Mad River Union
HUMBOLDT – Blindsided by COVID-19, the county is glumly assessing loss of sales tax revenue with a preliminary estimate pegging it at $1.3 million.
That situation was one of many items on a packed May 19 agenda of the Board of Supervisors. The board also approved moves on advancing a ballot measure supporting low income housing and the first round of grant awards under the Project Trellis cannabis business support program.
The sales tax drop was part of a staff presentation on the third quarter of the current year’s county budget. The advent of coronavirus has thrown the county’s economy into uncharted territory and a consulting firm that estimates tax revenues has “never experienced an environment with so many unknowns,” according to a written staff report.
Preliminary estimates show a 13.5 percent percent drop in sales tax revenue from what was budgeted in the current fiscal year and a 5.5 percent drop as the county heads into the next fiscal year, which begins July 1.
In dollars, that amounts to $1.3 million less than what was expected for both years.
This will affect public safety services funded through the Measure Z and Proposition 172 sales taxes. Those funding sources will see “similar and equally extreme impacts” as overall sales tax revenue drops.
The county’s consultants have estimated a 6.5 percent reduction of Transient Occupancy Tax (TOT) revenue, which is derived from hotel room fees, in the current fiscal year. Deputy County Administrative Officer Elishia Hayes said administrative staff believes the percentage “to be an optimistic projection and have doubled that for revenues anticipated for 2021.”
The length of the economic malaise is unknown, as is the longevity of shelter in place restrictions. The staff report states that even if economic recovery begins this year, it is expected to be slow and a resurgence of COVID-19 could offset it.
Property tax collection is seeing a more modest decline, of 2.6 percent, and Measure S cannabis tax revenue is stable as consumers are said to be buying as much or more cannabis as usual these days.
Also at the meeting, supervisors voted to authorize contracting with a polling consultant to gauge public opinion on a countywide housing-related ballot measure for the November 3 election.
The proposed measure will locally repeal Article 34 of the state constitution, which was described as being a barrier to low income housing development during a staff report.
Added to California’s constitution decades ago, Article 34 prohibits local governments from developing or funding housing projects unless voters approve.
Its repeal is a core aspect in realizing the affordable housing goals of the county’s Housing Element, said Planning Director John Ford.
The article not only prevents local governments from participating in housing development, but also jacks up administrative costs when the county applies for state grants. Any grant-funded project’s ownership and financing has to be reviewed by attorneys to ensure compliance with Article 34.
A recent example of how it has blocked housing development is seen with a county-owned property on Lucas Street in Eureka. The county would pursue developing it or providing funding for low income housing there but can’t due to Article 34’s constraints.
Placing a measure on the ballot, paying for polling and carrying out a public education campaign would cost $121,000, according to a written staff report.
Supervisors voted to authorize a General Fund allocation for the measure’s expenses and the polling. But they held off on allocating for the education campaign, as it will depend on the results of polling.
Also approved was a slate of 14 cannabis business grants amounting to about $180,000.
All are for $10,000 except for a $50,000 grant for capital investment and infrastructure at the Five Sisters Farm in Piercy.
There were 71 applications for the grants, whose funding comes from Measure S revenue.
The grants were supported by all five supervisors but approved in a 3-2 vote. The split was due to the minutes of a February 25 advisory committee meeting being included in the agenda item and they were in dispute.
There was debate over whether Supervisor Steve Madrone had directed his appointee to prioritize grant applications involving road associations. Madrone said the minutes regarding that are misleading and the vote excluded their approval but supervisors Virginia Bass and Rex Bohn didn’t agree to that.