Something doesn’t add up about the local tax measures that voters will be deciding this fall.
We’ve become accustomed to seeing tax increases during difficult economic times to help the state, cities and counties stay afloat. But why so many now in an otherwise good — if not robust — time?
Let me start with the caveat that there are good arguments to be made for why the county library system needs funding from a one-eighth-cent sale tax increase and why county parks — which has seen flat revenue growth for the past 10 years, according to Parks Director Caryl Hart — need the support of a half-cent sales tax.
There also are good arguments for why voters should boost the county’s hotel tax from 9 percent to 12 percent, generating some $4.8 million a year for road repairs, affordable housing and other stuff. What’s the harm? As the late Sen. Russell Long of Louisiana said, “Don’t tax you. Don’t tax me. Tax the guy behind the tree.” In our case, that would be a tourist standing behind a redwood tree — at a winery.
But why now? The county’s general fund budget for the fiscal year that began July 1 is up nearly 3 percent from the year before. Overall tax revenue is up 5.9 percent, while spending on salaries and benefits is up $7.2 million over the year before. Why is money for parks and road repair so hard to find?
The answers, of course, are complex. But one of the clearest explanations can be found right there on page 13 — of a document that should be required reading in Sonoma County. It’s the final report of the county’s Independent Citizens Advisory Committee on Pension Matters. It’s under the heading “Cost to the community of foregone services.”
The reports shows that the decisions county supervisors made back in the early 2000s to increase retirement benefits — essentially giving employees a retroactive 50 percent boost in their pensions — have cost the county an extra $260 million over the past 10 years. That’s money that “would have been available to fund critical public services.” (To clarify, this is not the county’s full cost of pensions. This is just the additional costs above what the county was paying prior to increasing benefits.)
Of all the figures in the pension report, this is the one that should stand out. That’s $26 million a year that the county otherwise would have had to spend. To put this in perspective, according to the report, for every $10 million extra the county has, it could hire 44 more deputies. Or it could repair and pave an additional 40 miles of roads. The county supervisors have gone to great efforts to find extra money — including taking $11 million from the general fund this year — to help with road repair. But our roads still continue to be ranked among the worst in the Bay Area.
And keep in mind that $26 million a year is only to cover past costs. The pension committee reports that the extra costs are expected to total another $741 million between now and 2030 — barring any downturns in the economy. That’s an average of $53 million a year.
In short, while agencies and county department compete in this high-stakes game of musical chairs in seeking voter approval for silo funding initiatives, there’s an elephant in the room that is taking up all the space. That pachyderm is a massive unfunded pension obligation that — despite all of the efforts at reform by local and state leaders and despite the massive infusion of extra taxpayer dollars to make up for stock market losses — still totals $831 million. As the report states, “To eliminate the county’s unfunded pension obligation, it would cost each person living in the county approximately $1,650.”