individuals that have been hit hardest by the pandemic. We are literally asking those who can least afford to do so to help us bail them out," she said.

The other wrinkle in the debate is that the county has only a tentative idea of what the current and future budgets under COVID-19 will be. Like most public agencies throughout the Bay Area, Santa Clara County is projecting a deficit, but the exact details are still hazy — the 2020-21 budget is still in flux, and county officials have only loosely referenced a $300 million budget hole.

It's unclear what the final size of the deficit will be, what programs are on the chopping block and what expenditures will be reimbursed by federal or state aid, making it hard for supervisors to weigh in on the tax measure.

"I just don't know how much we need," Ellenberg said.

Supervisor Joe Simitian said he was unwilling to back the sales tax, and said that it's difficult for him to come to voters asking for more money when the county's budget has grown so much in recent years, buoyed by a lengthy period of economic expansion in Silicon Valley. From the 2012-13 fiscal year to 2018-19, Simitian said the budget has grown by 84.3%, vastly outpacing population growth and inflation.

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Not having the tax measure will likely trigger difficult budget cuts in the future, he said, but the alternative is putting the burden on low-income residents.

"This doesn't mitigate income inequality, it actually exacerbates it by taking more money out of the pockets of folks who can least afford it," Simitian said.

The 3-2 vote, with supervisors Simitian and Mike Wasserman opposed, means county staff will craft a framework for the sales tax measure for a final vote in the coming weeks. But it could very likely be dead on arrival, as a four-fifths vote of the board is required to put a general tax on the ballot.

Ellenberg said her support is contingent on whether the tax measure could be contracted to just two or three years, rather than five, and a better road map for how the money will be spent.

Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.

Kevin Forestieri writes for the Mountain View Voice, the sister publication of PaloAltoOnline.com.

Follow Palo Alto Online and the Palo Alto Weekly on Twitter @paloaltoweekly, Facebook and on Instagram @paloaltoonline for breaking news, local events, photos, videos and more.

Santa Clara County supervisors propose sales tax to fill $250M deficit

Critics say added charge would further challenge workers already facing financial hardship

by / Mountain View Voice

Uploaded: Fri, Jul 24, 2020, 8:38 am

Santa Clara County's board of supervisors are looking into a sales tax measure to patch up a massive hole in the county's budget during the coronavirus pandemic, but it may not have enough support to even make it on the ballot.

County supervisors voted 3-2 Tuesday to consider next month a five-eighths percent (0.625%) sales tax for the November ballot. If passed, it would raise an estimated $250 million each year for the next five years, which proponents say will help the county respond to the COVID-19 public health crisis and stave off cuts to other vital services.

In a pitch for the tax measure, Supervisor Cindy Chavez said that the money will be invaluable for supporting low-income and minority communities that have been disproportionately impacted by the virus, particularly in East San Jose and the South County area. She acknowledged that a sales tax is not a perfect tool — it is regressive and burdens lower-income families — but said it would be a short, temporary source of money that doesn't depend on the shaky prospect of state or federal relief.

"This is such a historic crisis," Chavez said. "I am very concerned that without local response — without us taking our future into our own hands — that relying on the state or federal government to come and save us is just not a real thing."

But Supervisor Susan Ellenberg, who voted to at least consider the idea, said she had deep reservations about supporting a tax that burdens families dealing with unemployment, looming rent payments and food insecurity. And because it's a general use tax, there's no legal way to guarantee voters that the money will be spent specifically on COVID-19 relief efforts.

"The impact of a sales tax will be felt most acutely by those small businesses and struggling families and individuals that have been hit hardest by the pandemic. We are literally asking those who can least afford to do so to help us bail them out," she said.

The other wrinkle in the debate is that the county has only a tentative idea of what the current and future budgets under COVID-19 will be. Like most public agencies throughout the Bay Area, Santa Clara County is projecting a deficit, but the exact details are still hazy — the 2020-21 budget is still in flux, and county officials have only loosely referenced a $300 million budget hole.

It's unclear what the final size of the deficit will be, what programs are on the chopping block and what expenditures will be reimbursed by federal or state aid, making it hard for supervisors to weigh in on the tax measure.

"I just don't know how much we need," Ellenberg said.

Supervisor Joe Simitian said he was unwilling to back the sales tax, and said that it's difficult for him to come to voters asking for more money when the county's budget has grown so much in recent years, buoyed by a lengthy period of economic expansion in Silicon Valley. From the 2012-13 fiscal year to 2018-19, Simitian said the budget has grown by 84.3%, vastly outpacing population growth and inflation.

