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Bass Pro, Costco helping soften city budget cuts

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POSTED December 23, 2008 11:55 p.m.

The couple from San Jose standing in the Bass Pro Shop check out line Sunday with $625 of camping and fishing gear were also getting ready to contribute $2.81 to help run Manteca’s general fund services and another  $3.15 to help pay for additional Manteca police officers and firefighters.

Bass Pro Shops and Costco — along with other new retail — are expected to soften the blow to Manteca’s sales tax revenues being hit by the triple whammy of the soft economy, Meryvn’s closing, and auto sales dropping off dramatically.

The two major retailers are expected to pump $600,000 into the city’s general fund as Manteca’s share of sales tax collected during a nine-month period ending June 30, 2009.

Bass Pro represents new sales tax receipts as the money being spent there wasn’t being netted by Manteca retailers prior to its opening. Costco is snagging a large chunk of Manteca consumer dollars — estimated at $60 million annually — that was going to the wholesale warehouse’s Tracy and Modesto stores plus new dollars from nearby communities. A large portion of that, though, is spent on non-taxable food items. Costco may have an impact on taxable sales at existing Manteca stores but in the overall scheme it is expected to be miniscule.

Even with the extra $600,000 that was not projected as part of this fiscal year’s sales tax receipts, Manteca city leaders still expect to fall short of the $6.6 million anticipated budget for sales tax revenue for the current fiscal year.

“They (Bass Pro and Costco) are a reason why we’re not being hit a as hard for the current fiscal year as many other cities nearby are getting hit,” noted Assistant City Manager Karen McLaughlin.

The sales tax deal made with Poag & McEwen to land the Promenade Shops at Orchard Valley lifestyle mall anchored by Bass Pro Shops has the city returning 55 percent of the sales tax generated by the mall — with pre-established caps — in any given year for 35 years. That excludes, however, Measure K transit half-cent sales tax as well as the half-cent public safety tax that Manteca will retain 100 percent of all receipts.

Measure M sales tax receipts are also lagging behind in projections.

Manteca is also benefiting from a big contract with the Los Angeles Unified School District landed by American Modular Homes on Spreckels Avenue. The builder of prefabricated classrooms was Manteca’s largest single source of sales tax last fiscal year. The contract means they won’t be experiencing a major slow down in production.

McLaughlin said the city might avoid any current fiscal year need to cutback staffing although any position that becomes vacant through someone leaving or retiring is being examined carefully to determine if they are absolutely essential to fill. If not, they are being left vacant. The city is also tightening up on all expenditures. As things stand now, they will need to cut $8 million from the spending plan for the 2009-10 fiscal year. Without the sales tax receipts that Bass Pro Shops and Costco are helping replace, the city over the course of a fiscal year would be forced to find ways to cut upwards of 12 to 15 employees assuming an average cost of $60,000 per worker for salary and benefits.

Sales at both stores aren’t both as strong as predicted due to the recession. JC Penney is expected to take up the slack created by Meryvn’s closing.

Regardless, Manteca needs to weather the drop off in sales tax — it’s single biggest source of revenue for the general fund — until the economy picks up again.

Manteca is looking at non-paid furloughs for city workers next fiscal year in a bid to try and avoid layoffs.

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