The tax man is coming to Santa Monica one week early.
While April 15 is a dreaded day for most Americans, those who live and work in Santa Monica have to deal with Uncle Sam on April 8, as the voter-approved half-cent sales tax went into effect five months after Santa Monica Measures Y and YY passed.
In accordance with Measure Y, the sales tax on most consumer items will increase from 9.75 percent to 10.25 percent. Thanks to Measure YY, at least half the money raised from the tax increase would be directed to the Santa Monica-Malibu Union School District (SMMUSD).
On Nov. 2, both Measures Y and YY reportedly passed with more than 60 percent of the vote in favor of the half-cent tax increase and expenditure direction.
The City of Santa Monica is not the only municipality within Los Angeles County to charge more than the countywide 9.75 percent sales tax rate on consumer items. Santa Monica joins cities such as Avalon, El Monte, Inglewood, South El Monte, and Contra Costa County’s El Cerrito in assessing the 10.25 percent sales tax rate, while Alameda County’s San Leandro opted for a 10 percent sales tax.
The cities of South Gate and Pico Rivera, both in southeast Los Angeles County, have the highest sales tax rates at 10.75 percent.
Here in Santa Monica, City Attorney Marsha Jones Moutrie released a statement during the election of what services would be affected by the sales tax increase and how it would be implemented.
“Some of the services and programs that can receive funding (from the half-cent sales tax increase) include: police, fire, paramedic and emergency 911 response, school, educational and after school programs, public transit, services for the disabled, gang and drug prevention programs, environmental and library services,” she stated in an impartial analysis of Measure Y that was posted in the Nov. 2 election materials.
“It would only apply to goods and services that are subject to the existing sales tax. For instance, purchases of prescription medications and food store items would not be taxed,” she added.
As Measure YY was simultaneously passed with Measure Y on Nov. 2, it is interesting to note that the former is merely an advisory provision.
“This measure asks whether half of the revenue should be used to support school, educational and after school programs and the other half used to support other services, such as police, fire, and paramedics services, libraries, and social and environmental programs,” Moutrie stated in her analysis. “Because this measure is advisory, its passage would not legally compel the City to expend the revenues as described in the measure. Instead, the measure would supply information about whether the voters prefer that the revenues be expended in the manner described.”
As it relates to consumers, expenditures exempt from the sales tax increase are any purchases made with food stamps, groceries, gas, prescriptions, medical care or equipment, utilities, rent, and services.
A few items fall in the “in between” category as to whether the tax increase would apply. For example, if a car buyer registers the car in Santa Monica, only then would the 10.25 percent sales tax rate apply, as opposed to someone purchasing a vehicle and registering it in Venice or Pacific Palisades, where the 9.75 percent rate is applicable.
Also, certain taxable items, such as appliances delivered or shipped into Santa Monica from another city by a third party (as opposed to transporting the goods into town on their own) may be subject to the new rate.
Groups and interests who supported Measures Y and YY in the Nov. 2 election included the Santa Monica Police Officers Association, the PTA, Santa Monicans for Renters’ Rights, and the League of Women Voters of Santa Monica. Also supporting the twin measures were renters, homeowners, the City’s neighborhood groups, and small business owners.
The Santa Monica Chamber of Commerce was reportedly neutral on Measure Y yet supported Measure YY.
According to Finance Director Carol Swindell, the half-cent sales tax is expected to produce an estimated $11.4 million windfall for the City’s general fund, half of which would be allocated to the SMMUSD. However, the exact amount will not be known until it is calculated by state officials in 2012; once the specific figure is determined, the City will ensure that half of that adjusted amount will be allocated to the school district in accordance with Measure YY.
Kate Vernez from the City Manager’s Office added the Council will likely discuss Measures Y and YY in relation to SMMUSD at its April 26 meeting or shortly thereafter. According to Vernez, both the City and the school district are ironing out final details of a community agreement, which Swindell adds would establish a new accord between both parties.