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Task Force Report Advocates Half-Cent Sales Tax Hike

Report goes to City Council Tuesday from Walnut Creek Community Blue Ribbon Task Force on Fiscal Health.

A city task force has taken a hard look at city finances and concluded Walnut Creek should add a half-cent to the sales tax to keep the city afloat.

A 48-page draft report by the 15-member Walnut Creek Community Blue Ribbon Task Force on Fiscal Health goes to the City Council at its next meeting, which starts at 7 p.m. Tuesday at City Hall.

Task Force Chairman Bob Pickett will discuss the report with the council Tuesday. Below is a Q&A with Pickett about the report and the many task force meetings that went into it.

He might get some questions about recommendation 11A: "Even with the efforts to reduce operating costs and accumulate funds for needed capital projects, there will not be sufficient revenue to fund repairs to roads and streets, renovations or replacement of aging facilities and continue arts, recreation and community service programs that are valued and supported by residents. The Task Force investigated numerous options to address anticipated shortfalls and recommends a half-cent sales tax increase to address the City's goals."

The report advises a community survey to reveal the level of community support for a sales tax increase. The task force estimated a half-cent hike would generate $7 million annually, based on the current 1 percent sales tax producing about $15 million.

The report advised the city to pursue a half-cent sales tax increase "only after the implementation of cost reduction measures and other methods for increasing revenue (such as economic development and cost recovery)."

Mayor's initiative

When Cindy Silva was sworn in as mayor in December 2010, she announced two initiatives:

  • the promotion of 2011 as the Year of the Volunteer in Walnut Creek.
  • the formation of a task force to advise the council on spending priorities in a time of economic challenge.

Besides the sales tax, the task force report offers these conclusions (beginning on p. 8):

  • develop an integrated financial management process
  • set aside funds for replacement of aging capital assets such as the Larkey and Clarke swim centers.
  • establish greater cost efficiency "by consolidating uses in fewer facilities and selling or leasing underutilized properties."
  • implement reductions in payroll costs through changes to employee contributions to retirement and health insurance costs, including analysis of managing financial exposure through participation in CalPERS.
  • develop effective strategies to strengthen the city's commercial and retail base.

 

Despite the economic challenges cited, the task force took note of Walnut Creek's advantages (see p. 16), already generating the highest sales tax per capita in the county:

The city of Walnut Creek has long been in an enviable position as the geographic and economic center of Contra Costa County: Walnut Creek is considered to be the automotive shopping, retail, restaurant and cultural hub that serves local residents and non-residents alike. In addition, Walnut Creek is a major professional, financial and real estate employment center. Additional people in the work force boost the daytime population from 65,000 to approximately 85,000. This enhanced population further increases by the number of visitors that come to Walnut Creek on a given day to shop, eat and enjoy its cultural amenities. These components combine to create a strong local economy generating the highest sales tax revenue per capita in Contra Costa County.

The task force operated through subcommittees:

  • Delivery of Services — chaired by Jerry Kaplan
  • Capital Investment Program — chaired by Laura Simpson
  • Revenue Enhancement — chaired by Karen Majors
  • Demographics, Trends and Growth — chaired by Tom Terrill

 

Q&A with Bob Pickett

Walnut Creek Patch posed questions via email to Bob Pickett, who chairs the Walnut Creek Community Blue Ribbon Task Force on Fiscal Health Report. The questions were edited for length. Pickett's answers were edited hardly at all.

Walnut Creek Patch: The task force recommends Walnut Creek add a half-cent sales tax. Can you talk about the task force discussions on that?

Bob Pickett: One important thing to note with regard to the recommendation for a ½-cent sales tax increase is that the Task Force was very sensitive to how this would be received by the public. One result was that we placed a significant emphasis on cost-cutting measures. We also recognized that other methods of increasing City revenue are important, such as economic development.
Note Page 9, item no. 6: “After beginning implementation of further cost reduction measures and other methods of increasing revenue (such as economic development and cost recovery), consider a local ½ cent sales tax increase.”  

