March 6, 2009


Chula Vista’s tax proposal could be in big trouble!

When the Chula Vista City Council was determining whether or not to put a 1 cent sales tax in a special election, the State of California was trying to fix their budget mess with the key component being an increase in the State’s sale tax by the same amount. The Chula Vista council, in an expedite fashion put the measure on the ballot with mail ballots, going out April 6, well before the State passed their budget.

Many assumed that the rush to get the tax on the ballot was to deal quickly with the budget deficit, but was it really?

The issue of the State raising revenue via a tax increase was always a problem for the city but the mantra continued that there was no more room for cutting and that it had to go on the ballot now, city leaders keep repeating that their hands were tied, either cut valued services including police and fire or a new tax and they couldn’t wait to see what the State did.

By getting the City’s one cent sales tax ballot measure approved before the State got their house in order did allow for the City to “grandfather” in their tax hike ballot measure. This means that the full percentage point increase could be applied, assuming the sales tax measure passes. As Councilman Steve Castaneda explained, if Chula Vista had waited until after the State had passed their budget, the State’s total sales tax cap of 9.25% would have limited the City in the amount they could have raised sales tax. But because Chula Vista got their measure on the special mail ballot, it is exempt from the cap. Chula Vista’s sales tax can be raised the full 1% to a tax rate of 9.75% for Chula Vista residents.

It has already been determined that with the raise of the State sales tax starting April 1, the nearly doubling of the vehicle license fee to 1.15% of the vehicle’s value, and with an increase in personal income tax rates by 0.25 of a percentage point, the average family of four with an annual income of $75,000 will be paying about $963 more a year in taxes, according to a legislative analysis.

The question will be, do Chula Vistans want to add to this burden and add yet another one cent to shop and dine in Chula Vista? With all the layoffs, business closures, job insecurity this may be more expense than the voter is willing to take on.

The one cent tax rate increase with a 10 year sunset time frame has already raised concern. Local political activist, Earl Jentz, is already moving forward with an initiative that would change the tax from one percent to .75 percent and change the sunset date from 10 years down to five years. If this initiative does make it to the ballot it may fall under the cap restriction which would limit the tax hike to 9.25%.

In any event, because of the multiple financial blows California families are receiving, the ballot for a 1 percent increase could be in jeopardy even before it hits the mail boxes!

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