By Jonathan Friedman
Lookout Staff

July 6, 2010--The City Council tonight could vote to place a measure on the November ballot for a half-cent sales tax that would generate money to boost City Hall’s treasury. The tax would garner an estimated $13 million per year for a City that says it has a structural deficit.

City staff has recommended the council approve the item following last week’s poll of likely Santa Monica voters that had results showing a tax measure would pass. According to the staff report, 59 percent of those polled would support the tax “to fund essential services” when they did not receive detailed information. When presented with additional information, the support increased to 64 percent. The margin of error for the poll taken by Fairbank, Maslin, Maullin, Metz & Associates is 4.4 percent.

Staff is proposing a “general tax” that would not limit the use of revenue to specific items. So it would require a simple majority for passage. A tax proposal with specific designations for revenue would require two-thirds approval for passage.

The City budget for this fiscal year included a $13.2 million gap between revenues and expenditures. City officials managed to bridge the gap by making some cuts, increasing fees for certain programs, taking money from the Economic Uncertainty Fund and using cash remaining from the previous fiscal year. But City officials say there is a structural deficit, and it will not be possible to continue operating this way without making major program cuts in the future.

“Our five-year forecast projects expenditures growing at a rate that exceeds revenue growth, and anticipated State raids on city and county revenues necessitate discussion of potential revenue solutions,” Kathryn Vernez, assistant to the City Manager, wrote in a staff report. “Future operating costs associated with capital projects that are underway will add to this deficit. Staff will continue to evaluate opportunities to close the structural deficit with the least impact to the community. However, the State budget continues as a significant threat beyond City control.”

She continued, “Even as we continue to downsize, tame our ongoing costs and effectively deal with tepid growth over the next three years, future impacts of a financially moribund State will be measurable … It is prudent to consider ways to further bolster general funds for services such as police and fire services, education and school programs, parks and recreation and other general fund services given the ongoing State fiscal crisis.”

People were also asked in the poll whether they would support a property transfer tax. But this “did not poll particularly well,” according to the report from Vernez.

The proposed increase would bring the local sales tax to 10.25 percent. The existing 9.75 percent sales tax generates money for the State and County. There is no direct City sales tax, although some of the State and County revenues are handed down to support local programs.

According to the staff report, approximately one-fourth of the new revenue would be generated by tourists and other visitors.

The tax consideration will be on an agenda that includes a vote on the Land Use & Circulation Element (LUCE) of the General Plan. That item could be lengthy, and it is possible the tax measure could be delayed to the next meeting, a City source told The Lookout News.