A few weeks ago, the City Council approved placing a half cent sales tax increase on the November ballot. If approved, the “proposed “transaction and use tax” would increase the current 9.75 percent sales tax to 10.25 percent on all taxable items sold, delivered to or registered in Santa Monica.
Local merchants are concerned about "diversion,” which is what happens when Santa Monicans shop out of town to avoid paying a higher tax and non-residents stay away, slow or stop their spending for the same reason.
City Manager Rod “Half-cent” Gould disagreed with my comments about diversion in a letter to the editor (Letters to the editor, “For the record,” July 24-25, Pg. 4). Based on general information from someone on City Hall’s financial staff, my sources assumed the proposed increase would result in a 10 percent decline in Santa Monica’s taxable sales which last fiscal year was $2.680 billion. A 10 percent decline in taxable sales would amount to $268 million.
Gould wrote that the city’s outside consultant (HDL Companies in Diamond Bar), “Studied 37 of the 79 cities that have enacted such a tax and found the increased tax has no impact on taxable sales of any business type” and “… no decrease of city sales tax revenue.” While I’ll admit that a 10 percent decline in taxable sales was perhaps overstated, Gould’s contention that there will be no decline in taxable sales is Pollyannaish and equally unrealistic. Gould’s letter also ignored the majority of cities (42 out of 79) where there was an impact.
Neither HDL or Gould has talked to the residents I’ve conversed with over the last week or two who unanimously condemned the proposal as excessive and unneeded. All 60 to 75 people I talked with said, “If they raise the sales tax, I’ll go somewhere else.”
This newspaper has printed numerous, exclusively negative letters from readers since the tax was announced. In the July 17-18, Q-line, (Pg 5), 15 of 16 respondents said they wouldn’t vote for this tax and many of them also vowed not to shop here if it passed.
At a Sunset Park block party I attended July 24, Councilman Bob Holbrook was surprised to hear residents say they’d leave town to shop.
“You’d drive out of town to save a few cents,” he asked? Maybe not for one small item, they replied, but if shopping for a number of items at one time, they certainly would.
Costco in Venice seems to be a favorite. It and similar non-local outlets will surely benefit at the expense of Santa Monica retailers, especially those selling higher ticket items.
For every dollar spent out of town, the city will not only lose the half cent increase but also the one cent on each taxable sales dollar it now receives from the current 9.75 percent tax.
Farmers’ Market changes coming — better or worse?
Never content to let well enough alone, City Hall is “tweaking” its various Farmers’ Markets.
At the Pico Farmers Market, many quality “prepared foods” purveyors have been doing business for as long as 15 years. The Old Town Baking Company, Bertha’s Tamales, Candy’s Gourmet Sausage, Laurent Croissants, Expresso Experience, Cafe Laurent, Lox of Bagels and others may be gone in two months.
It seems that some local merchants, primarily on Main Street, want to get in on the lucrative market action by selling prepared foods such as light meals, sandwiches and beverages there.
According to market supervisor Laura Avery, “Limited non-farmer space has been filled for years. Main Street’s market has 13 prepared food stalls, Pico has seven and the Downtown markets have one or two each."
Nevertheless, the Farmers’ Market staff in Andy Agle’s Housing and Economic Development Department “was advised by City Attorney, Marsha Moutrie to establish an open application process so that everyone should have a chance to be considered,” Avery disclosed.
“Our standard advice for allocating commercial opportunities afforded by the city is an open, fair and competitive process with the decisions made pursuant to standards approved by council. In general, this is the system for awarding city contracts, and it is the general recommendation we made as to the markets,” Moutrie e-mailed. The three year development process was approved by City Council in May.
A panel of seven people — mostly City Hall staff — will decide in the next six weeks who goes, who stays and who comes in new. Experience in open air markets, quality of ingredients, sustainability and maintaining a variety of purveyors are prime considerations. Being a Santa Monica business is a plus. Vendors will be finalized in September and debut their wares around Oct. 1.
Many of us shop these markets for the prepared foods including breads and specialty items as well as the fresh produce. While change isn’t necessarily bad, let’s hope this “adjustment” doesn’t disappoint and therefore give loyal market customers a reason to shop at Farmers’ Markets out of town.
Bill can be reached at email@example.com.