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Eyewitness to History: The Measure C Debate

September 27, 2017

 

Not since Abe Lincoln went nose-to-nose with Stephen Douglas has there been a political debate as dramatic and momentous as Tuesday’s matchup between Santa Barbara Mayor Helene Schneider and Councilman Frank Hotchklss over the largest tax increase in city history.

 

Oh sure, the iconic Great Debates of 1858 featured seven, three-hour proceedings, transfixed the nation and focused on the issue of slavery - while Helene and Frank together spoke for 54 minutes and 11 seconds to 15 members of the Santa Barbara County Taxpayers Association about, um, Measure C.

 

Okay, so maybe I hyped the lede a little.

 

But with good reason: the event organized by Joe Armendariz, the conservative organization’s indefatigable executive director, was the first and, who knows, maybe final chance for local voters to hear a well-argued discussion of what is likely the most consequential item on the Nov, 7 ballot. 

 

“I call it the Tax From Here to Eternity,” said Hotchkiss, one of two mayoral candidates who oppose it.

 

 

Wading into the Weeds I. Measure C would increase Santa Barbara’s current $7.75 per $100 local sales tax rate to $8.75  indefinitely, beginning next year.

 

On a 5-2 vote in June, the city council put the tax increase on the ballot; council members Cathy Murillo and Bendy White, both running for mayor, along with Gregg Hart, now seeking re-election in District 5, joined Jason Dominguez and Schneider in the majority while Randy Rowse (who later had an apparent change of heart) voted with Hotchkiss, against it.. 

 

This is the 80-word description of the measure voters will see on their ballots:

 

To maintain essential services and repair critical infrastructure including:

  • Police, fire, and 911 emergency medical response;

  • Local streets, potholes, bridges and storm drains;

  • Neighborhood fire stations/public safety infrastructure;

  • Parks, youth/senior services; address homelessness;

  • Help retain local businesses; support other general services;

Shall the City of Santa Barbara enact a one-cent sales tax providing approximately 22 million dollars annually unless ended by voters; requiring audits, citizens oversight, public disclosure of spending, and all funds used locally?

 

(Your government in action: as a technical matter, the council actually had to approve two separate pieces of legislation – a 3,712-word ordinance and an 856-word resolution - to put this on the ballot. In the interest of curing insomnia throughout our community, both are appended below).

 

California’s statewide sales tax rate is 7.5 percent, with 6.25 percent going to Sacramento and 1.25 percent going to county government; local voters, however, have the power to raise the rate further in their own communities.

 

If voters pass Measure C, Santa Barbara’s new rate would rank above the basic rate, but remain below other roughly comparable coastal cities, including Santa Monica (10.25), Redondo Beach ( 9.25) and Santa Cruz (9.0)

 

 

Wading into the Weeds II. Measure C is forecast to generate about $22 million a year (Hotchkiss said his research shows this would make it, in dollars, the largest tax increase in Santa Barbara history).

 

Today, there is little dispute at City Hall about what the money should be used for: overdue repairs and maintenance on city streets, as well as construction of a new police station and other necessary public works needs.

 

However, those who have followed along in their hymnals to this point will note that along with better infrastructure, the ballot measure also promises “other general services,” including parks, business retention, homelessness, “youth/senior” and other unspecified programs.

 

Therein lies the crux of the argument.

 

Under California law, passage of Measure C would have required a two-thirds vote approval if the council earmarked it specifically for infrastructure repairs; because of that “general services” business, it only requires a majority vote.

 

“Our infrastructure and deferred maintenance is a big, big issue,” said Helene.

 

“What is it going to be used for, that is the key question,” said Frank.

 

 

How the deal went down. Hotchkiss strode into the Alumni Room at the University Club clad in summer sports coat, rep tie and khakis, while Mayor Helene channeled her inner Phyllis Schafly, in a bright red dress and an American flag silk scarf (“I’m coming into the lion’s den,” she explained).

 

At the start, the two fell all over each other talking about much they liked, admired and respected her and his colleague. It was enough to make a hog puke.

 

They also agreed on the need for street repairs and a new cop shop. When they finally got around to debating, these were the key differences.

 

Not-so-super majority

 

Schneider said there is consensus at City Hall that the new money should go overwhelmingly for infrastructure and promised that, if C passes, she would work in her lame duck months to ensure it does: “The council can put this into policy,” she said..

 

Hotchkiss said the council should have gone for “the bigger enchilada” super-majority threshold, to have “it completely locked in” so the new cash would be guaranteed for public works. The lower vote requirement allows future councils to redirect the money at will -- “I wish I was confident as Helene” that wouldn’t happen, he said.

 

 

Who pays?

