If the polling is correct on the sales tax – and we have no reason to believe otherwise – the measure should cruise to an easy victory. Truth be told, the city and council have had an uncommon nervousness about the prospects for renewal – even though status quo tax measures in Davis will invariably pass and get renewed without much in the way of commotion.
In a way that was too bad. As I pointed out a few months ago, with polling as high as 75 to 80 percent for renewal at the same rate, why settle for the status quo? The $8.6 million that the current measure generates would cripple the city if it were cut off, but, by the same token, its passage does little to move the ball forward.
That is because even with the $8.6 million the city remains AT LEAST $8 million in the hole annually. By going up to a 1.5 percent tax instead of a 1 percent tax, the city could add another $4.3 million to its coffers. That would more than replace the loss of the parcel tax for roads two years ago – and do it on a majority vote rather than a two-thirds vote that ended up only generating 57 percent support and thus losing.
The only thing that the city actually “gains” from this sales tax measure is no sunset date. That’s a low bargain at best. As we pointed out, there was little chance a status quo tax in Davis was going to face any kind of real challenge.
In fact, while the school parcel tax drew opposition, there was nary a murmur of protest for the sales tax.
So one critical question is why did the city shoot so low when it had so much banked in terms of support and so much need for extra revenue?
Perhaps even more amazing is that there was absolutely no public discussion about expanding the sales tax, despite the Vanguard raising this very point several times.
This of course isn’t the only lost opportunity. A reader wrote in yesterday to lament the fact that there was absolutely no “legitimate discussion” around this renewal about the “community’s miserable, per capita performance on this metric.”
The 2017 State of the City report makes passing reference to it: “Although Davis represented around 32 percent of the countywide population in 2014, according to the BOE, retail establishments in the City of Davis facilitated only 15.6 percent ($589,194) of countywide taxable sales, compared to West Sacramento and Woodland which facilitated 36.7 and 24.3 percent of countywide taxable
This was the subject of the Vanguard’s 2016 analysis on Davis lagging in per capita retail sales.
Our data at the time showed Davis generating $8430 in retail sales per capita, compared to over $15 thousand for Woodland, $22 thousand for Dixon, $26 thousand for West Sacramento, $28 thousand for San Luis Obispo and $36 thousand for Palo Alto.
A comparative analysis showed that Davis trailed other college towns (comparable to Claremont but behind San Luis Obispo, Chico, Isla Vista and Berkeley) in this regard, but also behind regional counterparts like Woodland, West Sacramento and Dixon.
The city seems to suffer from two separate problems here.
First, it has failed to address, since 2013, what has become apparent – a lack of resources to fund basic infrastructure. In 2014, the council put a sales tax measure on the ballot. It was understood at that time that the sales tax measure would close what was an immediate $5 million structural deficit.
But at the same time, it was recognized that the city had over $100 million in unfunded infrastructure costs – we now know that number is at least twice that and continues to grow. However, the council in 2014 failed to put a parcel tax on the ballot, failed to put a parcel tax on the ballot in 2016, then finally put the roads parcel tax on the ballot in June 2018 – running up against the parks tax renewal, and it failed.
As we correctly predicted in 2018, the loss of the parcel tax would mean that the city would not have an opportunity to address the roads deficit until at least 2022. As we have pointed out, that is entirely by choice as the council did not even consider the possibility of expanding the sales tax to 1.5 percent.
The second and related problem has been the lack of communication from the council about their fiscal shortcomings. If you look at polling, most people think our fiscal condition is good or fair.
The reality is that this is not the case. The city is running about an $8 to $10 million shortfall – a shortfall that most of the public seems completely unaware of it. A lot of this shortfall would disappear if Davis went from being near the bottom in retail sales per capita to near the middle tier.
As most readers understand, the plan to close that gap has been a commitment to economic development. The city has over the last decade either consciously or unconsciously moved away from the notion of augmenting retail sales in the traditional sense, and is looking toward developing its high tech sector that will bring in both augmented property tax as well as point of sales tax to help close that gap.
We could see the Aggie Research Campus on the ballot perhaps in November of this year. And yet, the council has once again missed an opportunity to connect all the dots here and show the public that the lagging retail sales connect both to our need to renew the sales tax as well as our need to develop more bases for revenue.
As our reader notes, “[A]ll we get is silence and cheerleading for renewal – without any meaningful discussion.”
That lack of discussion which the Vanguard has been calling for since at least 2014 has bitten us, in the loss of the 2018 parcel tax and may well doom us again in 2020.
—David M. Greenwald reporting