Blog note: this is an interesting article in that it draws on a 2013 grand jury report to support a 2016 ballot initiative. Grand juries in any one year sometimes have a longer life.
In 2012, San Mateo County voters approved Measure A, which temporarily raised the sales tax by a half cent and was set to expire in 2023. This year, Measure K asks voters to extend the tax for an additional 20 years until 2043 — a pill that some county residents are finding difficult to swallow.
Measure K’s supporters argue it funds essential county services like literacy programs and helps ease the housing crisis that will take decades for the county to fix. Critics worry about the timing and need for Measure K. Some say it’s premature to triple the duration of a tax just three years into its implementation, and ask whether the extra revenue is needed at all, given the relatively robust state of the county’s finances.
Initially expected to raise around $60 million a year in tax revenue, Measure A has actually raised around $80 million annually thus far. Each year, the county’s Board of Supervisors has allocated Measure A funding to programs for community services, housing and homelessness support, public safety, parks, veterans and health care services, and youth and education programs.
Total spending from Measure A funds has increased each year, from around $24 million in 2013-2014 to around $44 million in 2015-2016, according to the county manager’s office. This year, Measure A appropriations are expected to jump to around $178.3 million, according to the county’s approved recommended budget. Less than 11 percent of that is budgeted for affordable housing development contracts.
The bulk of the funds have gone to projects on the bay side of the Peninsula, said county Supervisor Don Horsley, whose district includes the Coastside. He’s quick to note that Measure A funds have also gone to initiatives on the coast like Seton Medical Center Coastside, the Big Lift educational program, medical clinic service at Puente in Pescadero, and affordable housing projects like MidPen Housing in Pacifica and loans for farm labor housing on the South Coast.
Big-ticket items include Seton Medical Center in Daly City, which received around $24.5 million for seismic upgrades. Technology and network infrastructure work cost an additional $15 million. MidPen Housing received $3.69 million.
Measure K opponents are concerned about postponing the tax’s expiration date by two decades. “The current Measure A was a temporary tax to get over some difficult times,” said Thomas Weissmiller, treasurer for the Committee to Stop Measure K. “Now we basically have three years of execution, and they want to extend it another 20 years. The question is, ‘Why now?’”
Weissmiller also questions whether the county needed the tax revenue in the first place, pointing to a 2013 civil grand jury report that found that the Board of Supervisors did not account for all the revenues it anticipated in its fiscal budget. The report criticized the board for not including in its budget the funds generated when educational reserve augmentation funds from local taxes exceed school funding requirements, referred to as excess ERAF.
“This has allowed the county to claim in recent years that it has a structural deficit. However, when all revenues, including something called ‘excess ERAF’ are counted, the county has not had an actual deficit since at least 2003,” the grand jury report said. “The county had a surplus of $26 million in fiscal year 2012 and its net assets have increased every year for each of the last 10 fiscal years. The Board did not publicize the true condition of its finances as of the time tax Measures T, U, X, and A were voted on in 2012,” the report said.
The Board of Supervisors issued a detailed response to the grand jury’s findings. “All things considered,” the response said, “even with the inclusion of 100 percent of excess ERAF, county officials could not have predicted anything better than a structurally balanced budget over the next five years.”
Recent financial reports indicate that the county is on more solid financial footing. The county’s approved recommended budget for financial year 2016-2017 lists its general fund reserves at $170.1 million.
And the county controller’s 2015 Comprehensive Annual Financial Report indicated that total property assessment roll value was $12.6 billion greater than it was the prior year, increasing the local property tax revenue to $1.77 billion.
“Since property tax revenues are the county’s largest source of general fund revenues, the health of the local real estate market and associated changes in property assessed values are key indicators of the county’s financial outlook,” the report said. “The FY 2015-16 property assessment values in the county are at a historic high.”
The county controller’s office has not yet released the report for the year ending June 30. It expects to release it sometime in November after the election, according to the county’s assistant controller Shirley Tourel.
For some, the county’s financial reserves and property tax revenue belie the need for Measure A and its proposed extension on the ballot. “(When Measure A was passed), we were in dire straits and needed increased revenue, and that turned out not to be true,” said Montara resident John Oehlert, a Stanford biostatistician who has lived on the Coastside for 30 years.
