Sales tax revenue down in California

May 22, 2009 7:29:52 PM PDT
The state budget deficit is going to mean less sales tax money for California cities and counties.

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Sales taxes are collected locally, but they go to the state and one percent is then passed back to local governments. As the economy slumps, people are buying less and sales taxes have taken a dive.

Like a lot of cities, Burlingame relies on sales taxes from automobile dealerships. Normally it's 45 percent of the cities sales tax revenue. This year it's down about 20 percent.

"We're back down to the levels we were collecting right after the 9/11 terrorist attacks," said Burlingame Finance Director Jesus Nava. "What has suffered the most is funding for capital improvements. The majority of the brunt has been in repairs to streets repairs to infrastructure."

Library hours have been cut back and some staff positions eliminated. Now Burlingame is going to get less back from the state in sales tax revenue.

The latest figures show that San Francisco sales tax revenue is down $1.7 million, Oakland is down $476,000, Santa Clara $437,000 and Burlingame $103,000 less than what was expected.

"Percentage-wise business is probably down, I'd say about 20 percent. We've seen a lot of store closures in the small mom and pop businesses," said Lucy store manager Javey Affonso.

Affonso's estimate of 20 percent is just about exactly the average state-wide.

In Sacramento, the legislature's budget conference committee met to discuss the state's cash flow problems.

Assemblywoman Noreen Evans of Santa Rosa is chair of the committee.

"We are on the precipice of the cliff right now, and unless we make some very, very drastic cuts or unless we somehow find some new revenues, we are in very sad shape as a state," said Evans.

To help close the state's budget gap, lawmakers are considering a proposal to hold back eight percent of the property tax money they send back to the cities.

In Burlingame, that would mean a loss of $1.2 million, greater than 10 times more than the cut in sales taxes.

"It will mean having to look at police and fire services and possibly reducing those services that are essential," said Nava.

So far, Burlingame has managed to cut the police budget without firing officers. Across the bay in Oakland, they are looking to cut dozens of officers because of budget shortfalls. ABC7 wanted to talk to city leaders about that, but City Hall is closed on Fridays in order to save money.

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