On June 7, Richmond residents will go to the polls to vote on Measures C and D, both tax-related measures that are meant to make up for shortfalls in the budget stemming from Governor Jerry Brown’s proposed budget cuts. But opponents say the measures are a bad idea, and could potentially expose the city to costly lawsuits.
Measure D, which the city council voted to put on the ballot, would raise sales tax in Richmond by half a percent. The funding is intended to be used for city services to make up for the drop in state funds the city expects once the state budget is passed. The measure is needed, proponents argue, because the state is in a budget crisis, and this is the only way to avoid cutting back funding for schools and city services. The measure is expected to generate roughly $2.2 million dollars a year.
Bill Lindsay, Richmond’s city manager, said that the budget relies on that $2.2 million. “If Measure D doesn’t pass, we’d have to make a second round of cuts to cut out that $2 million,” he said.
That means cutting into services that are already operating on skeleton budgets, Lindsay said. “We’ve already cut the fire department to minimum staffing levels. The library is at minimum staffing levels. The recreation department is at bare minimum, they’re only able to just keep community centers open,” he said. “It will have noticeable effect on services and programs that residents rely on.”
In March, City Council discussed putting the measures up for public vote. The council expressed their ambivalence about asking Richmond residents to make up the money the state was cutting. At the meeting, public speakers were pointed, but split. Opponents said the measure would choke businesses with one of the highest sales taxes in the state and add an extra burden to already strained pocket books. Proponents said sacrifice was necessary to keep schools and vital city services running. Speakers also balked at the $200,000 cost of putting on the special election. In the end, the five councilmembers on hand voted unanimously to put the measures on the ballot.
Measure C is an advisory measure that accompanies Measure D. If both measures pass, Measure C would recommend that the city council use half of the resulting revenue to fund schools, and the other half for other city services.
Roxanne Brown-Garcia, principal of Kennedy High School, said that students and staff at the high school and throughout the district are getting organized by manning phone banks until the election to urge people to support both measures. “For Kennedy, it’s seriously important,” she said. “Only last year they were considering closing us down, so for Kennedy we need every pocket of cash to keep us going.”
The school would not be at risk of closing without the tax measure, but administrators would likely have to cut the school’s resource officers, she said. School resource officers are police officers who work within to schools in an effort to prevent crimes, and act as a central hub for community organizations, school administrators and the police department. “They do a lot of interventions,” she said. “They prevent a lot of things from happening because they’re really connected to the kids and they make sure we know what’s going on in the community, with gangs and other issues.”
But Kris Hunt of the Contra Costa Taxpayers Association says the ballot measures are a bad idea. She calls the tax increase a permanent solution to a temporary problem. And she says that sales taxes disproportionately impact the poor because sales tax is not correlated to income, like other kinds of taxes are. “It does harm to the very people they’re hoping to help,” she said. “It’s a terrible time to raise taxes.”
Whether the sales tax increase would actually raise the total amount of sales tax Richmond residents will pay remains to be seen, though. Sales tax in Richmond is currently at 9.75 percent, and while Measure D would add a half-percent to the city’s sales tax, state sales tax is anticipated to drop by one percent when a temporary tax, passed as part of the budget agreement in 2008, expires. Unless state legislators approve an extension of that temporary state sales tax, the at-the-counter sales tax paid by Richmond residents will actually be lower, even if Measure D passes.
A test case for tax opponents
There’s another problem with the ballot measures, Hunt says: Measure C, if passed along with Measure D, would represent a violation of the state Constitution. The state requires that if ballot-based tax measures are designated for specific uses, they require a two-thirds vote for approval. By separating out Measures C and D, Hunt says, the city is flouting that law, allowing two separate measures — the tax increase and the measure designating splitting the funds between schools and other city programs — to both be approved by a simple majority.
“This seems like an evasion of the law,” said Hunt. She said she has spoken with lawyers from the Howard Jarvis Taxpayers Association, an anti-tax group, and says they are ready to sue the city if both measures passes.
City Manager Bill Lindsay says he is not concerned. “We would not have put the measures on the ballot if we thought they were illegal,” he said. He said it is actually advantageous to the city to separate the tax from the advisory measure directing its use. Because Measure C is a recommendation, the city council is able to make sure the funds are only used for Richmond’s schools. “The fact that it is an advisory measure is actually an important part of the accountability that is built in,” he said. “If there was a requirement that the funds go to the school district then we wouldn’t have that oversight ability.”
Tim Bittle, an attorney with the Howard Jarvis Taxpayers Association, said the group is watching to see what happens. He said Proposition 218, which passed in 1996, redefined special taxes to also include a configuration that separates a tax from a measure to direct its use. He calls it an “A-B scheme,” and said that his organization has not yet challenged one of these configurations because in all but one case, voters have not approved one or both of the measures.
Last fall, Santa Monica passed a similar pair of measures—one to raise $12 million through a sales tax hike and another that directed half of that revenue to schools. Lindsay points to these as precedent for Measures C and D. “I don’t know why the Jarvis group would decide that when Richmond does something identical to Santa Monica that they would sue Richmond when they didn’t sue Santa Monica,” he said.
“I think they feel they missed that one,” Hunt said referring to the taxpayers’ association. “It’s a big state so they can’t get them all, but they are watching this one.”
Bittle said that the Jarvis group did not know about the measure until it was too late to challenge it in court. The organization is keen to challenge the validity of so-called “A-B schemes” because it would be set the precedent for similar configurations of tax measures, Bittle said. But he said he’s hesitant to do so in Richmond because it is in California’s First District Court of Appeals, which he called “unfriendly” to tax payers and less likely to side with them.