Not having the tax measure will likely trigger difficult budget cuts in the future, he said, but the alternative is putting the burden on low-income residents.

"This doesn't mitigate income inequality, it actually exacerbates it by taking more money out of the pockets of folks who can least afford it," Simitian said.

The 3-2 vote, with supervisors Simitian and Mike Wasserman opposed, means county staff will craft a framework for the sales tax measure for a final vote in the coming weeks. But it could very likely be dead on arrival, as a four-fifths vote of the board is required to put a general tax on the ballot.

Ellenberg said her support is contingent on whether the tax measure could be contracted to just two or three years, rather than five, and a better road map for how the money will be spent.

Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.

Kevin Forestieri writes for the Mountain View Voice, the sister publication of PaloAltoOnline.com.

Comments

Mark Weiss
Downtown North
on Jul 24, 2020 at 8:44 am
Mark Weiss, Downtown North
on Jul 24, 2020 at 8:44 am
1 person likes this

Or, split roll.


Dan
Midtown
on Jul 24, 2020 at 8:52 am
Dan, Midtown
on Jul 24, 2020 at 8:52 am
30 people like this

Voting no on tax increases of any kind. How much is enough? Every time an "emergency" tax increase has been passed , it NEVER gets sunset.


Anon
Another Palo Alto neighborhood
on Jul 24, 2020 at 9:01 am
Anon, Another Palo Alto neighborhood
on Jul 24, 2020 at 9:01 am
32 people like this

A *brilliant* idea. Not. Let's add another regressive tax to the tax burden of people of below-average means?

NO. Let's not do that.

If the county government needs more money, let's tax people who have all the money.


TaxMan
Palo Alto Orchards
on Jul 24, 2020 at 10:23 am
TaxMan, Palo Alto Orchards
on Jul 24, 2020 at 10:23 am
27 people like this

While the Santa Clara County is at it, why don't you just pass a gross receipts tax (1%) on gross sales of Tesla, Intel, Apple and the other tech firms. Any firm with less than $10 million gross is exempted. The businesses can pay it. And companies and their shareholders feel it's unfair, the door is over there.

And what would happen? They leave Santa Clara County (maybe to Stockton, Imperial Valley, or Sacramento with the jobs. . ) then congestion on the freeway and housing issues disappear. Housing prices stablizes.
Viola! Problem fixed.

HAHAHAH. .. maybe common sense could prevail!


rsmithjr
Duveneck/St. Francis
on Jul 24, 2020 at 10:24 am
rsmithjr, Duveneck/St. Francis
on Jul 24, 2020 at 10:24 am
27 people like this

Huge tax revenues of recent years just brought us huge increases in the budget.


Pacsailor
Another Palo Alto neighborhood
on Jul 24, 2020 at 11:01 am
Pacsailor, Another Palo Alto neighborhood
on Jul 24, 2020 at 11:01 am
20 people like this

These guys must be out of their minds, why would anyone with common sense add a tax during these uncertain times, when there is high unemployment and lots of businesses that are closed.


chris
University South
on Jul 24, 2020 at 11:06 am
chris, University South
on Jul 24, 2020 at 11:06 am
6 people like this

Why not take advantage of the federal bailout? What county is proposing a tax increase of that magnitude at this time? This is a federal problem.


Resident
Another Palo Alto neighborhood
on Jul 24, 2020 at 11:31 am
Resident, Another Palo Alto neighborhood
on Jul 24, 2020 at 11:31 am
21 people like this

Exactly the same as the City of Palo Alto. Too many administrators and not enough common sense.

We can't pay more City taxes, we can't pay more County taxes when they are running amuck with our money. So many people out of work. So many people depending on food banks to get food. So many people who are struggling to run a business or working on reduced hours. There is no way that the economy can return to normal this way and increased taxes will only hurt those who are already struggling.

Instead get rid of some of the administrators and get the economy going so that people can earn money and spend money. Start acting like a household and get rid of the fluff.


Anon
Evergreen Park
on Jul 24, 2020 at 5:15 pm
Anon, Evergreen Park
on Jul 24, 2020 at 5:15 pm
19 people like this

BART just passed an across-board 2.75% salary INCREASE last week, while ridership is down 88%. Can you believe that?

Greedy governments and agencies are much, much worse than greedy corporations.