 

Schneider emphasized that because of Santa Barbara’s tourist economy, Measure C is a “fair share” tax increase, under which visitors would pay an estimated 40 percent of the total amount to be collected.

 

Hotchkiss noted that the sales tax is “regressive” and predicted that those with lower incomes would feel it, especially once the new statewide gas tax begins to be imposed in coming years.

 

Red Ink in the Sunset

 

Hotchkiss said that government “works like an adolescent” and that repealing the tax in the future would prove impossible, or at least comparable to taking away an allowance from “your 18-year old daughter.”

 

Schneider said the city has a good track record of not rechanneling tax increases approved by voters, dating back to the Utility Users Tax, passed thirty years ago.

 

There were no injuries.

 

 

Political junkie alert. Eyeballs rolled wildly when Armendariz, scourge of the social democratic nanny state, announced at the start that the taxpayers association would decide their position on Measure C only after hearing from Helene and Frank.

 

“All of it depends on who is the more persuasive,” he said, with a flawed imitation of a straight face.

 

Yes-on-C campaign manager Mary Rose, lunching on Cobb salad and iced tea, informed her seatmate that Joe, along with Hotchkiss, signed the No-on-C ballot argument that will appear in the voter handbook, now being printed, weeks ago.

 

Armendariz lives in Orcutt and so is, uh, not supposed to sign such arguments; ever politically nimble, he instead employed his organizational designation for the job, identifying himself as Executive Director of the tax group.

 

This just in: Vegas refuses to post odds on SFCTA endorsing Measure C.

 

*The Fab Five. Among the mayoral candidates, Hal Conklin, Cathy Murillo and Bendy White support Measure A, while Hotchkiss opposes it. As for Angel Martinez, the fifth candidate, it's complicated.

 

In an August 31 interview with Newsmakers TV, Angel dithered about how he would have structured the revenue stream differently. Pressed for a straight answer, he said this:

 

 

Q: So you're against it?

A: I'm against the current state of it, I am.

 

Given that the "current state" of Measure C is, you know, Measure C, his comment led Newsmakers to mark him down as a "no," until we heard, pretty reliably, that Martinez more recently told the Chamber of Commerce, which endorsed both him and Measure C, that he supports it.

 

Updating this graf: We emailed Martinez last night seeking clarification. He said, "I'm against the fact that it is going into the general fund, allowing the possibility that it will be used for things other than infrastructure and a new police headquarters."

 

A few minutes later, he emailed again to say, "That said, we desperately need investment in our infrastructure. It should have been a bond measure. And may end up as that before all is said and done."

 

Sounds like a big no.

 

JR 

 

Images: Abraham Lincoln & Stephen A. Douglas; political reporter in the weeds; dog in the weeds; Helene Schneider; Frank Hotchkiss; Joe Armendariz; Angel Martinez; unidentified voter wondering whether to get up and read appendices I&II.

 

Email us at newsmakerswithjr@gmail.com or comment on our stories on our Facebook page - SB City Desk. Thanks for reading.

 

 

Appendix I

 

Here is the text of the ordinance passed by the City Council that underpins Measure C.

 

 

ORDINANCE NO. ____

 

AN ORDINANCE OF THE COUNCIL OF THE CITY OF

SANTA BARBARA IMPOSING A ONE PERCENT

TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY

THE STATE BOARD OF EQUALIZATION, SUBJECT TO

ADOPTION BY THE ELECTORATE BY APPROVING THE

SANTA BARBARA CRITICAL INFRASTRUCTURE AND

ESSENTIAL COMMUNITY SERVICES MEASURE

THE CITY COUNCIL OF THE CITY OF SANTA BARBARA DOES ORDAIN AS

FOLLOWS:

SECTION 1. Findings and Purpose. The City Council finds and declares as

follows:

A. The City of Santa Barbara provides vital municipal services and facilities,

such as:

1. Police, fire, and 911 emergency medical response;

2. Repairing local streets, potholes, bridges and storm drains;

3. Maintaining neighborhood fire stations and upgrading public safety

infrastructure;

4. Protecting parks, youth and senior services;

5. Addressing homelessness;

6. Helping retain local businesses; and

7. Supporting other general services that are necessary to protect the public

health, safety and general welfare.

B. The City of Santa Barbara’s existing revenues are insufficient to fully provide

such municipal services and facilities at the level that residents need and want.

C. Over the past five years, the state has taken away over $100 million in local

City funding. This measure provides local funding for local needs, and includes strict

accountability requirements including independent oversight by a citizen’s committee that

must meet in public, full disclosure of public spending available on the City’s website and

at other public locations in the City; annual financial audits; and a requirement that all

funds raised be spent locally and cannot be taken by Sacramento or Washington.

