City Council Preview: Special Meeting to Discuss New Sales Tax

The will discuss and possibly give direction on a proposal to place a general sales tax on the November 6 ballot during a special meeting tonight at 6 p.m. inside council chambers. 

The idea of a sales tax was brought before the council during their by members of the Board of Education for the .

Facing an $8 million budget shortfall next year if , backed by Gov. Jerry Brown, fails, the GUSD has asked the council to consider placing a sales tax of either a quarter-cent or a half-cent on the ballot.

Revenue from the tax would go into the city's general fund which could then be allocated to the money-strapped school district. District representatives have told the council that the GUSD needs between $3 million and $5 million a year, the meeting's agenda packet states.

It is beyond the GUSD's powers to place such a tax measure on the ballot.

showed that 61 percent of respondents would vote yes or lean towards yes for a half-cent sales tax. Sixty-four percent responded similarly for a quarter-cent tax. Details regarding the survey will be presented to the council tonight.

Among their recommendations included in the packet, staff suggests the city conduct its own survey to determine the feasibility of a tax passing. Staff also recommends reviewing language used by the GUSD to determine whether it is "legally permissible ballot language."

According to the packet, Campbell is currently the only Santa Clara County city with a sales tax dedicated to local purposes. Voters there approved a quarter-cent increase in 2008 to "maintain and protect city services and facilities," such as pothole repair and police patrols. Its current sales tax is the highest in the county at 8.5 percent.

Gilroy has the same 8.25 rate as every other city, however this rate will increase July 1 by an eighth-cent due to 2008's voter-approved Measure B, which creates a dedicated revenue stream for the Valley Transit Authority's obligation to BART's operation, maintenance and future capital reserve.

In the packet, staff say using a sales tax as a means of raising funds for local public schools is not "a common procedure in California." In fact, only Santa Monica has ever implemented such a tax.

A host of legal issues tied to this particular tax will also be presented to the council, such as the risk that tax proceeds turned over from the city to the district would be deemed an improper purpose of the city's expenditure of general tax revenue under state preemption rules, which state that the operation of public schools is a statewide matter and not a municipal concern.

Lastly, staff will present several public policy considerations to the council, such as:

• Whether a new sales tax will deteriorate the city's existing sales tax base
• If the measure should include a sunset provision
• If the council should specify how the GUSD can allocate funds
• What to do if the GUSD's budget improves

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