Commentary: Thinking About Taxes and the Need for Revenue

Wallet Taxes
Share:

Pothole-Sky

I thought it was an interesting comment that former Assemblymember and County Supervisor Helen Thomson made with regards to the proposed soda tax: “I’m a Democrat and I happen to like taxes. I think they have a purpose. We are a democratic society and taxes can do good things for people.”

I’m a Democrat too, and probably a more liberal one than Ms. Thomson, but I was raised mainly in the post-Prop 13 world and I think we need to be exceedingly careful about when and how and for what purpose we propose raising taxes.

I will point out that the Vanguard floated the idea of a soda tax on December 16 of 2014. However, and unfortunately, given that it would be a general tax in the city of Davis, I am now hesitant to support a general tax right now, in part because we cannot control how it is spent.

While I support the idea of using the money as a veritable sin tax, and, as a sufferer of diabetes, I support the need to fight against childhood obesity and diabetes, I think people who do not have it do not fully appreciate how devastating a disease it is.

My problem is that there is nothing that can prevent the city from taking the money from the soda tax and using it on employee compensation.

I now have a similar concern on a tax for roads and infrastructure. The city report from this week shows, despite lower projected inflation for asphalt, we will still need about $10 million per year annually for pavement projects, while we currently budget $4 million.

One idea floated has been the Utility User Tax. The advantage of that tax over a parcel tax is that the city would need only a majority vote of the voters to pass it. A parcel tax would require a two-thirds vote. The main advantage of the parcel tax, however, would be that the voters would have far greater certainty that the money would be spent as advertised.

The city unfortunately has a history of playing bait and switch with taxes. In 2004, Measure P was put on the ballot as the original half-cent sales tax.

In the argument on the ballot in favor of Measure P, the signers, which included Lois Wolk (Assemblymember), Helen Thomson (Supervisor) and then-Mayor Susie Boyd, argued: “The City faces increasing costs. We will face higher expenditures if we are to provide the additional police protection and meet park and recreation and open space commitments we have made to our citizens.

“Without Measure P revenue,” they argued, “given the uncertain state support to the General Fund, we would be faced with very deep service cuts in police, fire, and parks.”

However, a 2010 Vanguard study found that the money would end up going largely to increased salaries, particularly for fire, who in April 2006 were retroactively given an annual increase in compensation of 8.46 percent per year – or 34 percent over the course of their four-year contract.

While the city sold the public that the measure would pay for additional protection for police, it actually went for increased salaries, and fire got by far the largest increases in salaries. And while it was billed as a way to meet park and recreation commitments, in fact, we had to pass a parks parcel tax just two years later because we had used the entire sum to pay for employee compensation.

To a much lesser extent, we had the same thing happen with the revenue from the last sales tax.

In the discussion about the sales tax in the winter of 2014, the city council was talked out of doing an advisory measure to guide its spending. As we noted in a commentary in February 2014, there was the expressed belief that times had changed and the council could not get away with giving away the store again.

One councilmember suggested that the half-cent sales tax and $3.6 million in revenue is small and therefore will preclude it being used for salary increases as it will go to pay for the city’s increasing water bill, PERS (Public Employees’ Retirement System) contributions and retiree health costs. The argument was, “There was no point in an advisory measure for the smaller amount.”

And yet, here we are. While a 3 percent COLA (Cost-of-Living Adjustment) is hardly giving away the store, it does push us closer to the red by 2019. Mostly, it illustrates that, while the intentions were probably sincere in February 2014, times change and so do priorities.

Going forward, there are questions about how much support a Utility User Tax actually has. Some have gone so far as to suggest that the Utility User Tax is off the table. The official word from the city is that, while it is not off the table, it is getting mixed reactions with no clear consensus as to what people will or will not support.

But even a parcel tax right now would present risks. The city is currently spending somewhere around $3 million in general fund money on roads – pass a parcel tax and it is at least possible that the parcel tax could be used on roads but free up the $3 million from the general fund to go to employee compensation.

That is a similar concern which we now have with the proposed soda tax – the money that could be sold on programs for children’s health could instead effectively go to supplement employee compensation.

Some will say – why are you so opposed to using money for employee compensation increases? While a complex answer, my concern remains that we are already over-extended on salaries and we are not really in the clear on revenues or the budget sustainability.

