Local Measure B Forum
GRASS VALLEY—Local residents gathered to hear from a panel of local leaders about Measure B, a citywide sales tax initiative which will appear on the March 5th primary ballot for residents of the City of Grass Valley. The forum was hosted by the Nevada County Association of Realtors and held at Esterly Hall, 336 Crown Point Circle.
Holli Navo, president of the Nevada County Association of Realtors, moderated the evening. She welcomed attendees and started the evening, saying that local representatives would be fielding questions about Measure B, and that they had been given those questions ahead of time. Navo encouraged dialogue and as a result, several community members asked their own questions as well. A little over 30 people attended the event.
The six panelists were Tim Kiser, Grass Valley city manager; Grass Valley city council members Haven Caravelli and Tom Ivy; Gil Mathew, executive director of the Economic Resource Council; Robin Davies, executive director of the Greater Grass Valley Chamber of Commerce; and Tom Last, executive director of the Nevada County Contractors Association.
From left to right: Tom Last, Robin Davies, Gil Mathew, Haven Caravelli, Tom Ivy, Tim Kiser
Is the City of Grass Valley Actually Experiencing a Fiscal Emergency?
Ivy asserted, “No, we’re not going insolvent,” and explained that for the city to put this tax forward on an expedited timeline they had to declare a fiscal emergency. Kiser explained that the city does not need to declare a fiscal emergency to put the measure on the November ballot. A community member asked if this is a common practice to declare a fiscal emergency. Ivy claimed, “this is not the first time it’s been done.” Navo gave the other panelists a chance to respond as well, and Davies gave only a short reply: “not under our jurisdiction.”
Why Is This a General Tax and Not a Special Tax for This Specific Issue?
Ivy explained that “it’s almost impossible to pass a special tax in Grass Valley,” because it takes two-thirds of citizens to vote for it. The city council proposed the tax as a general tax because it only takes a simple majority to pass. Ivy added, “a lot of cities can’t pass a special tax in today’s environment, just flat out.”
Kiser explained the history of recent tax measures: Measures N and E were previous measures that increased taxes–N was a temporary tax increase, and Measure E replaced N to make the tax increase permanent. If passed by voters, this year’s Measure B will be an additional sales tax increase on top of that.
One community member asked if public opinion matters, why would the city go for the method that would require even fewer votes to pass.
Is This Tax Increase Necessary?
A community member asked how much the city estimates to be able to earn from this tax increase. Kiser said $2.5 million (which represents 5% of the $49 million 2022-2023 budget). The community member asked in return, if there isn’t $2.5 million that could be removed from the budget to be reallocated to the needs they have in mind. Ivy replied, “not easily.” The community member rebutted, “well it’s like going on a diet, it’s never easy.”
Impact on Businesses
Another question raised from the community was whether or not a raise in sales tax will impact business owners to the point where they might leave or even not survive. Kiser: “We do have a track record of working with our businesses and our community. Just look at Mill Street.”
Davies talked about how she sent a questionnaire by email to the Chamber of Commerce’s 782 members and 3% responded. The few responses showed mixed results. Davies explained that based on the limited amount of feedback she has received, Grass Valley businesses have not voiced strong feelings about Measure B and that “none of them” said they oppose it. Tom Last disagreed, saying that construction suppliers are worried that the sales tax measure may result in a loss of revenue.
A local business owner explained that Jerry’s Home Improvement in Eugene, Oregon has 15% market share of Ukiah, California customers driving six hours to avoid sales tax, implying that a significant share of people might be motivated to drive outside Grass Valley to cities that have lower sales tax rates.
An Accumulation of Taxes
To highlight the cumulative effect of taxes, the local business owner continued to explain that his business has to pay a mattress tax because the State of California considers any furniture with a cushion on it as subject to that tax, and also pays a $750/year lead tax for the few batteries he sells. “People are already stressed beyond what they can afford.” Using the “death by a thousand cuts” analogy, he warned against “an accumulation of taxes” over time, which add up to a larger burden.
