After voters rejected a 1-cent sales tax hike in 2010, Half Moon Bay officials are once again asking city residents to approve a similar measure — this time for a half-cent.
The Half Moon Bay City Council approved putting the measure on the November ballot earlier this year to help support some of the city’s capital needs such as repairing the Main Street Bridge. The council voted 4-1, with Councilwoman Marina Fraser voting against it.
Fraser, however, fully supported Measure K in 2010 but the city’s needs have changed since then, she previously told the Daily Journal. Ironically, current Vice Mayor Rick Kowalczyk opposed Measure K but is now on board with supporting Measure J.
He and Mayor Allan Alifano are leading the charge in trying to get the measure passed.
Measure K barely lost in 2010 and Alifano thinks a less burdensome tax with a three-year sunset might be more palatable for Half Moon Bay residents this year.
Opponents of Measure J, however, say the city is not in the dire straits it says it’s in.
The city has already reduced cost significantly by contracting out services such as police but still has capital needs, to the tune of $1 million a year, that need to be addressed, Alifano told the Daily Journal.
But George Gipe, one of the main opponents of Measure J, told the Daily Journal that Half Moon Bay can cover its capital needs within its current budget.
The city now has an operating surplus, Gipe said, and can use grants and gas tax funds to pay for any capital projects the city wants to undertake.
Gipe also questions a city expenditure of $450,000 to pay for a Emergency Operations Center that he calls redundant.
Boosting sales tax also hurts the poor and leads to higher unemployment, Gipe said.
The city got itself into a structural deficit after losing a court settlement over the botched Beachwood development that is costing the city more than $1 million annually in bond payments.
"If that wasn’t there, there would be no need for a tax,” Alifano said.
Business owners in town, Alifano said, have expressed more favor toward Measure J this year than they did for Measure K in 2010, Alifano said.
"We’ve done all the cutting. Now we need to raise revenue,” Alifano said.
The three-year tax will help the city with its capital needs for the next three years and, after that, the city may be able to generate money from Beachwood, now called the Cabrillo Highway properties, once it is sold in a few years.
But Gipe contends the city has much more money to spend on capital needs since it now has an operating surplus of about $2 million. The city’s revenue is about $11.1 million annually. It spent $12.2 million last year but Gipe said those were one-time costs to the city and that its actual expenditures are closer to about $9 million.
Other tax sources, such as property, sales and hotel, are on the rise, Gipe said.
The sales tax hike is "totally unnecessary. The situation is not dire enough to justify a tax increase,” he said.
Half Moon Bay’s current sales tax is one of the highest in the region, he said.
The tax will also hurt local jobs, Gipe said.
The half-cent sales tax hike, if approved, will bring in about $870,000 annually.
The city may want to consider selling off surplus property to support capital projects, Gipe said.
He also suggested the city can loan itself money out of its sewer fund, if it really wants to address capital needs.
"The city needs to live within its means,” Gipe said.
Alifano said, however, that the city’s capital project costs could increase drastically if it doesn’t move toward addressing them now.
"If we spend now, we can save later,” Alifano said.
If approved, the sales tax in Half Moon Bay will rise to 8.75 percent. The tax needs a simple majority to pass.
The general election is Tuesday, Nov. 6.
Bill Silverfarb can be reached by email: email@example.com or by phone: (650) 344-5200 ext. 106.