Costs continue to escalate for pensions. The city revenue picture is murky at best, and innovation parks, if they get passed by the voters – a huge if at this point – only provide marginal relief. And at some point, perhaps soon, an economic downturn could push us deep into the red.

In short, we expanded salaries and benefits way too far for us to sustain from 1998 until 2006, and, as a result, we are vulnerable to rising costs and fluctuations in the economy that could put us right back on the brink.

And instead of building reserves and hoping to generate new revenue to secure our position, we are leaking money back to employee compensation under the guise that they took a hit from 2009 to the present while ignoring their huge explosion in wages and benefits from 1998 to 2006.

If the numbers are right, we are talking about somewhere between a 7 and 11 percent hit for employee groups. On the other hand, we saw far larger increases the previous decade – again, beyond the point where they were sustainable.

In the end, the council has about $150 million just in unfunded roads, and that doesn’t include the backlog for other infrastructure. Instead of making sure that we have secured funding for those needs, we have agreed to a COLA for employee groups.

And, without agreeing on a tax structure for roads, now we are floating the idea of a soda tax. As I said, I support the soda tax in concept, but unless we secure our own finances, I am reluctant to support a new tax.

—David M. Greenwald reporting

Share:

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Related posts

33 thoughts on “Commentary: Thinking About Taxes and the Need for Revenue”

  1. Barack Palin

    Hey, it was spelled out that the public didn’t want employee raises with the discussion around the 2014 sales tax.  That’s why the advisory measure came up.  The council knew this and as you stated “there was the expressed belief that times had changed and the council could not get away with giving away the store again”.  Well we were fooled again.  They lost much of our trust.  

  2. Misanthrop

    You’re a Democrat? Well I guess its a big tent and if you identify as Democrat we should take your word for it. You seem more a libertarian, socially liberal but fiscally conservative.

    I do find the idea that you are more liberal than the former county supervisor and assembly member sort of apples and oranges. The obvious question would be on what issue? Of course on traditional Democratic issues of  jobs, taxes, wages, public health and safety, minimum wage, support of workers right to organize and bargain collectively, education, mental health services, children’s advocacy and protection, water quality and protection of the environment Helen’s record stands as a testament to her unflinching commitment to traditional big D Democratic values.

    A little friendly advise, if I were you I wouldn’t go around comparing yourself to Helen and her record of public service.

        1. Davis Progressive

          “Your ideology compared to Helen’s doesn’t hold a candle.”

          that’s a weird comment – ideology not holding a candle to helen’s?  what does that even mean?  why divert a comment thread on such banalities.  there are important thoughts in here, this isn’t one of them.

  3. Davis Progressive

    so here are some important thoughts from this commentary:

    1. the council essentially promised in winter/ spring 2014 that the sales tax revenue would not go to employee compensation and instead go to other things listed above.  four of the councilmembers have a year later reneged on that promise.

    2.  can the council now make a credible commitment to spend tax revenue on what they promise?

    3.  can the voters trust that a soda tax will go to children’s health rather than the health of staff’s children?

    1. Anon

      DP: “1. the council essentially promised in winter/ spring 2014 that the sales tax revenue would not go to employee compensation and instead go to other things listed above.  four of the councilmembers have a year later reneged on that promise.

      I could just as easily argue the sales tax revenue is going for roads, street lights, and all the things it was promised to go for, and that the COLA just agreed to will have to come from other general fund money.  I personally think the better argument is to ask: “Where is the money for the COLA going to come from?  What is going to have to be cut to achieve the COLA, if there is no new tax?”  It is a legitimate question to ask the City Council members/City Manager.

    2. Tia Will

      DP

      First I want to thank you for getting the conversation back on a substantive track. I have been doing a lot of thinking about what it means for a candidate for public office and/or an elected official to make a promise. This has come up for my because of some posters comments about “feeling betrayed” in comparison to my lack of such feelings and trying to understand the difference in those points of view.

      It seems to me that there are two different types of “promises” that can be made. One is the kind of promise that I consider binding because it is within the candidates direct control because it is only themselves and their career that are potentially at stake. An example would be ” I will not take any contribution from any private interest group”. That is really direct, simple and can be upheld regardless of  changing circumstances. The second type of “promise” I see as more aspirational and subject to change depending upon changing circumstances and needs. This is the type of “promise” such as all proceeds from this measure will only go to “X” goal. I do not see this as an absolute because I want officials to not be so set in their thinking that they cannot or will not process new information or take changing circumstances into account in their decision making. What some see as immutable “promises” I see as statements of intent in a rapidly changing world.

