Facing a multimillion-dollar budget shortfall over the next few years, Monterey City Council declared a “fiscal emergency” on Nov. 19 and called a special election for March 3 to ask voters to consider a sales tax increase.
The sales tax rate in Monterey would go up from the current 8.75 percent to 9.25 percent, reaching the maximum cities and counties are allowed to charge beyond the state’s base rate of 7.25 percent. An estimated $5 million a year could be generated by the new tax. If it doesn’t get the support of the majority of voters, city officials warn they would have to make “drastic service cuts.”
The money would not only make up for the city’s anticipated operating deficit, it would also help pay off the city’s $159 million pension liability and allow investment in parks, infrastructure, technology and new fire engines.
Before calling the special election, the city paid for a public opinion survey which found that more than 60 percent of voters would likely support the tax increase. According to the survey, one of the most convincing reasons in favor is that some of the funding would come from taxes paid by visitors shopping in Monterey.
In making the case for the tax measure, city officials cited an October report from the California State Auditor that ranked Monterey as the 45th most fiscally distressed city out of 471.
Sales tax rates in nearby cities vary from 8.75 percent in Carmel, Sand City, and Pacific Grove to 9.25 percent in Seaside and Marina.
Monterey put a new sales tax called Measure S on the ballot about a year ago; voters passed it with an 82-percent majority. The proceeds from that tax are restricted to road repair and improvements.