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A half a penny thought for the Manteca City Council when looking at new taxes
Penny

Regardless of what you think of Mayor Ben Cantu and/or his proposal to explore pushing for formation of a community facilities district to help pay for additional police and fire services in Manteca, it has to be done.

That’s not to say the specific idea should be embraced. Many of us, however, are living in a fantasy world if we believe there is some way to squeeze money out of existing municipal revenue streams to fund the level of needs that vary based on people’s perspectives or to cover the cost of amenities the city does not have.

It is true the city could tone down its 25 percent reserve policy a percentage or so. But that would be a relative minuscule gain. They could also torpedo the economic development reserve if they can’t be more aggressive at making it work to improve the overall financial standing of the community which in turn would increase the city’s tax base.

But given the needs and wants those two actions will make some — but not a lot — of headway.

The only way revenue can be raised in a significant enough way to make a difference is to ask for voter or property owner approval of a taxing measure. Assuming the city puts together a precise and ironclad spending plan for new taxes, if it is rejected by the voters you have your answer that’s good for at least two years. It would mean there is not a large enough stomach by the public for increased services and more amenities. It’s not likely to stop the squawking on social media because more often than not the people who complain about not enough police officers and other shortcomings tend to vote against new taxes.

In the past 20 years Manteca has eliminated a tax — the $2.65 per customer monthly tax for municipal utility services — and imposed a tax. The tax that was dropped was by council fiat on the assumption the majority of the public would make incumbents pay with their council seats if they did not do so after a court ruling on a similar but not the same tax in another jurisdiction related to how that tax was implemented.

The additional tax was the half cent Measure M public safety sales tax that is covering the salary and benefits of 15 police officers and 15 firefighters as voters were promised in the ballot language. 

Originally the ballot measure advanced by staff and embraced lukewarmly by the council in 2004 for a general half cents sales tax increase had no specific spending plan.

The measure only needed a simple majority. It was rejected with a resounding 82 percent “no” vote.

Two years later the council originated the Measure M half cent sales tax that was locked into a specific spending plan and was able to secure the required a two thirds vote.

There is a lesson in the half cent sales tax that the current council needs to heed.

They need to start the ball rolling on possible tax increase votes. That is what Cantu did.

They also need to have advocates lined up willing to campaign for whatever measure they decide  to push long before the council takes a formal vote to place it on the ballot. They also need to have a very specific spending plan that is locked down once it is approved by voters.

That said, the council needs to do two extremely critical things. They need to inventory what is likely to be coming down the line in terms of ballot measures in the next few years such as a potential city bond measure asking for $40 million for recreational facilities and a Manteca Unified school district bond measure.

They must then decide how not to kill off support.

That may sound obvious but a community facilities district tax is tied to property just like a bond measure.

It is why the council needs to look at all potential ways of increasing funding for police and fire services and then move forward instead of limiting their initial discussion to a community facilities district. That includes looking at the most obvious action — asking voters to pump up the public safety tax from a half a cent to a full penny.

The advantages of such a move are numerous. First the city can point to a track record of keeping their word. Given the half cent tax now in place covers the cost of 15 police officers and 15 firefighters, doubling it means Manteca would be able to hire 30 more public safety employers whether it is 20 officers and 10 firefighters, a 50-50 split or some other combination.

A sales tax would not compete with a property-based tax. While it is true a tax is a tax, the type of tax and how it is collected can be a significant factor. 

A property-based tax decreases housing affordability and also cuts into the mental pie of what a homeowner may be willing to serve up in additional taxes tied to their property. Such taxes are often collected as part of a mortgage payment but for those who own their homes outright it is a twice a year hit that is much harder to swallow than an extra penny on every $2 of taxable sales.

It is true that if your goal is to get to “x-amount” of dollars whatever way you go you will end up collecting the same whether it is an extra penny in every $2 spent or $50 twice a year on a tax bill. Many will see it as a tax regardless which is correct. But there are many people if you make the case for the need and they are willing to buy into it is self-defeating if you make it a bitter pill to swallow by putting in place a tax that has the looks of creating a hardship and actually does in some cases.

A lot of basic needs such as non-prepared food from a grocery store are not taxable. This is not lost on people on limited incomes such as those relying either 100 percent or to a large degree on Social Security. Their houses may be paid for but they are likely facing 2 percent annual property tax increases under Proposition 13 given Manteca’s growth and housing market. Adding a property tax to that means you likely won’t get the vote of people in such a position but it is also will make them more likely to work feverishly to defeat such a measure.

Given Manteca has a mega-region retailer such as Bass Pro where 98 percent of the taxable sales are made to people who do not reside in Manteca plus area draws such as Costco and the soon-to-break ground Living Spaces Furniture Store that will draw from nearby communities such as Lathrop and even Escalon and Ripon for the foreseeable future, the tax burden for more police and firefighters will be picked up partially by non-Manteca residents.

The basic California sales tax is 7.25 cents on the dollar of which a cent goes to the general fund of the city where the sales tax is collected San Joaquin County has a half sent Measure K transportation tax.

Manteca’s sales tax with the Measure M public safety tax included is 8.25 cents. That is the same as Tracy that also collects an additional half cent sales tax.

Lathrop collects an additional one cent making their sale tax higher than Manteca’s at 8.75 cents. Stockton’s is even higher at 9 cents as it includes an additional 1.25 cents collected by the city. Modesto — the only other major retail center in the area — has an additional local tax that brings their overall sales tax to 7.87 cents. Manteca adding a half cent sales tax would bump their rate up to 8.75 matching Lathrop’s rate.

You would be paying at that point a more robust sales tax in Manteca — 0.9 cents more per taxable dollar of sales than Modesto, 0.25 cents more than Tracy, the same as Lathrop, and 0.25 cents less than Stockton.

Pennies do add up.

But at the same time most of us devalue the penny — think of the last time you picked up one you saw on the sidewalk, do you toss them into the dish at cash registers after you get your change, or do you have 200 or so pennies that are laying around the house. Those 200 pennies would cover the added tax on $400 worth of taxable goods in Manteca if the sales tax rate was increased a half cent.

The Manteca council needs to look at all funding options and go with the one that makes the most sense and has the least impact in the pocketbooks of Manteca voters.