The city of Napa is seeking ways to patch a multimillion-dollar hole ripped in its budget by the coronavirus outbreak and the widespread business shutdowns it has caused. But this year, it will not try to collect more of those funds at the cash register.
On Tuesday, the City Council shelved the idea of placing a half-cent increase in the sales tax on the November ballot. Although a city-sponsored survey indicated just over 54 percent of those responding to a June survey were open to such an increase, council members set aside the proposal, citing economic stress suffered by the newly jobless as shelter-at-home restrictions have frozen or slowed large swaths of the economy.
“This would unfortunately be challenging for our most vulnerable residents, so I agree this simply is the wrong time,” said Councilmember Liz Alessio, predicting an increased sales tax would be unfairly onerous to retirees, the recently unemployed and those who were already poor before the pandemic. “With our income gap and the cost of housing, the percentage of the burden would fall heavier on those residents while far less on the affluent residents.”
Although city officials predicted a higher sales tax could generate an extra $7 million to $8 million per year at a time when Napa is trying to close a projected $20 million revenue loss due to COVID-19, the council heeded the sharp opposition of residents who wrote to the city ahead of the meeting.
With spectators not allowed to attend the council meeting at City Hall due to county social distancing rules, the pushback against a higher sales tax largely took the form of numerous emails urging Napa not to bolster its finances on the backs of its most disadvantaged residents. Several writers also called on Napa to divert much of its police funding to civilian uses, reflecting a common demand of protesters and activists in the weeks since George Floyd died while being detained by Minneapolis police May 25.
“The city should be thinking about its residents that are in most need, and those with the least means to support themselves during this economic and public health crisis,” wrote Joshua Murillo in one email read aloud to council members. “Low-income households are the ones who would be most impacted by an increase in sales taxes, so it is backwards to consider imposing one.”
Alessio declared herself open to a different funding source – a tax on non-residents who own homes in Napa, with the proceeds to be devoted to affordable housing and rent assistance. “Housing was in crisis before COVID, and it still is now,” she said.
The council on June 9 instructed city staff to conduct a survey of likely voters and gauge a sales tax hike’s prospects at this fall’s ballot box. An internet and phone survey of 783 likely November voters in Napa, conducted by Godbe Research of San Mateo on June 22-25, indicated 25.3 percent of participants would “definitely” support a ballot measure while 29.3 percent were “probably” in favor. Twenty-four percent of those polled declared themselves “definitely” opposed to a potential hike, and another 14.4 percent said they “probably” would reject it.
Out of Napa’s current 7.75 percent sales tax, 5.5 percent is collected by California, 0.5 percent is allotted by the state to local public safety agencies, and another 0.25 percent is sent to Napa County for transportation funding. The city of Napa keeps 1 percent, and a further 0.5 percent is set aside for transportation projects across the county under Measure T, with the city receiving about 40 percent of that total.
Napa began studying the prospects of a sales tax increase amid the punishing financial forecast reflected in tentative budget for the 2020-21 fiscal year, which began July 1.
A pre-pandemic spending forecast of $103.3 million from Napa’s general fund was cut to $90.6 million, and the city’s revenue projection was reduced from $104.7 million to $87 million, largely due to the closure of hotels and other businesses during a statewide stay-at-home order that began in March. The budget imposes sharp spending cuts across all city departments and shifts $3.6 million of emergency reserve funds into its general fund, while freezing 31 job vacancies.
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You can reach Howard Yune at 707-256-2214 or email@example.com
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