Paso Robles will lose $10 million due to COVID-19 — should voters raise city’s sales tax?
Paso Robles leaders will ask voters to consider a 1 cent sales tax increase in November to help offset revenue loss from the coronavirus and to help fill the gap between needed services and the dollars required to pay for them.
The City Council on Tuesday night voted 4-1 in favor of adding the tax increase to the ballot. Councilman Fred Strong cast the sole dissenting vote.
The measure would raise Paso Robles’ sales tax from 7.75% to 8.75% and would likely generate about $10 million every year, according to a city staff report.
The measure would ask for approval of a general tax, meaning the money would likely be used to fund a list of priorities, including fire and paramedic services, public safety, street repairs and homeless services. However, the measure wouldn’t necessarily require the money to be used for those specific things.
A general tax requires only a simple majority, meaning more than 50% of voters need to support it for the measure to pass.
“The level of service in this community will be significantly diminished without these funds,” City Manager Tom Frutchey said during the meeting.
The city will join San Luis Obispo — and likely several other cities in San Luis Obispo County — in asking voters for additional funds to help cope with budget gaps that have been worsened by the coronavirus pandemic. The virus outbreak has hurt businesses, kept visitors away and made residents wary of spending, resulting in fewer tax dollars for cities.
Paso Robles is set to lose $10 million in revenue from March through the end of the year due to the pandemic, Frutchey said.
The city, which has a $53.7 million general fund budget, was faced with a $13 million deficit. The City Council made $7.4 million in budget cuts and used $5.7 million in reserve funds to fill the gap, according to the staff report.
Paso Robles was facing budget challenges even before the pandemic, Frutchey said.
“The city has what’s called a structural deficit,” he said. “The wisdom of the state of California and its legislation and voter-approved initiatives has led to a disconnect between the needs for services that our residents and local businesses request and require and the revenues that we receive to in order to provide those services. And that structural deficit has been made even worse by COVID-19.”
In 2018, voters rejected a ballot measure asking for a half-cent sales tax increase. About 47% of voters supported the measure, and about 53% of voters opposed it.
A survey of 541 Paso Robles residents conducted by FM3 Research online and over the phone indicated 40% of those polled in July would support the measure, and 25% of those polled would lean toward voting yes.
About 22% of those surveyed said they would definitely not support the tax measure, 9% said they would lean toward voting no and 4% remained undecided.
Correction: This story has been updated to clarify the proposed sales tax increase. If voters approve the ballot measure, the tax will be raised by 1 cent, or one percentage point.
This story was originally published July 23, 2020 at 1:57 PM.
