Will California SB 1 Funding Be Enough to Ward off Pursuit of Elk Grove Sales Tax Increase?

May 27, 2017 | 

During the Wednesday, May 24 Elk Grove City Council meeting, city manager Laura Gill discussed additional funding expected following the passage of California Senate Bill 1 during her presentation on next year's fiscal budget. 

Signed into law by Gov. Jerry Brown, SB1, will raise $5 billion annually by increasing vehicle registration fees and gasoline sales taxes. About half of the proceeds are to be used distributed to municipalities for road repair and maintenance.  

During her presentation, Gill said the City expects to receive about $1 million during fiscal year 2018, which starts on July 1, 2017. After that, anticipated revenues will be $3 million in fiscal year 2019 and $3.5 million in subsequent years.  

"This impacts the city positively in two ways," Gill told the City Council. "One, it does increase funding for road maintenance. which helps decrease the urgency of general fund argumentation in the short term."

Gill acknowledged this does not come without cost to taxpayers.

"This bill does come at a cost to taxpayers, taxpayers will see an increase in gas taxes and other fees," Gill said. "The gas tax in of itself has not been raised since 1981, so there is quite a bit of catch-up to be had." 

At that same meeting, capital project manager Rick Carter noted that the City has an annual need of $12 for road maintenance, but it has only $4 million in annual funding. 

Doing the math, and going on the assumption that the annual maintenance costs are static, which it will not be, the City will have about $7.5 million in funding, which means there is still an annual deficit of at least $4.5 million.

How will the City make up this shortfall? 

One proposal the City Council has flirted with to fund this, and other services will be to ask Elk Grove voters to approve a sales tax increase.  On several occasions, the City Council have expressed support for asking voters for more revenue via increasing sales taxes.

Their rationale has been everybody else is doing it, so why can't we?

Although the City Council decided not to pursue the matter last summer reasoning it would have been competing with Sacramento Transportation Authority's Measure B county-wide sales tax increase, which was defeated by a narrow margin, the possibility that it will be considered and approved for the 2018 election is almost a sure bet.

Even though SB 1 has given Elk Grove a lifeline for the delayed, and much-needed road maintenance, it will not be enough according to current projections. While the City Council will probably seek a sales tax ostensibly for this, we urge caution. 

Like other Californian's, Elk Grove residents will be paying for our local road repairs every time they gas up to the tune of 12 cents a gallon now, and 19 cents by 2019. Additionally, vehicle registration fees will increase anywhere from $25 to $175 based the estimated vehicle value.

Before the Elk Grove City Council considers increasing this already regressive tax, we urge them to turn over every stone, put their personal non-essential city projects aside, and do everything within their power to avoid placing another financial burden on residents. As the City staff has been fond of saying in their funding search for discretionary projects through the years, now is the time to sharpen your pencils.