Lindsay readies for 1% sales tax increase
By Paul Myers
lindsay – The Lindsay City Council called a special meeting last Thursday morning at 7 a.m. for one specific purpose, – to declare a fiscal emergency. But before anyone gets too concerned, it is actually in the best interest of the City’s revenue stream.
In new finance director Bret Harmon’s own words to the city council during a Feb. 8 workshop meeting, the city’s “tax base is eroding.” As a result the City of Lindsay is missing out on revenue it desperately needs for public safety in terms of police officers, equipment and a new fully equipped fire truck. As a result, the City holds just $400,000 in reserves, which, according to Harmon, should be between $1.5 – $3 million.
In order to quickly generate additional sales tax revenue the council decided to place a general sales tax measure, raising sales tax by 1%, on this June’s ballot. If the measure passes the City will be able to start benefiting from the additional revenue in late December of this year.
But in order to expedite the process and qualify for the election office’s deadline, the City council was required to declared a fiscal emergency. Also the council chose a general tax measure, as opposed to a special tax measure, because it only requires a simple majority to pass. But after deciding to move forward on the emergency declarationand the 1% sales tax increase council members were unsure how to convey what it would mean to the public.
New councilmember Laura Soria-Cortez noted that it may be difficult to explain the difference to the public who may think that it would be an additional tax to their property taxes. By way of combating that the council and staff determined that the strongest campaign would be to explain what it would mean in terms of dollars and cents.
“The way I would explain it is that it is one cent for every dollar, 10 cents for every 10 dollars, and one dollar for every 100 dollars,” stated city attorney Mario Zamora.
The 1% is an add on to the city’s already 7.75% sales tax pushing the rate to 8.75%, albeit that does include a .5% Measure R tax levied by Tulare County for road projects. But in terms of yearly revenue the 1% sales tax will bring in $908,000 per year. As well, an 8.75% sales tax will be a quarter of a percent above Dinuba and half percent above Farmersville, Porterville and Visalia. The City of Exeter is also examining their sales tax rate that currently stands at 7.75%, and they met about the option of an increase last Tuesday as well.
According to the Lindsay finance director four major factors have been slowly eating away at the Lindsay tax base; a steady move from goods to services, economic development elsewhere, increase in internet sales and exemptions. Moving forward Harmon hopes to start capturing additional revenue through transactions and use tax and the sales and use tax which includes the 1% increase. Examples of transaction and use tax are new car sales, third-party car sales, online shopping sales, some construction, some business to business and certain purchases outside delivered in. An example of local sales and use tax would be equipment purchased from a Lindsay business and delivered to another jurisdiction for first use. Examples where both are one in the same are service stations, general retail stores and restaurants.
As of now the public has until March 10 to file arguments for and against the tax measure. The last day for rebuttal arguments is March 20, and on May 5 the election office will mail out sample ballots. May 22 is the last day for voters to register to vote in the election.