Lindsay Mulls Sales Tax Hike

With the city facing a major deficit with no way to cover the gap, the Lindsay City Council is considering a gamble that could see them clear of red ink.

Facing budget shortfalls on the order of $450,000 annually for the foreseeable future, the city has already been forced to send home its workforce two days a month as a cost-saving measure. More cuts to city services, reduced hours and even layoffs could result if some solution is not found, leaving the Council wondering if voters would be willing to approve a citywide sales tax. A more immediate question is whether the Council itself, which has shown signs of division recently, can even agree to make the attempt.

Time of the Essence

If Lindsay is going to raise sales tax there, the city must act now, Finance Director Tamera Larken told the Council at its meeting, September 8.

“You have to start now, because you really won’t reap any benefit until 2017,” she said.

Should the council decide to move ahead, the earliest voters could see the proposal will be during the June 2016 primary election. Passage will require a two-thirds majority. If approved, 110 days will lapse before the city could begin collecting the additional revenue on October 1, 2016, and the first payments from the state would not arrive until after the start of the new year.

“This is not an immediate fix,” Larken said. “This is a long-range plan. In 2017, your projected deficits are still going to be there.”

Cut to the Bone

Larken said the budget has already been combed for possible cuts, and city hall is looking for ways to increase its income now.

“We are looking at other immediate measures to try and reduce that, increased revenues in other departments that may be requiring a General Fund operating transfer,” she said. “There’s no way we can cut more than maybe $50,000-$60,000 out of the problem that we have now.”

With that impasse, Lindsay finds itself going the way of most of the county’s other cities. Only Lindsay, Woodlake and Exeter have yet to enact localized sales-tax increases. Dinuba added an extra 0.75% at the check-out on top of the 8% charged countywide. Visalia added 0.25%, while the Farmersville, Porterville and Tulare tacked on 0.5% at the register.

With that in mind, city staff recommends the Council seek a 0.5% increase should they decide to go ahead with the plan. Even that may not be enough to bridge the gap entirely.

“If you were to increase the tax rate by 0.50, you would realize about $377,805,” said Larken. “With the projected deficit for 2015 of $451,000, if you only went with the 0.25, you’d still be $262,000 in the hole.”

Spreading the Burden

If the sales tax goes into effect, the money raised would likely be directed into the general fund, which is short because the city is still making loan payments for improvements downtown made a decade ago, before the economic collapse of 2008. The majority of the general fund, 85%, is spent on the city’s fire department and police force.

Two of the other cities that have adopted local sales taxes, Farmersville and Porterville, tied their measures to funding public safety. The move means visitors to those cities help fund those critical services, making such a tax more attractive to Lindsay, which sees an influx of visitors to its McDermott Field House.

Council Already Divided

However, hiring a consultant to usher the possible tax through the ballot process has cost other local cities around $30,000, a sum Lindsay cannot afford.

“My biggest concern is how do we have the money to even go after this,” said Councilwoman Pamela Kimbell. “I don’t think we cannot afford to do it, down the road, but it’s going to be really hard right now.”

Kimbell joined Mayor Ramona Villarreal-Padilla and Councilman Danny Salinas in voting to direct staff to continue researching the sales tax. Mayor Pro Tem Rosaena Sanchez voted against going ahead, and Councilman Steve Mecum, who has a history of voting against tax and fee increases, was absent. This presents a possible problem, as the ordinance calling for any sales tax increase must have approval of at least four of the five council members. The notion left Interim City Manager Bill Zigler with some seeming trepidation over the cost should the Council be unable to reach agreement.

“It’s just about potentially spending money to do the research, and a whole lot of staff time; it’s very technical,” he said. “If we don’t have four-fifths that can ultimately approve this thing, we’re going to be left longing and we’re going to fail.”

Despite that fear, staff will continue developing the plan, bringing it back to the Council at its next meeting with the hope a four-fifths agreement can be found.

“That’s a tight spot to be put on,” said Villarreal-Padilla.

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