The taxman stayeth
Our little Island has gotten its fair share of bad budget news, and been subject to the hard knocks of the state’s fiscal crisis. But it looks like we’ve managed so far to dodge one bullet: We’re hanging on to a steady (if small) stream of sales tax dollars.
Late last week, the state Board of Equalization – which handles everyone’s sales tax money – sent letters to 337 local finance directors informing them they’d see a drop in their sales tax advances for the month as a result of state sales tax revenues obliterated by the recession. The board sent an additional 15 letters to cities that won’t see any advance at all.
Fortunately, Alameda wasn’t one of the cities or counties that got a letter. (Our redevelopment projects weren’t hit either.)
A Board of Equalization press release says that payments for the second quarter of this year were 14.4 percent less money than they had been getting for the month; the state’s overall sales decline was 18.74 percent (not including a temporary 1 percent increase). Cities and counties where taxable sales dropped off by more than 21.4 percent lost an additional 4 percent of their sales tax payment.
The board had sent out a similar round of 473 letters in May and still others in February, the first time such letters were sent out on a broad scale. That’s more than half of the 768 jurisdictions the board collects sales taxes for. The payments are based on prior taxable sales patterns “that do not apply in the current economic climate,” their release says.
They’re expecting additional reductions for the rest of the year, the release says.
Sales tax accounted for about 7 percent of the city’s general fund revenue for 2008, or about $5 million. This past year, the amount stayed steady despite the loss of our last few auto dealerships. (That said, we collect about half the county average.)