D. Even before last winter’s damaging rainstorms, 64% of the streets in Santa

Barbara were rated as “at risk, poor or failed” by pavement engineers.

E. The City of Santa Barbara is 167 years old and has aging infrastructure

which needs to be repaired and upgraded. This measure invests in our community by

helping improve the condition of our streets and sidewalks, earthquake retrofit local

 

2

EXHIBIT A

 

bridges, as well as repair and upgrade deteriorating storm drains and the seismically

unsafe police station. It will cost taxpayers less to address these infrastructure needs now,

rather than letting them worsen and costing all of us more in the long-run.

F. There are nearly 800 homeless people living on the streets, in cars or in

temporary shelters in Santa Barbara on any given night, including nearly 150 veterans

and families with young children. This measure will help the City continue to provide

resources to community partners to address homelessness including mental health,

substance abuse treatment services and job training, to respectfully help individuals,

veterans and families with young children transition away from or stay off the street, as

well as to ensure our business districts, parks and other public areas are safe and secure

for everyone.

G. Well maintained streets, quality neighborhood parks, and safe and clean

streets, schools and neighborhoods are an investment in public safety that strengthens

local property values and make our community a more desirable place to live, do business

and raise a family.

H. About 40% of Santa Barbara’s sales tax dollars are paid by tourists and

visitors from surrounding areas. This measure will help make sure that tourists and visitors

are paying their fair share to maintain our community and not place these costs

exclusively upon city residents. Prescription medications and groceries will not be taxed

by this measure.

I. The funding made available by this measure will enable the City to restore

and improve its general municipal services and facilities. Nothing in this measure allows

tax revenues to be directed into a special fund or for a special purpose.

SECTION 2. Chapter 4.14 [Transactions and Use Tax] of Title 4 [Revenue,

Finance and Purchasing] of the Santa Barbara Municipal Code is added to read as

follows:

4.14.010 Short Title. This ordinance shall be known as the Santa Barbara Critical

Infrastructure and Essential Community Services Measure. The City of Santa Barbara

hereinafter shall be called "City." This ordinance shall be applicable in the incorporated

territory of the City.

4.14.020 Operative Date. "Operative Date" means the first day of the first calendar

quarter commencing more than 110 days after November 7, 2017.

4.14.030 Purposes. This ordinance is adopted to achieve the following, among

other purposes, and directs that the provisions hereof be interpreted in order to

accomplish those purposes:

A. To impose a retail transactions and use tax in accordance with the

provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and

 

3

EXHIBIT A

 

Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to

adopt this tax ordinance which shall be operative if a majority of the electors voting on the

measure vote to approve the imposition of the tax at an election called for that purpose.

B. To adopt a retail transactions and use tax ordinance that incorporates

provisions identical to those of the Sales and Use Tax Law of the State of California

insofar as those provisions are not inconsistent with the requirements and limitations

contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.

C. To adopt a retail transactions and use tax ordinance that imposes a tax and

provides a measure therefore that can be administered and collected by the State Board

of Equalization in a manner that adapts itself as fully as practicable to, and requires the

least possible deviation from, the existing statutory and administrative procedures

followed by the State Board of Equalization in administering and collecting the California

State Sales and Use Taxes.

D. To adopt a retail transactions and use tax ordinance that can be

administered in a manner that will be, to the greatest degree possible, consistent with the

provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost

of collecting the transactions and use taxes, and at the same time, minimize the burden of

record keeping upon persons subject to taxation under the provisions of this ordinance.

4.14.040 Contract with State. Prior to the operative date, the City shall contract

with the State Board of Equalization to perform all functions incident to the administration

and operation of this transactions and use tax ordinance; provided, that if the City shall not

have contracted with the State Board of Equalization prior to the operative date, it shall

nevertheless so contract and in such a case the operative date shall be the first day of the

first calendar quarter following the execution of such a contract.

4.14.050 Transactions Tax Rate. For the privilege of selling tangible personal

property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of

the City at the rate of 1.00% of the gross receipts of any retailer from the sale of all

tangible personal property sold at retail in said territory on and after the operative date of

this ordinance.

4.14.060 Place of Sale. For the purposes of this ordinance, all retail sales are

consummated at the place of business of the retailer unless the tangible personal property

sold is delivered by the retailer or his agent to an out-of-state destination or to a common

carrier for delivery to an out-of-state destination. The gross receipts from such sales shall

include delivery charges, when such charges are subject to the state sales and use tax,

regardless of the place to which delivery is made. In the event a retailer has no

permanent place of business in the State or has more than one place of business, the

place or places at which the retail sales are consummated shall be determined under

rules and regulations to be prescribed and adopted by the State Board of Equalization.