This also recognizes that the City has already undertaken cost some cutting measures. See recommendations 11.a and 11.b.

One reason the sale tax was of most interest to the Task Force is that it shares the money-raising burden with people who come from outside of Walnut Creek, but who benefit from Walnut Creek’s services and amenities. It reduces the burden on Walnut Creek residences and will have the greatest potential of generating meaningful revenue. Read Finding 11 and see Table V on page 45.

WCP: The sales tax is the attention-getting item in the report -- do you want to draw my attention to something else in the report?

Bob Pickett:

COST CONTROL
There are 38 recommendations in the report. Of these, over half are related to cost cutting. This signifies the Task Force’s recognition of the importance of controlling costs.  The sales tax, although an important component to the total plan, is not the “silver bullet.” The Task Force looks at this as an integral plan with a variety of components, all of which contribute to mitigating financial stress on the City over the long term.

EMPLOYEE COSTS
Page 5, paragraph 3.  “City Council has implemented a variety of measures to reduce operating costs.” Employee costs are the greatest single cost to the City. City Council has negotiated new labor contracts which begin to address this issue. Further work is needed on this matter.
Also, the employee retirement system costs are difficult to control because of the way CalPERS is structured (Page 5, last paragraph).  Read section II.D (starts on page 30) – Employee Compensation, Benefits and Pension Obligations.  This section provides a good summary of the CalPERS issues.
Employee health insurance costs are escalating as much as four times inflation rates. (Page 6, first paragraph)

WCP: Is there something in the report that you see as an innovation or an important idea that the city can emphasize?

Bob Pickett: The City has undertaken efforts in a number of areas to deal with the current economic situation. The purpose of the Task Force was to develop a sufficient understanding of the of the City’s operations and finances, and from that, make recommendations for “next steps.” The report identifies several key elements, which are summarized as items 1 through 6 of the Executive Summary (Page 9). This lays forth an integrated plan for implementation of the important ideas. The Task Force looks at this as a package. No single element is sufficient to deal with the future City finances. That’s the most important idea.

Thomas G Dunne November 14, 2011 at 06:45 PM
......the real question's here should be, is the Task Force recommendation, to increase the WC sales tax by 1/2 cent, adequatly supported by information in their report and given today's economic climate, can this City Council build the public confidence and trust enough to give them more money to spend.The second question may prove the larger challange.
obiwan November 14, 2011 at 08:45 PM
Good point Horde Mother. But I guess the question could be rephrased - how do the WC auto dealers feel about losing the business that is now driving here from Dublin (actually all of Alameda County) and Concord to avoid paying the higher sales tax?
Jojo Potato November 15, 2011 at 03:08 AM
I wonder how much of this tax will go to operating expenses of that big building with empty book shelves across from city hall? (yes, I stole that line from another corespondent). As a long term city resident, I don't want your fancy crap. I object to your "galas" to celebrate spending money on Arts, Athletics and other things that should pay for themselves. We all know that this "Blue ribbon" committee was handpicked by Cindy and her buddies. If you cut off the car sales tax money there will not be a lot of money left to pay for your toys. You've tried to kick out Ford and Honda from downtown but thank goodness they are still here. Maybe you should give yourselves a party and stop trying to figure out how to rip us off!
Just a consumer November 17, 2011 at 07:05 PM
Why is it that during hard times for everyone the bureaucrats manage to find a ''legitimate" excuse to raise taxes around their own incompetent management. Austerity or reduced grants, employees, committees (aka task forces) to asses this and/or that, etc. -- what a concept! Nah - makes too much sense. In the end, the consumer is the helpless victim.
Bruce the Bald November 17, 2011 at 08:25 PM
Anonymity is rapidly ripping apart democracy. Wearing masks, hiding behind misleading names -- sort of intellectual graffiti. My hat's off to those who aren't afraid to use their real names. And I'm wondering whether all those years of teaching "critical thinking" have been worthwhile. Bruce Reeves

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