Thursday, July 1, 2010

Santa Cruz Grand Jury says government could benefit from legal pot: County could see $7.5 million gain from new taxes and decreased costs

Posted: 06/29/2010 07:38:00 PM PDT
Updated: 06/29/2010 07:38:36 PM PDT

SANTA CRUZ - Local governments could cash in on legal pot to the tune of $7.5 million, a new Santa Cruz County Grand Jury report concludes.

The analysis of the financial impact of Proposition 19, a measure on the Nov. 2 statewide ballot, which seeks to legalize, regulate and tax marijuana, is one of several reports released Tuesday by the Grand Jury - and no doubt the most unusual.

As is typical, the Grand Jury spent the past year studying various government agencies, and in its final report raises issues and makes recommendations for the studied programs and groups, including the County Jail, the public defender's contract, a drug treatment website and the Watsonville Personnel Commission, as well as for public libraries and the Lompico Water District, sections that were previously released.

But the pot report aimed to scrutinize the finances without weighing in on the issue.

"At the end of the day it's up to the voters," said Patrick Henderson, who chaired the marijuana committee. "We didn't look into the morality of it, just the dollars and cents impact on Santa Cruz."

The report, which opens with a light-hearted preamble titled "Getting the Dope on Dope: The Grand Jury Attempts to Clear the Smoke in the Joint from the Numbers," derives some of its data from statewide estimates of marijuana use and enforcement costs. It also looked at local crime statistics.

Santa Cruz Police spokesman Zach Friend questioned one piece of data. He said department figures from 2008 show 315 adult arrests/citations, while the Grand Jury report says there were 724. Friend said adults are the "overwhelming" majority when it comes to arrests and citations for marijuana.

Henderson said all the numbers came from the agencies themselves.

"If the data's wrong, it's because they gave us the wrong data," he said.

The report assumes pot would cost $100 an ounce, that 19 million ounces would be sold statewide, and that the county would impose a $50-per-ounce tax. Under that scenario the county would collect $129,200 in sales taxes and $6.46 million from its pot tax.

The county also would lose about $400,000 in fines, seized property and enforcement grants, but would save $1.36 million in arrest, prosecution and incarceration costs, the report says.

What's unknown, Henderson said, are the potential costs of legalizing the drug, lost productivity and addiction treatment, for example.

Supervisor Tony Campos, who is serving as board chair, hasn't taken a position on Proposition 19, but he said he's seen a huge change in attitudes about marijuana, even among some in law enforcement, during his 12 years in office. His "gut feeling" is that the measure will pass. If it does, he's willing to tax sales.

"We sure could use it ... to help our county pay for law enforcement, mental health services, health care for our elderly, to make sure there's child care, and probably No. 1, to make sure our schools have money," he said.

Santa Cruz Mayor Mike Rotkin, who favors legalizing pot with "reasonable regulation," said his city can't go it alone, but if state voters approve the measure, "it would be a good thing." Marijuana is not more dangerous than alcohol, he said, and much of the problem revolves around its status as an illegal substance, violent turf wars, for example.

"We certainly would tax the hell out of it," Rotkin said. "Certainly, it's not a necessity. It's a luxury."

2010 Grand JURY REPORT

Watsonville Personnel Commission

The fairness of an Aug. 20 hearing was questioned after the department head defending against an employee complaint attended a dinner with commissioners beforehand. The jury concluded that the hearing was fair, commended the commission for its process, but said the dinner, while legal, could have resulted in the appearance of bias, and recommended limiting future dinners to commissioners, their legal counsel and recording secretary.

The jury commended county health officials for a website that provides information about recovery and addiction treatment programs, but said accuracy of information should be verified and updated, and a disclaimer should be more prominent to avoid the appearance of official endorsement of private services.

Public Defender's Contract

The jury recommended the county make its contract with a private law firm for public defenders services more transparent by adding an audit clause and consider opening the contract to a competitive bidding process. The same firm has provided legal representation for indigent defendants in the county for 35 years and the jury noted that services have been satisfactory. This year's contract costs the county more than $5.2 million.

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