“That was very troublesome,” he said. “If they had counted all the money they had, they never would have gotten Measure A’s approval from the people.”
Both Weissmiller and Oehlert expressed doubts about the effectiveness of the Measure A Oversight Committee, which reviews an annual audit of the Measure A sales tax, and recommends “appropriate metrics to assess the impact of Measure A funds and prepares an annual report,” according to the website of the county manager’s office. The oversight committee’s 10 uncompensated members are appointed by the Board of Supervisors, and are required to meet a minimum of twice a year. The committee last met in January, and its next meeting is scheduled for December, according to Deputy County Manager for Performance Management Reyna Farrales. A meeting scheduled for September was canceled.
“I don’t think the board should be appointing people to oversee them,” said Oehlert. “There needs to be some separation, some daylight between them.”
At the heart of the concerns of the “Committee to Stop Measure K, Why Now?” is the question of why it’s necessary to prolong taxes to solve future problems they don’t consider guaranteed.
“The funds in the (Measure A) sales tax go to a general fund, so it’s not specifically identified, and these funds won’t be available until 2024,” said Weissmiller. “If they do have a plan to fix the affordable housing crisis using Measure A funds, they can re-allocate accordingly.”
Proponents of Measure K say the problem of affordable housing isn’t that simple and will take years to solve. “We didn’t get into this problem overnight. It took decades of neglect, of not providing housing for anyone at any level, and as a consequence you’re not going to dig your way out of this overnight,” said Horsley. “If our county is going to make long-term commitments, we have to make sure we have a way to meet those commitments.”
Horsley disagreed with the characterization that Measure A funds go into the county’s general fund, pointing to the county manager’s website, which contains a breakdown of all Measure A spending.
As for Measure K, the bill’s text designates the tax as being “for general fund purposes.” On the Coastside, Horsley said Measure K funds could go to improvements for the Green Valley Trail Project south of the Devil’s Slide tunnels and the Naomi Patridge Trail along Highway 1 in Half Moon Bay. Patridge, a former mayor of Half Moon Bay, is listed as being a member of the Measure A oversight committee with a term that expires in 2017.
Horsley also mentioned The Big Lift literacy program at Cabrillo Unified School District, and Seton Coastside’s emergency room as future Coastside recipients of Measure K funds, if it passes.
Proponents of Measure K point to the county’s need for affordable housing as a prime reason for the tax. However, Horsley said the board would not reallocate Measure A or K funds in the future to focus more on affordable housing, since much of the funding is committed to other projects like paratransit service Redi-Wheels, Big Lift, and support for the Parks Department. The board would commit between $10 and 15 million in Measure K funds annually for building or buying affordable housing projects in the county, Horsley said. He said annual Measure K allocations to affordable housing projects would not increase to more than that amount, due to the fact that funds are committed to other projects.
“We’re not going to cut other priorities for affordable housing,” said Horsley, “but we can and have dedicated between $10 and 15 million for affordable housing.”
Although the 2016-2017 budget is not yet finalized, the county’s recommended budget includes $178.3 million in Measure A spending. Of that, $19.3 million, or just under 11 percent, has been allocated to affordable housing development contracts, according to the county’s Department of Housing. MidPen Housing received $3.69 million for development of 265 units in four communities in South San Francisco, Moss Beach, Redwood City and East Palo Alto, according to MidPen’s president Matt Franklin.
As Election Day approaches, Measure K’s supporters have raised the bulk of campaign contributions. The committee “Yes on K, Neighbors for Affordability and Quality of Life with Major Funding by Seton Medical Center and MidPen Housing Corp.” reported total contributions of more than $900,000 through Oct. 20, according to the county elections website. Of that, Seton Medical Center donated $550,000, according to a spokesperson, and MidPen Housing Corp. donated nearly $103,000 in total contributions, according to Franklin. Other major donations include $100,000 from the Chan Zuckerberg Initiative, $50,000 from Facebook, and $25,000 from the Sobrato Organization.
The committee to stop the tax has not raised the $2,000 threshold required to file with the county elections office, said Weissmiller.
October 25, 2016
Half Moon Basy Review
By Kaitlyn Bartley
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