Grass Valley temp tax hike $$ spent as promised, but no exit planned
In the year since Grass Valley voters approved a 10-year sales tax increase to fix roads, hire police and firefighters and update their equipment, the city reports it has spent $415,000 as promised.
While new police officers are driving new vehicles and the fire department is poised to get a new engine for the first time in more than a decade, the city has not yet taken any steps toward absorbing these added costs into its general fund, once the sales take hike ceases.
“That’s the question,” said interim City Manager Jeff Foltz. “It still need to be resolved.”
A more than two-thirds majority of voters approved Measure N, a half-percent sales tax initiative that raised the sales tax rate to 8.125 percent in the city, in the November 2012 election. The tax took effect in April with the first revenues hitting the city in June.
The city expects the tax will bring in between $2.2 million and $2.5 million annually until the measure expires after 10 years.
“Hopefully, over the 10 years, it will generate $25 million in revenue and a big portion will go toward salaries,” Foltz said.
During the economic downturn, Grass Valley’s estimated nearly $10.1 million general fund dropped $1.5 million lower than its fiscal year 2007-08 peak at nearly $11.56 million.
Some of Measure N’s selling points were the establishment of a citizen oversight committee to monitor and advise the city council on tax revenue expenditures, as well as a clause that the tax could be halted if the city’s general fund revenues returned to their 2008 levels.
“They anticipated they could make up the $2.5 million in revenue per year. But that is a challenge,” Foltz said. “If they can’t, then there has to be a community decision about whether to continue with the tax.”
Prior to voters passing Measure N, the city instituted furloughs, laid off employees and left positions vacant. Without the measure, police warned that lesser crimes would not receive priority responses and other law enforcement services would be cut.
So far, the police have hired three officers and are looking for two more, purchased three vehicles to replace aged cruisers and acquired various equipment, including Tasers, according to Foltz and Police Chief John Foster.
“Even with Measure N, while it’s certainly helping, it still is not enough to meet our needs,” said Foster, whose department still has a handful of vacant positions.
Four firefighters have also been hired with Measure N funds and one has been funded for promotion, Foltz said.
But the city ran into a Measure N cash-flow problem this fall, around the same time former City Administrator Dan Holler resigned following a negative employment evaluation by the city council.
With the timing of state’s tax allocations to the city and uncertainties about how much would be allocated and at what time, the city froze all discretionary spending for 60 days until funds were in the bank.
“Fortunately or unfortunately, when the (tax) measure was passed in April, we started spending money before it was in the bank,” Foltz told the council in September.
Funds eventually came in early October and the freeze was lifted, but some planned expenditures have been delayed, such as any public works projects and the fire department’s first fire engine purchase using the Measure N funds.
“This will be the first of three (engine) purchases of that 10-year span,” said interim Fire Chief Mark Buttron at Tuesday’s council meeting, where he was approved to pursue a $454,000 fire engine purchase.
The fire engine’s payment is not due until its arrival, expected in late August or early September of 2014, Buttron said, citing a long design and build time.
“It was clearly a blessing that (residents) had it passed. We never could have got this equipment and hired these people without it,” Foltz said. “The corollary is: What do we do once it expires?”
If the city does not take steps to absorb Measure N costs — namely salaries — into its regular budget by the tax’s expiration date, officials will either have to cut costs or ask voters to re-approve or extend the half-cent tax.
“When we talk about long-term sustainability, at some point if we don’t phase this thing out, we’re going to have go back to the voters to extend this thing,” said Chauncey Poston, a member of the Measure N citizen oversight committee.
“It can’t be how we fund the city from now on,” Poston said. “At some point (voters) are going to say no.”
To contact Staff Writer Christopher Rosacker, email firstname.lastname@example.org or call 530-477-4236.
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