  4. Anon

    There are so many inaccuracies/revisionist history in this article, it would take just too much time to address it all.  So I will address the main issue I believe the article is trying to get at, a proposed tax on soda.  As well intentioned as it may be, a tax on soda makes no logical sense to me.  Why not tax cookies, candy, cakes, and while we are at it, bread, crackers and yogurt which also contain sugar? Processed food in general is loaded with sugar and salt.  If you understand anything about people’s eating habits, you will understand a tax on “bad” food is unlikely to deter people from eating/drinking it.  You can provide all the education on good eating practices you want, and it is not likely to deter people from eating/drinking “bad” foods.  Offering children nutritious and delicious lunches at schools is probably the closest you can come to instilling good eating habits, and even that is an uphill battle.  On top of that, we encourage people to sit at desks for long hours at work in front of a computer.  We as a nation do not encourage regular exercise at work.  If this nation were truly serious about addressing the obesity problem, we would give our workers time off and funding to work out at a gym every day or even 2-3 times a week.  Children would get more opportunities to exercise in school.  I don’t believe as a practical matter that a tax on soda is going to address the obesity problem.

    1. Davis Progressive

      “There are so many inaccuracies/revisionist history in this article, it would take just too much time to address it all.”

      my view is if you can’t at least articulate a few, you’re taking a gratuitous swipe at the vanguard for which he or others cannot defend him on.

      “So I will address the main issue I believe the article is trying to get at, a proposed tax on soda. ”

      that’s not how i read the article.  i read the article as taking a skeptical stance that the city council will uphold their agreements to the voters on how to use the revenue from a tax measure.

      1. Anon

        The problem I am having with the premise of this article is that it conveniently accuses the City Council of supplantation/reneging on promises, which appear to me to be revisionist history, conflating past City Councils with the current one.  Roads and streetlights are being repaired, parks are being maintained, which is what the sales tax increase was for, as promised.  I will repeat, the question that should be asked is: Where is the funding going to come from to pay for the COLA, which has not been implemented yet? That, to me, is a legitimate question.

        1. Mark West

          “conflating past City Councils with the current one”

          All four member of Council who voted in favor of the MOUs were on Council when the Sales Tax initiative was placed on the ballot, and all four were present and involved in the discussions where verbal promises were made that the sales tax money would not be used for compensation increases. Nothing, with that regard at least, has been conflated.

        2. Anon

          To Mark West: This is from the article: “In the argument on the ballot in favor of Measure P, the signers, which included Lois Wolk (Assemblymember), Helen Thomson (Supervisor) and then-Mayor Susie Boyd…”

          Conflating the actions of this City Council with the one back in 2004 is ridiculous.

        3. Mark West

          “Conflating the actions of this City Council with the one back in 2004 is ridiculous.”

          I think it is a reasonable approach to say the CC did something 10 years ago, and repeated something very similar today.  It shows a pattern of behavior of our elected officials and helps to explain why many citizens do not trust or believe what the City says.  It really doesn’t matter that different people were involved in the two incidents because in both cases it was a group of elected officials who represent the citizens of Davis.

          What I do find ridiculous however is your willingness to ignore facts in your effort to defend the actions of this CC. Makes me think you have a conflict of interest, but of course, we will never know since you choose to hide your identity.

          1. Matt Williams

            Mark West said … “It really doesn’t matter that different people were involved in the two incidents because in both cases it was a group of elected officials who represent the citizens of Davis.”

            I concur with that assessment.

            Mark West said … “What I do find ridiculous however is your willingness to ignore facts in your effort to defend the actions of this CC. Makes me think you have a conflict of interest, but of course, we will never know since you choose to hide your identity.”

            I don’t agree with your thought that Anon has a conflict of interest. However, I have noticed a very noticeable shift in Anon’s comments in recent weeks. They have been much more attuned to political expediency. His/her alignment with CalAg on the subject of an all R&D configuration for Nishi really surprised me, and at first seemed to be out of character. But, as he/she continued to advocate that position, it seemed to me that the treason he/she was taking that position was because he/she didn’t believe Nishi could pass with housing … and abandoning the housing was the politically expedient thing to do if the goal was to avoid a Measure J/R loss at Nishi regardless of the cost. His/her comments about KetMoRee have had a similar political expediency tone. So, my suspicions are that Anon’s defending the Council as vociferously as he/she is doing is a continuation of that political expediency theme.

