Pinole is a small city near the Carquinez Strait that leads to the Sacramento River and our state capitol. The Point Pinole Regional Shoreline has some terrific view points. But lately what Pinole is becoming known for is its chronically out-of-balance city budget and its’ taxes, taxes, and more taxes. The reason for the deficit and new taxes is the city has spent too much on public employee union salaries, and especially their most generous pensions and medical benefits. The city has just 18,729 residents but even after cuts has well over 100 public employees. What the city obviously needs to do is fix the problem of salaries and benefits by lowering them to manageable levels. But the city won’t do so because of opposition by public employee unions. So they just keep raising taxes instead, and the new taxes are never enough to fix the problems the unions won’t allow to be reformed.
The City knew it was in trouble as early as 2006 and started making some woefully inadequate adjustments by reducing some bloated staffing to more reasonable levels and attempting to reduce some costs by changing its staff medical plan from a defined plan under CalPERS to a fully paid Kaiser medical plan for the Police department in particular. But these changes still were not enough to address top-heavy salaries and pensions benefits dragging the budget into deficit. Yet instead of looking to themselves and taking the hard decisions needed to fix the city, Pinole’s city council turned to the taxpayers. Repeatedly.
In 2006, voters were asked to pass Measure S, which raised sales taxes 1/2 cent from 8 1/4% to 8 3/4%. The Measure passed with about 60% of the vote. The Measure was supposed to increase general funds to a level to fix Pinole’s public employee salary and pension problems. But it didn’t.
So in November 2012, the city put Measure M on the ballot, to extend a utility tax placed directly on residents utility bills. It passed with nearly 80% of the vote. But that still didn’t raise enough money to keep pace with public employee union salaries, pensions and benefits approved by the city council.
As a result of Proposition 30, which raised the state’s portion of sales taxes to the highest levels in the nation, Pinole’s sales tax today stands at 9%. But the city council doesn’t think that is enough for residents to pay. So in November, it is likely the city council will put another sales tax hike on the ballot, lifting the sales tax locals pay to 9 1/4 cents, rather than trim back burgeoning public employee pay and benefits.
Pinole’s serial tax increases are sadly becoming a typical refrain in cities across the state. Rather that deal with the problem – out-of-control public employee union pay and benefits – elected officials (many of whom are elected as a result of public employee union political spending and are therefore beholden to the unions) simply punt to the taxpayers, who are expected to pass tax-and-tax to solve a problem created by the cabal of public employee unions and liberal Democratic office holders they control. (It is also a terrible omen for pension liability in future that a line firefighter, for example, made $350,000 in salary last year in San Francisco, a pay level grossly out-of-whack with comparative salary data for the private sector.) The result is economic devastation for the rest of society as high consumption taxes to support the salaries and benefits make the poor poorer, and small businesses and their job creating potential suffers as well. Why would anyone on a budget want to buy an automobile or other major item in Pinole at a 9 1/4% tax rate when the sales tax average for the rest of the state is 8%, and in many cities the tax rate is the state minimum of 7 1/2%?
In coming years, as the pension crisis gets larger and cities fail to address the real problems, California residents will be asked again-and-again to approve new local taxes for trumped-up reasons: to fix roads, or improve police and fire services. But the cities ought to be providing these services competently to begin with. Just as giving a dollar to the drunk panhandler doesn’t solve the long-term problem for the drunk, these new “targeted” taxes will not solve the ever growing needs for fixing public employee pensions in the state, and the only way that problem will ever be fixed is for citizens to stop giving government the extra money in the first place.