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Dropping gas prices cutting city revenue
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Gas prices dipping below $2 is good news if you’re a motorist.
It’s not so good news if you want municipal services such as police, fire, and parks.
The drop in gas prices — fuel was $1.10 more expensive per gallon 10 months ago — is putting a crimp in Manteca’s municipal budget.
Costco on March 13, 2015 was selling unleaded for $3.13 a gallon — the lowest in Manteca. On Thursday, it had dropped to $1.99 a gallon. Sinclair on East Yosemite and Circle K on South Main were also selling gas at $1.99.
Mayor Steve DeBrum noted during Thursday’s mid-year budget review that a drop in revenue connected with gas sales may force the delay of some projects. That’s because fuel sales are subject to sales tax — thanks to a large segment of the population that commutes to the Bay Area — that plays a big role in funding municipal services. Every taxable dollar spent in Manteca is taxed 8.5 cents. One cent goes to the city general fund, a half cent to Measure K road projects that include street maintenance in Manteca, and a half a cent goes to pay for the salaries of 15 firefighters and 15 police officers through the voter approved public safety tax.
The drop in gas prices means every time a gallon of gas is pumped in Manteca today as opposed to 10 months ago the city is receiving 55 percent less in sales tax.
And while that may free up more money for discretionary spending, municipal Finance Director Susan Mallory pointed out Internet sales have been taking a larger chunk of the retail dollars spent by consumers.
And even though the gas tax component that is used at the federal, state, and local levels for road projects and transit expenditures doesn’t change as it based on each gallon sold, increased fuel efficiency is cutting into that money as well.
Each time you buy a gallon of gas in California you are paying 58 cents in gas taxes — 39.59 cents to the state and $18.4 cents to the federal government. Based on a $2 per gallon cost you are paying 17 cents in sales tax of which Manteca gets 2 cents for general fund uses, and a penny for public safety while Measure K collects a center and the state gets the balance of 14 cents. That also means every $2 you are now spending on a gallon of gas, 75 cents is being eaten up in taxes.
Sales and property taxes are the top funding sources for the $32 million general fund that covers day-to-day city services except for sewer, water, and garbage collection.
Property taxes are the top revenue source. They were projected to come in at $11.9 million for 2015-2016 or 5 percent over the previous year. Property tax receipts are actually running almost 8 percent above last fiscal year.
Sales tax is next on the list of top revenue sources budgeted at $8.8 million. That was projected a 4 percent higher than the previous year. However, due primarily to dropping gas prices, sales tax receipts are coming in at 2.5 percent above last fiscal year.