        4. Barack Palin

          I didn’t really follow Davis politics in 2004.  But in my mind what the council did this week was much more egregious than the 2004 council because this council knew the public was against these raises.

    2. Topcat

      I don’t believe as a practical matter that a tax on soda is going to address the obesity problem.

      Yes, As a practical matter a local Davis tax on soda will mean that people will do more shopping in Woodland, Dixon, and West Sacramento to avoid the Davis tax.

      1. Matt Williams

        Topcat, do you really think that a Carl’s Junior customer looking to have his/her lunch, and/or the lunch for his/her children is going to drive to the Carl’s Junior in Woodland, Dixon, or West Sacramento to avoid the Davis tax?

        1. Tia Will

          Anon

          a tax on soda makes no logical sense to me.”

          I don’t believe as a practical matter that a tax on soda is going to address the obesity problem.”

          I can understand how a tax on soda might not seem logical to you given the litany of other unhealthy behaviors that you have listed, all of which are valid. So perhaps as a doctor, I can frame this a little differently for you by presenting some of the specific reasons for targeting sweetened beverages :

          Sodas have a disproportionate effect on pancreatic function ( and thus diabetes and obesity) compared to  any of the other food items that you mentioned for several reasons:

          1. Soda provides an almost undiluted quantity bolus of sugar directly to the pancreas because of its rapid absorption as a liquid.

          2. The sugar in soda is delivered essentially unbuffered to the pancreas in a huge bolus because of the lack of any other ingredients which are present in all of the other “food” items that you mentioned. The pancreas can handle sugar in small or gradually administered amounts, but is ill equipped to handle the equivalent of 16 tsp delivered over a very short time interval.

          3. Unlike with cakes, pies, cookies which most of us use as occasional treats or even if consumed daily, provide smaller quantities of sugar since most of us are not capable of consuming very large amounts in short time intervals without feeling sick and stopping. Sodas, because they lack the additional ingredients can be consumed in one sitting easily.  Unfortunately for some consuming multiple sodas daily is habitual.

          Once again, no one is anticipating that a soda tax will on its own “address the obesity problem”. It is anticipated that along with education ( widespread in the medical community so if your doctor isn’t discussing this with you, they should be), changes in school menus ( already in the works although slowly), changes in exercise habits ( which will result in me continuing my arguments against the default use of cars which you often seem to find objectionable) will serve as one adjunct ( not a panacea) in our attempts to change dangerous and costly behaviors.

      2. Anon

        From an article Robb Davis cited: “America have had extra sales taxes on fizzy drinks, of 3-7%. This has helped to raise revenue, but the impact on consumption has been marginal.

        1. Tia Will

          Don and Anon

          Combined, I think that your two posts make an a further interesting point.

          Even as anti-obesity campaigners like Mr. Nutter have failed to pass taxes, they have accomplished something larger. In the course of the fight, they have reminded people that soda is not a very healthy product. They have echoed similar messages coming from public health researchers and others — and fundamentally changed the way Americans think about soda.”

          A tax on soda is not meant as a stand alone “panacea” for the obesity/diabetes issue. Just raising the issue repetitively raises people’s awareness of the issue and helps with individual decisions to either stop or minimize consumption of these beverages. This I know to be true from my own practice. People who read about the issues do become more aware and some will choose to act on this in their own life. The fact that raising revenue is an outcome is for me an added argument for voting in these taxes even if the directly measured decrease after implementation is “marginal”.

          Continue reading the main story

  5. Michael Harrington

    David: thank you for this well researched and thoughtful article. It’s one of the best ever.

    Rochelle and Brett should have voted NO to the Cola. So far as I know, neither one needs the employee unions/groups for future political careers.

    I’d still support a parcel tax for infastructure repairs but only with an anti- backfill clause that prevents the CC from using General Fund money that used to go towards what the parcel tax is going to pay for

    1. Misanthrop

      Hilarious, a guy who was on the council when it blew up the budget by giving 3% at 50 pensions telling current members they shouldn’t have voted for a 3% cola.

  6. CalAg

    “political expediency theme” @ Matt Williams

    Said the guy that is running for City Council hiding behind the rhetoric of “evidence based decision making.” What a joke. His lack of self-awareness is disturbing.