Jack
Midtown
on Jul 24, 2020 at 7:28 pm
Jack, Midtown
on Jul 24, 2020 at 7:28 pm
15 people like this

Sales taxes are highly regressive. It hurts the people who are hurting the most from this lockdown.


musical
Palo Verde
on Jul 24, 2020 at 11:51 pm
musical, Palo Verde
on Jul 24, 2020 at 11:51 pm
4 people like this

Just don't close my precious sales-tax loophole, the exemption of groceries.


Juana Q Public
another community
on Jul 28, 2020 at 1:04 pm
Juana Q Public, another community
on Jul 28, 2020 at 1:04 pm
7 people like this

Other news outlets are covering the heavy lobbying by the county-contracted nonprofits to Supervisor Chavez and the Board of Supervisors to get this tax increase on the ballot.

Are these the same nonprofits that are awarded millions of tax dollars in county contracts with informal or non-competitive processes?

Are these the same nonprofits who get paid millions of tax dollars in spite of often not meeting the performance measures set forth in their under-managed contracts?

Before we vote to increase our taxes to keep these nonprofits afloat, a Grand Jury Investigation should answer these questions.


merry
Palo Alto Hills
on Jul 28, 2020 at 1:31 pm
merry, Palo Alto Hills
on Jul 28, 2020 at 1:31 pm
8 people like this

No new taxes! None!


Anon
Another Palo Alto neighborhood
on Jul 28, 2020 at 2:20 pm
Anon, Another Palo Alto neighborhood
on Jul 28, 2020 at 2:20 pm
4 people like this

Posted by merry, a resident of Palo Alto Hills

>> No new taxes! None!

I disagree. If we could figure out how to tax the super-rich monopolists around here, I would vote for it. Sales tax is the opposite-- it disproportionately taxes the poor and lower middle class. No to higher sales tax. Good luck taxing the super-rich. Ever since Reagan, it has gotten ever more difficult.


Helen
Downtown North
on Jul 28, 2020 at 2:43 pm
Helen, Downtown North
on Jul 28, 2020 at 2:43 pm
2 people like this

I’ve been expecting this.


musical
Palo Verde
on Jul 29, 2020 at 12:18 am
musical, Palo Verde
on Jul 29, 2020 at 12:18 am
Like this comment

80% of taxes are paid by 20% of the people. Or is it 90% by 10%? Or 95% by 5%?


Anon
Another Palo Alto neighborhood
on Jul 29, 2020 at 12:42 pm
Anon, Another Palo Alto neighborhood
on Jul 29, 2020 at 12:42 pm
Like this comment

Posted by musical, a resident of Palo Verde

>> 80% of taxes are paid by 20% of the people. Or is it 90% by 10%? Or 95% by 5%?

Two things. First, don't confuse "taxes" with "federal income taxes". There are (misleading) charts like this one with titles like "Half of taxpayers pay 97% of all income taxes: Web Link OR Web Link

There are charts like the one near the top of this page, showing that state and local tax burden is, on average, just the opposite: the fraction of income paid in state and local taxes is highest for the poor and lowest for the rich:

Web Link

It is difficult to add it all up, but, clearly, the tax burden on the rich relative to the poor changed drastically before/after Reagan:

Web Link


Not me
Evergreen Park
on Jul 29, 2020 at 10:34 pm
Not me, Evergreen Park
on Jul 29, 2020 at 10:34 pm
2 people like this

@Anon who says, "I disagree. If we could figure out how to tax the super-rich monopolists around here, I would vote for it."

In other words "as long as you don't tax me I'm all for it."

For those supporting Prop 15, what are the chances that of it passes, the state/county/school districts will lower other taxes or assessments?
My guess is zero.


Anon
Another Palo Alto neighborhood
on Jul 30, 2020 at 12:06 pm
Anon, Another Palo Alto neighborhood
on Jul 30, 2020 at 12:06 pm
Like this comment

Posted by Not me, a resident of Evergreen Park

>> @Anon who says, "I disagree. If we could figure out how to tax the super-rich monopolists around here, I would vote for it."

>> In other words "as long as you don't tax me I'm all for it."

Please read what I wrote again. I didn't say anything whatsoever about my own income or wealth or what taxes I might or might not pay.

The TLDR is, "As long as you don't tax the poor and lower middle class, I'm all for it."

I don't suppose you read any of the links I posted showing the decline in taxes paid by the rich, and, the surprising, to some people, fraction of income the poor pay in taxes?


musical
Palo Verde
on Jul 30, 2020 at 6:11 pm
musical, Palo Verde
on Jul 30, 2020 at 6:11 pm
Like this comment

@Anon, that itep.org link confirms California tops all other states in taxing the rich vs poor.


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