San Francisco Chronicle - NO
CHRONICLE RECOMMENDS No on Alameda County Measure W and Contra Costa County Measure X
A crush of poorly timed tax hikes
Beyond California’s daunting dozen statewide propositions, the state’s voters will consider a host of local ballot measures next month. Many of them — 180 by one count — would impose, raise or extend city and county taxes. The impressive tally in the Bay Area includes 1 cardroom tax (in San Jose), 1 ridehailing tax (in Berkeley), 3 business receipts taxes (two of them in San Francisco), 5 real estate transfer taxes, 5 cannabis taxes, 6 utility taxes, 7 hotel taxes, 16 parcel taxes and 18 sales taxes.
Two far-reaching but thinly justified local measures would raise sales taxes by half a percentage point across Alameda and Contra Costa counties, raising tens of millions of dollars annually for their governments. While officials have portrayed the tax increases as funding homelessness services, coronavirus response and other urgent needs, the reality is that the revenue would go to each county’s general fund to be spent at the discretion of the local officials who proposed them.
The parallels between the proposals, Alameda County Measure W and Contra Costa County Measure X, don’t end there. In both counties, the sales tax increases are the second proposed to voters this year. The March primary ballots also featured 0.5% sales tax increases for specified uses in each county — child care and pediatric medicine in Alameda, transportation in Contra Costa — that fell short of the two-thirds support typically required for special-purpose taxes. The general taxes on the ballot in November require the support of only a simple majority, a hurdle the primary measures cleared.
Legal disputes have further blurred the local tax picture. A state appellate court ruling on a lawsuit led by San Francisco officials found the two-thirds requirement for special taxes should apply only to ballot measures placed by local governments, not those qualified by private parties. That could clear Alameda County to collect the sales tax hike proposed in March even as voters consider another.
State and local sales taxes in Alameda County amount to at least 9.25% and as much as 9.75% in cities that have approved additional levies, so one or both of this year’s measures could put the rate over 10% in all or part of the county. In Contra Costa County, where sales taxes range from 8.25% to 9.25%, three cities — Orinda, Concord and San Pablo — are proposing their own 0.5% increases on top of the county measure in November.
The pandemic and the associated downturn provide the most compelling argument for local tax increases. The contagion has increased the demand for services while undermining the revenues needed to provide them, and the federal government has provided relatively little aid to states and cities so far. But the proposed duration of the tax increases doesn’t support the notion that they are emergency measures: Alameda County’s tax hike would last 10 years and Contra Costa’s 20.
Sales tax hikes are ill-suited to the crisis in other ways, relying on revenues that are currently depressed and unpredictable while disincentivizing consumer spending when it’s sorely needed. And because sales taxes are regressive by nature, the increases would disproportionately burden those least able to afford them.
The crush of local tax measures on this and other California ballots partly reflects the draconian and convoluted strictures imposed by Proposition 13 in 1978 and the 1996 follow-up Prop. 218, which limited property taxes and established the two-thirds threshold for tax increases. This year’s statewide Prop. 15 would begin to address those excesses by lifting Prop. 13 restrictions for large commercial properties.
Especially in light of that and other unsettled questions, including the ultimate fate of measures only recently put to voters, the counties’ proposed tax hikes are ill-timed and poorly targeted. Voters should hesitate to support longterm, regressive tax hikes at a time of great but temporary turmoil.