He asked, “where does it end?,” adding, “I believe the council could have voted on this—why is it even going to a vote to the public? Why did you guys not just vote on this?” Caravelli said she “had to put it on the ballot” because enough people didn’t show up to express their opinion in previous city council meetings on the subject.
A Promise of Good Intentions
City Council member Ivy stressed that the funds will be spent as promised, saying “we’re gonna try our darndest to work with our community.” Ivy and Kiser also pointed to the City Council’s track record in managing Measure E funds responsibly. A member of the community noted that it has been reported that there was sufficient budget in prior years, and wanted to know what has changed to cause that amount to be insufficient now. Ivy clarified that “we want to provide a higher level of service” and believes that the tax funds from Measure B would help to keep the allure alive for people looking to move to the area.
Ivy insisted that the funds earned from the sales tax increase will benefit people living outside of the city limits, saying “we’re gonna spend a significant chunk of change outside city limits masticating.” Kiser added that the increased fire risk in recent years justifies the new sales tax.
Concerns Over the Future
Navo questioned what would happen when the tax sunsets in seven years and how the city would continue to fund the programs paid for with the tax proceeds, observing that the situation at that time would be unmanageable. Questioning whether the tax would really sunset, she quipped “Can you tell us an idea of taxes that went away?” with the audience sympathizing in light laughter. She sought clarification, asking if there would really be an option to vote to end the tax, noting that there would be programs in place that voters will have to give up. Ivy acknowledged it “will be hard to take away what is taken for granted in the future.”
Caravelli added that “a lot of things change in seven years. We could go into a major recession that would cut into our funds.” She explained that it is “hard to project” what sales tax revenue will be if economic conditions change.
Seeking Relief in the Insurance Market
An audience member asked for clarification as to whether the City seeks a reduction in the “ISO rating” in connection with Measure B. Kiser stated that the purpose is not to reduce ISO rating, though it may be an added benefit. (According to Nevada County Consolidated Fire, “ISO is a third-party independent agency that evaluates the fire district on their water supply, fire department equipment and communications systems.”) He informed the audience that there was no active intention to go from a 3 to a 2 (ISO rating), stating “We were very fortunate.”
Addressing the ISO discussion, an audience member who has a business on South Auburn Street noted that “dropping from a 2 to 1 isn’t gonna change your insurance rate. A ‘2’ is very good. Wildfire risk score is the biggest factor.” Navo sought clarification, asking the panel if a reduction of the ISO rating would make a big difference in the insurance market. A member of the panel confirmed that it would not.
Kiser talked about setting up “firewise communities” in Grass Valley so that insurance companies will reduce their rates, and an audience member rebutted that insurance providers do not recognize firewise communities because there is not a system to check if firewise communities are in compliance.
Truckee Held up as Role Model for Fire Management
An additional discussion ensued about Truckee’s approach to fire. A local business owner noted that Truckee’s property tax-based Measure T is a “beautiful piece of legislation that insurers love.” Kiser noted that Truckee’s Measure T is based on property taxes and applies a sliding scale. He also held up Truckee as a “role model” for their approach to fire policy, and that the city of Grass Valley is interested in purchasing the software and system Truckee uses. Truckee rejected last year’s Measure V, another sales tax increase similar to Measure B proposed by the county.
Concerns from the Local Construction Industry
In his closing comments, Tom Last offered his concerns over the effect that small fixes like this local tax have on the big picture of construction and housing costs. “Many people in government and politics look at little things. People need to understand what this does to the cost of construction. We’re up to $400 a square foot (for building costs on housing).” He speculated that this tax will push that amount to $405 per square foot (which for a 2,000-square-foot house would be an additional $10,000). He noted that “politicians and government look at specifics and the little picture. From the construction industry we’re in a tough situation with the cost of inflation, cost of housing.”
Speaking to the cost of housing, he lamented “The kids can’t afford to live here anymore. I wish people would understand that issue more when they vote. I wish people would understand that it is making it difficult for businesses to operate.”
Holli Navo added, “Do we understand the consequences? Nobody wants to say no to fire, but what are we doing to the cost of living here? We need a larger understanding.”