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San Jose Mercury News
Santa Clara County tries again for a sales tax
By John Woolfolk
October 7, 2012

This article is also available at the Web site of the San Jose Mercury News, here.

Santa Clara County officials last asked for a general sales tax increase in June 2006, going large with a half-cent, 30-year tax measure and getting spanked with 57-percent voter rejection.

On Nov. 6, county officials will try again, this time with a more modest request in a sputtering economy. Measure A would impose a one-eighth-cent general sales tax that would raise up to $50 million annually over 10 years for various county programs including the public hospital, law enforcement and road improvements.

"An eighth of a penny isn't too much to ask," said Chris Wilder, executive director of the VMC Foundation, a nonprofit that raises about $10 million annually to support Santa Clara Valley Medical Center and other health programs. "The county has done a pretty good job of cutting and combining services and using technology to be more efficient. At a certain point if we want to maintain health and safety in the county, we have to pay for it."

Measure A critics include the Silicon Valley Taxpayers Association and San Jose Silicon Valley Chamber of Commerce who argue the extra taxes will just be gobbled up by rising costs for generous government pensions and the increase will make the county a high-cost place to shop and do business.

"The county has not worked to reduce their own expenses as diligently as they should have," said John Roeder, president of the Silicon Valley Taxpayers' Association. "They need to do that instead of just asking taxpayers for more money."

Because the measure calls for a general tax not targeted for a specific program, Measure A needs only majority voter approval to pass. But it comes at a time when government officials everywhere are holding out their hands for more money.

Most prominent among them is Gov. Jerry Brown, whose Proposition 30 would raise the sales tax a quarter of a cent statewide for four years and income taxes on high earners for seven years. Locally, the Santa Clara Valley Water District is asking county voters to renew an expiring $52 annual parcel tax and several San Jose school districts have bond measures on the ballot.

Larry Gerston, a San Jose State University political science professor, said tax measures tend to defeat themselves in lean times.

"Voters these days are skittish about raising taxes," Gerston said.

Santa Clara County voters have however blessed taxes for popular programs in recent years, even those requiring two-thirds voter approval, including two in November 2008: An eighth-cent sales tax for extending Bay Area Rapid Transit into the county, which kicked in July 1, despite criticism that a half-cent sales tax approved in 2000 was supposed to pay for that; and an $840 million bond measure to fund state-mandated earthquake safety remodeling at VMC.

If voters approve Measure A, the county's sales tax would rise from 8.375 percent to 8.5 percent, matching the current rate in San Francisco, which is among the highest in California. The rate in Alameda and Los Angeles counties is 8.75 percent. San Mateo County's sales tax rate would jump from 8.25 to 8.75 percent if voters there approve a half-cent sales tax also on the November ballot.

If Proposition 30 passes along with Measure A, the county rate would be 8.75 percent, and other cities and counties would see a corresponding quarter-cent increase.

The cost of the additional eighth-cent sales tax on individual households is hard to gauge, as it depends on their spending. County officials say Measure A would raise $498.6 million over 10 years, an average of $49.9 million annually or about $82 a year for each of Santa Clara County's 604,204 households. But because much of the tax would be paid by shoppers visiting the county from elsewhere, the burden on each household might be half that, say $41 a year.

Santa Clara County, with a $4.2 billion annual budget, provides a variety of services, the largest being the $1.1 billion Valley Medical Center hospital. Others include the sheriff's department, jail, coroner and district attorney, public health programs, welfare programs, property tax assessments, voter registration, births and marriages.

County general fund revenues overall have grown over the last decade, from $1.7 billion in 2002 to $2 billion this year. Property taxes, the largest source of revenue beyond state and federal funding, dipped from $645 million in 2009 to $611 million last year but are rebounding to an anticipated $640 million in the current budget. The county's sales tax revenue slipped to $3.6 million this year from $3.8 million in 2007 but remains above the $3.5 million from a decade ago.

County officials acknowledge their employee retirement costs are soaring. They expect their retirement bill to grow by $12 million in 2014, $24 million the year after and $36 million in 2016. The county has promised some $3 billion more in retirement perks than its plan has cash to cover, a debt of almost $5,000 per county household.

But county officials blame factors beyond their control for their financial pinch. The housing market crash and weak economy have dragged down property and sales tax revenues. And they say San Jose can't make good on an agreement to pay the county $20 million a year in redevelopment tax revenue because of its debt owed to bondholders.

County officials also say they've trimmed $2 billion in costs over 10 years of budget deficits by eliminating jobs as employees leave or retire, using technology to become more efficient, drawing down reserves and negotiating $75 million worth of pay and benefit concessions from their employees. Spending, they said, has grown less than 1 percent a year over the last four years.

Contact John Woolfolk at 408-975-9346. Follow him on Twitter at Twitter.com/johnwoolfolk1.

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