    1. Matt Williams

      CalAg, you miss the point. My campaign theme is a call for less political calculation … and a replacement of that political calculation with greater due diligence of the evidence, If you apply that equation to what you know about me and my history of public service, where do you see me having made decisions based on political calculation? My efforts with the FEMA flood map revisions were 100% based on evidence. My participation with the Housing Element Steering Commission process had very little political calculation (not none, but very little). My participation on the Water Advisory Committee was almost 100% evidence-based. My work in bringing forward the 87/13 water rate listened to the political evidence and eliminated the concerns that had been raised in the Measure P vote. My work on the Natural Resources Commission was evidence based. And most recently my work on the Finance and Budget Commission has been virtually all focused on the fiscal evidence.

      Where/When in my 17 years here in Davis do you see me taking a position that has relied on political calculation? I’m looking forward to hearing your thoughts.

      1. CalAg

        I can’t comment on your body of public service, just your behavior on the Vanguard.

        Your shtick is that you have an unarticulated position and then try to lead people to your point of view with cherry-picked evidence. It lacks intellectual rigor and is fundamentally political. I get it. Do your own thing. But when you cover this with a thin veneer of rhetoric about “evidence-based decision making” and try to marginalize those with whom you disagree as being “politically-calculating” – well that’s really annoying and I call BS.

        1. Matt Williams

          CalAg said … “Your shtick is that you have an unarticulated position and then try to lead people to your point”

          In your comment above you are taking a huge leap of faith when moving from the first part (which in many cases is a reasonable assessment because in my opinion the issue being discussed has not achieved a level of evidentiary investigation to support taking a position), and the second part. Nishi is a perfect example of that kind of situation. Until we have evidence of how the transportation mode share issues are going to be addressed, and have evidence of how site access is going to be handled, I personally haven’t transitioned from evidence gathering mode into position mode. Taking a position at this point would be based on political calculation.

          With that said, there is no guarantee that the gathered evidence will result in a clear path to a position. The public hearings conducted by the Water Advisory Committee (WAC) on fluoridation were a perfect example. Both sides produced evidence. Some of that evidence was so dated that it was effectively useless. Some of that evidence was so absent of academic rigor that it was effectively useless. Some of the evidence was meta-data derived from a subjective review of flawed and/or stale primary data. As a result, both the WAC and subsequently the Council were forced to look at the “political evidence” to guide its final decision.

          “…try to lead people to your point” is an interesting observation on your part. More often than not I try and ask questions about the issue and/or the evidence and let people make up their own minds for themselves. In many cases, because I’m naturally drawn to exploring the evidence, I will metaphorically “throw the data out on the table” and see where the conversation about that data goes. More often the data itself makes the point. The US Census data about Davis’ population is a perfect case in point. It shows that we have two demographic groups that are shrinking dramatically (the DJUSD age children and the 25-54 year-olds) and two demographic groups that are growing dramatically (the UCD students and the seniors 55 and older). What that Census data means for the economic sustainability of Davis is an interesting discussion topic. I am very happy to promote that kind of discussion … and my ideal perspective is that discussion will include all points. I want to promote discussion, not shut it down. If I am guilty of leading people to more discussion and more inclusive discussion, then so be it.

          One piece of data that you and I are in complete agreement on is that UC Davis has failed miserably in providing housing for its ever increasing student population. If I am guilty of leading people to a basic understanding of that evidentiary reality, then so be it. You too are very actively trying to lead people to an understanding of that statistical reality. However, in that case, like the fluoridation situation, the UCD Housing statistics are only the beginning of the dialogue, and also like the fluoridation case where Alan Pryor and Don Saylor can come to very different conclusions about how to go forward, you and I have come to very different conclusions about whether UCD can be coerced into changing its housing behavior. The reality is that both of us (me just as much as you) are in the position where we have no choice other than to be “politically calculating.” Further, rather than marginalizing your political calculation, I respect it. Go back to any and all of our dialogues about the UCD Housing issue and see if you can find anywhere where I have said you are wrong in the point you have made. You won’t find even a single instance. The closest you are going to find is me saying, “I respectfully disagree, and as they say, reasonable people can agree to disagree reasonably.”

          With all the above said, I stand by the principle that Davis needs more evidence-based decision making, and less political calculation.

          JMHO

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for