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Higher Sales Taxes Start Kicking in for Santa Monica  
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Kutcher & Kozal, LLP

By Niki Cervantes
Staff Writer

April 6, 2017 -- A higher new sales tax arrived in Santa Monica Sunday, translating into a penny for every dollar spent on purchases to support local affordable housing and education, with another hike looming this summer.

The new rate of 9.75 -- which was the result of the approval of Measures GSH by local voters in November -- will be topped in three months, when a countywide measure also approved by voters this fall pushes the sales tax rate to 10.25 percent.

That would put Santa Monica at the highest tax rate now allowed by California law, a threshold reached by only a minority of local governments.

For a city as well-heeled as Santa Monica, the increases don’t necessarily pose a huge financial burden.

Still, the increases in Santa Monica were part of an unprecedented wave of ballot measures proposed -- and largely approved -- in California in November to raise local money for basics in education and local spending on routine projects such as fixing roads.

Experts, as well as taxpayer groups, are watching closely.

“California voters set a record last November for most local sales taxes approved or extended, at 66 (localities),” the Howard Jarvis Taxpayers Association said.

That included voters in 56 cities and three counties which “considered general purpose majority vote add-on sales tax rates ranging from ¼ percent to one percent,” said Michael Coleman of the Local Government Finance Almanac, which tracks the way cities and counties raise and spend revenue.

Santa Monica’s Measure GSH was on that list, passing with 63 percent of the vote ("Opponents Call Santa Monica Tax Measure 'Growth Stimulating Hormone,' Supporters Disagree," August 24, 2016.

Coleman’s report (at www.californiafinance.com) notes GSH was one of only six to have a companion on the ballot (Measure GS) which specified how the extra money would be spent -- $16 million in added revenue evenly split between the City for affordable housing and the public schools for improvements.

Coleman said the sales tax increases indicate localities don’t trust other levels of government -- especially the feds -- to help them any longer.

“The long-term trend of reduced federal revenue sharing with local governments that has helped to create the current sense of urgency surrounding raising revenue locally appears likely to accelerate,” he said.

Santa Monica sees its next sales tax increase on July 1. The additional half-cent sales tax was approved on November 8 countywide. It is primarily for public transit but also includes improvements to roads and expanding government bike-sharing efforts and greenways.

Measure M will nudge Santa Monica's sales tax to 10.25 percent -- the highest allowed by the state.

The rate is not common among the state's 58 counties and 482 municipalities.

In Los Angeles County, the 10.25 percent sales tax is expected to kick in for cities that had a 10 percent sales tax before Measure M, including La Mirada, Pico Rivera and South Gate.

In all, Measure M is expected to fetch $120 billion for transportation over 40 years, adding an estimated $25 to $65 a year in sales taxes for residents.

Although the sales tax is regarded as regressive because it hits low-income earners harder as a percentage of total income, it makes up two-thirds the Los Angeles Metropolitan Transportation Authority’s revenue today.

Voters in Los Angeles county hiked sales taxes again with the March 7 passage of countywide Measure H, aimed at addressing homelessness.

Measure H added a quarter-cent to sales tax rates and will raise an estimated $355 million annually.

But Santa Monica and other cities will have reached the 10.25 percent cap by then, so their rate cannot increase and the revenue is not expected to be collected within their borders without legislative changes.


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