 

4

EXHIBIT A

 

4.14.070 Use Tax Rate. An excise tax is hereby imposed on the storage, use or

other consumption in the City of tangible personal property purchased from any retailer on

and after the operative date of this ordinance for storage, use or other consumption in said

territory at the rate of 1.00% of the sales price of the property. The sales price shall

include delivery charges when such charges are subject to state sales or use tax

regardless of the place to which delivery is made.

4.14.080 Adoption of Provisions of State Law. Except as otherwise provided in this

ordinance and except insofar as they are inconsistent with the provisions of Part 1.6 of

Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing

with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted

and made a part of this ordinance as though fully set forth herein.

4.14.090 Limitations on Adoption of State Law and Collection of Use Taxes. In

adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:

A. Wherever the State of California is named or referred to as the taxing

agency, the name of this City shall be substituted therefor. However, the substitution shall

not be made when:

 

1. The word "State" is used as a part of the title of the State Controller,

State Treasurer, State Board of Control, State Board of Equalization, State Treasury, or

the Constitution of the State of California;

 

2. The result of that substitution would require action to be taken by or

against this City or any agency, officer, or employee thereof rather than by or against the

State Board of Equalization, in performing the functions incident to the administration or

operation of this ordinance.

 

3. In those sections, including, but not necessarily limited to sections

referring to the exterior boundaries of the State of California, where the result of the

substitution would be to:

 

a. Provide an exemption from this tax with respect to certain sales, storage,

use or other consumption of tangible personal property which would not otherwise be

exempt from this tax while such sales, storage, use or other consumption remain subject

to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and

Taxation Code, or;

 

b. Impose this tax with respect to certain sales, storage, use or other

consumption of tangible personal property which would not be subject to tax by the state

under the said provision of that code.

 

4. In Sections 6701, 6702 (except in the last sentence thereof), 6711,

 

6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.

 

5

EXHIBIT A

 

B. The word "City" shall be substituted for the word "State" in the phrase

"retailer engaged in business in this State" in Section 6203 and in the definition of that

phrase in Section 6203.

4.14.100 Permit Not Required. If a seller's permit has been issued to a retailer

under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit

shall not be required by this ordinance.

4.14.110 Exemptions and Exclusions.

A. There shall be excluded from the measure of the transactions tax and

the use tax the amount of any sales tax or use tax imposed by the State of California or by

any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales

and Use Tax Law or the amount of any state-administered transactions or use tax.

B. There are exempted from the computation of the amount of

 

transactions tax the gross receipts from:

 

1. Sales of tangible personal property, other than fuel or

 

petroleum products, to operators of aircraft to be used or consumed principally outside the

county in which the sale is made and directly and exclusively in the use of such aircraft as

common carriers of persons or property under the authority of the laws of this State, the

United States, or any foreign government.

 

2. Sales of property to be used outside the City which is shipped

to a point outside the City, pursuant to the contract of sale, by delivery to such point by the

retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee

at such point. For the purposes of this paragraph, delivery to a point outside the City shall

be satisfied:

 

a. With respect to vehicles (other than commercial

vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of

Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the

Public Utilities Code, and undocumented vessels registered under Division 3.5

(commencing with Section 9840) of the Vehicle Code by registration to an out-of-City

address and by a declaration under penalty of perjury, signed by the buyer, stating that

such address is, in fact, his or her principal place of residence; and

 

b. With respect to commercial vehicles, by registration to a

place of business out-of-City and declaration under penalty of perjury, signed by the

buyer, that the vehicle will be operated from that address.

 

3. The sale of tangible personal property if the seller is obligated

to furnish the property for a fixed price pursuant to a contract entered into prior to the

operative date of this ordinance.

 

6

EXHIBIT A

 

4. A lease of tangible personal property which is a continuing sale

of such property, for any period of time for which the lessor is obligated to lease the

property for an amount fixed by the lease prior to the operative date of this ordinance.

5. For the purposes of subparagraphs (3) and (4) of this section,

the sale or lease of tangible personal property shall be deemed not to be obligated

pursuant to a contract or lease for any period of time for which any party to the contract or

lease has the unconditional right to terminate the contract or lease upon notice, whether

or not such right is exercised.

 

C. There are exempted from the use tax imposed by this ordinance, the

 

storage, use or other consumption in this City of tangible personal property:

 

1. The gross receipts from the sale of which have been subject to

a transactions tax under any state-administered transactions and use tax ordinance.

2. Other than fuel or petroleum products purchased by operators

of aircraft and used or consumed by such operators directly and exclusively in the use of

such aircraft as common carriers of persons or property for hire or compensation under a

certificate of public convenience and necessity issued pursuant to the laws of this State,

the United States, or any foreign government. This exemption is in addition to the

exemptions provided in Sections 6366 and 6366.1 of the Revenue a