Fiscal Responsibility and the Proposed Tax Increases

By David W. Brown

Marina's budget has increased almost 70% in the last five years, despite a mere 2% increase in population and minimal inflation. We need to make substantial budget adjustments before asking for a general sales-tax increase.

What happened is that in 2006-2007, the City received about $15 Million (too little, in fact) from the sale of Fort Ord lands, and the City Council went on a spending spree, increasing its budget expenditures from $9.4 Million (FY 2005-6) to $15.6 Million (FY 2006-7) -- a 66% increase -- in just one year. Since that time, yearly budgets have ranged between some $13 Million (FY 2007-8, 2008-9) and $15 Million (2010-11), and deficits have ranged between some $1 Million (FY 2008-9) and almost $5 Million (the current budget). These deficits have been funded by taking money each year mostly from the Fort-Ord land-sale proceeds, which are now almost exhausted.

The Councils of 2006 through 2008 guessed -- wrongly -- that the massive developments they approved would generate tax revenue that would kick in by the time the $12 Million proceeds were exhausted. However, the recent decline in housing values has stymied development. The current Council proposes two tax measures, a 1% sales-tax increase and a 2% transit-occupancy tax (TOT) increase, which it estimates will bring in $2 Million each year. But even if both pass, $2 Million in new tax revenues won't go very far in addressing what amounts to an ongoing structural deficit that now approaches $5 Million.

I propose that in addition to the $800,000 cuts proposed by City staff at the insistence mostly of Councilmember O'Connell and Mayor Delgado, the City explore the following:

First, terminate the at-will contracts of all consultants, requiring a vote of the Council to exempt any consultants from this. Some full-time city "employees" regularly staffing departments are being paid total compensation at or near $200,000 a year.

Second, cut by 15% executive staff salaries of any staff member earning over $100,000, police and fire personnel excepted.

Third, move the Strategic Development Center (SDC) employees (whose salaries come out of developer funds, but whose overhead is paid by City funds, into the Community Development Department spaces, where that can be done without violating work-space requirements, with an eye toward paying no more rent for the SDC building.

Fourth, annex the CSUMB East-Campus Housing area. Estimates are that although the required studies will cost approximately $100,000 before this can be done, that amount will come back to the City each year in tax revenues, with no added overhead cost, since campus police and fire are paid for by CSUMB.

Once that is done, I will support a sales tax increase if needed. After all, if serious austerity measures do not go into effect soon, we will still be looking at yet another sales tax increase on top of the one currently proposed, and there is no way the voters will approve that, even if they do approve the one currently on the ballot. Let's not assume -- like past Councils did -- that Marina Heights and The Dunes will bring us new tax revenue from new housing any time soon.

That being said, I feel the City should have the proposed increase in the Transient TOT, which is now 10% and proposed to become 12%. After all, other cities throughout the state have 12% TOT's, and even 15% TOT's. Still, the revenue from that alone will be insignificant compared to the $5 Million annual structural deficit we are looking at every year.