City officials will hold a study session Tuesday on how to restore public services lost in the past decade of budget cuts, namely by considering a couple tax increases for the 2014 ballot. Police pay and staffing is a top priority, according to several memos.
Councilman Pete Constant suggests the San Jose Police Department re-hire former officers by offering them a hard-to-refuse cash incentive. San Jose would save tens of thousands of dollars per recruit by hiring officers who have already been through the academy and training, Constant says.
For the past several years, the city’s tackled budget deficits through service reductions and hundreds of layoffs, the councilman notes in a memo. Library hours were cut, fire stations staffed via overtime and street maintenance has a $339 million backlog.
“There is no doubt that these actions have severely affected our employees, residents and businesses. And unlike many other city services, changes in police staffing affect everyone,” Constant writes. “Reductions in police services equate to slower response times throughout the city, less time for investigations, fewer perpetrators arrested and rising crime throughout virtually every neighborhood in San Jose.”
Mayor Chuck Reed and Councilman Sam Liccardo submitted their own plan in a joint memo on how to restore a 10-percent salary cut and bring the city’s police staff up to 1,250 from the current 1,109 over the next four years.
Ideas to increase revenue include a new library parcel tax or sales tax. Like most municipalities, San Jose depends on sales tax and property tax to generate a good chunk of the general fund revenue—47 percent of it, or $389 million annually. The problem is those tax revenues rarely keep pace with economic growth.
The city’s sales tax base has also shrunk because of changing consumer habits. Consumers spent 53 cents per dollar on taxable items in 1979, according to a recent report by the California Legislative Analyst titled, “Why Have Sales Taxes Grown Slower Than the Economy?” That figure plummeted to 33 cents by 2012, as the price of services has grown four times as much as prices for goods since 1980, the report notes.
To make up for the drop in sales tax—especially since the spending freeze hastened when the economy tanked in 2008—lots of cities have turned to voters to pass sales tax increases. San Jose’s use tax rate is 8.75 percent, the same as San Francisco’s and a little less than Oakland’s.
The city would need 55 percent voter approval to pass a sales tax increase. A quarter-percent uptick to 9 percent would generate an additional $30 million to $35 million a year. A half-percent increase to 9.25 percent would generate up to $70 million annually, the city estimates.
Some council members are talking about teaming up with the Santa Clara Valley Transportation Authority (VTA) to extend and amend a countywide transportation tax next year, as another option.
Property tax also lags behind economic growth, especially given the confines of Prop. 13, a 1978 law that restricts annual property tax increases to 2 percent unless there’s a change in ownership or improvements to the property. Plus, the incremental growth in property taxes in San Jose’s former redevelopment districts went to pay down debt incurred by subsidized development in those areas. That means the city’s general fund won’t see any property tax revenue from former redevelopment projects until 2024, when the debt’s paid off.
To offset the lack, the city’s considering placing on the June 2014 ballot a measure to extend the city’s library parcel tax, which sunsets in 2015.
Each ballot measure, with prior polling to gauge public opinion beforehand, could cost anywhere between $425,000 and $900,000, the city says. The 2013-14 fiscal year budget includes $1.8 million for election, as Mayor Reed noted interest in these options before passing the current-year budget.
WHAT: City Council Study Session
WHEN: 1:30 to 5pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260