I was the only candidate for mayor to speak in opposition to the proposed sales tax hike at the San Leandro City Council meeting on Monday, July 19, 2010.  Below is a copy of my prepared statement.  The mayor and city council voted to place the measure on the November ballot, with council member Bill Stephens dissenting.

Mayor Santos discounted any negative impact on San Leandro business, citing as his example the valued added tax rate of 17.5% to 25% in European countries.  Another council member believed San Leandro’s sales tax could be raised to nearly 11% without any negative consequences.

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I speak in oppostion to the San Leandro 10% sales tax.

I fully appreciate that city services come at a price and most of our local taxes are allocated to city employees who work hard and deserve our respect. I have voted for past tax measures for our city.

However, like all taxpayers, I want value for my tax dollars and we are not receiving that.

Today, $10 million, or more than 1 out of every 7 dollars of the city’s budget, is spent on employee pensions. This amount will climb in the coming years. In addition we are spending over $1 million a year on retiree health care costs, which will also rise in the coming years.

Unless and until employee pension and retiree health care costs are brought under control, the proposed sales tax hike will quickly prove inadequate and in 2012 the city council will return to the voters with another tax increase.

Specifically, city employees must start to contribute to the cost of their pensions. The public can no longer afford to pay 100% of the cost of city employee pensions. Your own City Manager has advocated this course of action. Cities across California are asking employees to start making pension contributions. Yet, here in San Leandro, there is a lack of leadership. The city council approved contracts earlier this year that continue to allow employees to pay nothing toward their retirement.

If city employees contributed to the cost of their pensions, they would still receive the same generous pension when they retire and the city would save $3 million each year. That is the same amount as the current city budget deficit.

The alternative to pension reform is unacceptable – we either layoff police officers, firefighters and cut back on vital services or, as has been proposed, the city increases the sales tax to 10%. San Leandro would have the highest sales tax in Northern California.

This misguided and regressive tax hike will hurt the hardest seniors on fixed incomes and families struggling in the recession. It also has the potential of backfiring on the city and undermining our local economy as San Leandrans and others look to save money by dining and purchasing items in nearby cities with a lower sales tax.

Finally, it’s imperative that city officials speak honestly with respect to the budget. The city is now in its fourth year of multi-million dollar deficit spending, $24 million in total. The city’s deficit started before the recession began and was not linked to any raid on city funds by Sacramento. Of the $7 million Sacramento took last year, $2 million has already been repaid and the other $5 million, which will also be repaid, came from redevelopment agency funds that can not be used for police, fire and other city services.

Blaming Sacramento or the recession for all of the city’s budget woes is like the captain of the Titanic blaming the sinking of his ship on an iceberg. The city council’s lack of fiscal discipline and failure to reduce employee pension costs, along with overly optimistic and unrealistic revenue assumptions in previous years, explains why our city is on the path to bankruptcy.

The solvency of a city should not be risked on the outcome of an election, but because of the decisions this city council made, that is precisely what is occurring.

I, and I believe the majority of voters, will not reward fiscal mismanagement and the refusal to honestly and directly address our city’s structural deficit by voting for a 10% sale tax.

Here is a link to the Daily Review article on the meeting.