U-turn on taxes

Mayor Steinberg asks voters to take a leap of faith on enshrining Measure U, but looming pension debts give skeptics pause

This is an extended version of a story that appears in the August 16, 2018, issue.

In November, Sacramento voters will decide whether to indefinitely extend and double Measure U, a once-temporary, recession-era half-cent sales tax. Despite being heralded as an opportunity to invest in underserved communities by city politicians, activists are concerned about the non-binding nature of the promise.

Mayor Darrell Steinberg has repeatedly assured voters the new funds would go to youth programs, housing and job creation. Yet, if passed, the revenue won’t be earmarked for such programs—it will go straight to the city’s general fund. The decision to make Measure U’s adjustment a general tax was triggered by hopes of it passing with a simple majority vote, rather than needing a two-thirds supermajority required for earmarked revenue streams.

Jonah Paul, a member of Sacramento’s chapter of Democratic Socialists of America, expressed concern over the divvying of the estimated $100 million yearly windfall.

“These promises are based on good faith,” Paul said. “The question is if we should believe them.”

Skeptics like Paul wonder whether the money—which is monitored by a Citizens Oversight Committee with just one member at present, according to the city’s website—will go toward city debts rather than impoverished residents.

“[The city] needs to take care of its enormous police and fire pensions,” Paul said. “They also have a massive $300 arena bond obligation to pay off. This talk [of economic relief for the poor] just feels like the mayor’s spin.”

In 2015, a report from the Institute on Taxation and Economic Policy found that heavy reliance on sales taxes is a characteristic of the most regressive tax systems. The half-cent sales tax increase would bring Sacramento’s sales tax rate to 8.75 percent, on par with the city of Isleton for the highest in the region.

Fiscal watchdog group Eye on Sacramento has raised concerns about how the tax increase could hurt working-class and low-income families.

“For affluent residents, sales tax hikes can be fairly easily absorbed without having to sacrifice the necessities of life,” EoS president Craig Powell wrote in a letter to the mayor last month. “Not so for a great majority of Sacramentans.”

Even supporters of the initiative are wary of those consequences. Michelle Pariset, a housing advocate with Organize Sacramento, is on board with the tax increase, so long as the money goes toward those who will be hurt by it most.

“If we’re going to support something like that, we need some assurances that the interests of low-income communities will be served with this money,” she said.

“This is a regressive tax that hits low-income people the hardest,” Pariset acknowledged. “If we’re going to support something like that, we need some assurances that the interests of low-income communities will be served with this money.”

Pariset noted a lack of investment in the most economically challenged neighborhoods—Del Paso Heights and South Sacramento, among them—in favor of a heavy focus on the central city, emphasizing that the trend needs to change if the mayor wants public support for his tax plans.

“They’ve neglected low-income outer neighborhoods,” Pariset said. “If we’re going to tax the whole city some more, those resources cannot be concentrated in the central city alone.”