Sales tax represents 46% of our general fund revenues. The pre-recession peak was in 2007 when Visalia collected $23.3 million in sales tax revenues. After a substantial drop in revenues during the recession years, Visalia enjoyed a record year of $26.8 million in sales tax revenues in 2014. Based upon its population per capita, Visalia collects 67% more than its per capita share; in other words, as a regional hub, we attract shoppers from other areas of our county and neighboring counties. However, there has been some leakage as new retailers have come to smaller nearby towns. In 1980, Visalia generated 37.5% of Tulare County's sales tax revenues, while in 2014 we generated 47%. However, our population increased during that time from 20.4% to 28.2% of the county population, resulting in a 26% decrease in our proportional share.
In California, percentage of personal income spent on taxable sales decreased from 53% in 1980 to 33% currently. The main reason for this decline is internet sales and changes in spending habits. While the baby boomer generation still prefers to shop at brick and mortar stores, due to advancing age, this generation is spending more on services (such as health care), than on taxable goods. Meanwhile, the millennials (born 1980 to 2000) make up 30% of the population and purchase most things online, much of which isn't taxed yet. As a result, stores we were fond of shopping at such as Mervyn's, Blockbuster Video, Circuit City, and Borders Books, are gone. Others are downsizing. Technology is also reducing what is taxable. Digitally transferred goods are not considered as tangible personal property (books, music, movies, etc.). Energy efficiency is reducing taxable fuel purchases. There are hundreds of sales/use tax exemptions such as food, prescriptions, year books, etc. Shopping center trends have also changed. Sears and JC Penney's once had 70% of shopping center traffic but now only have 25%. Millennials will make up 75% of the work force within ten years, and many shoppers are choosing convenience over price. Things that are not subject to sales tax locally include repair work, business services, admissions at amusements, computer services, professional services, agricultural services, and leases and rentals, many of which are taxed in other states. Meanwhile, many expenses of local government remain the same or increase, such as street maintenance, building maintenance, and employee costs.
While we anticipate that our sales tax revenues will continue to increase, they will increase at a slower pace and percentage. Reduced sales tax revenues will lead to policy choices. Do we prefer to raise or modify taxes, or should local government make further cutbacks and provide fewer services?
NEW POLICE CHIEF:
We were saddened to hear that Police Chief Colleen Mestas was diagnosed with cancer. We wish her the best in her recovery and retirement. We congratulate Lieutenant Ed Lynn who will be the interim chief while Viaslia goes through the process to find a replacement for Chief Mestas. Since the police chief is a department head, it is the city manager, Mike Olmos, who will lead the recruitment and selection of the new police chief, subject to the final approval of the Visalia City Council. It is good to know that our city is in good hands with many fine, qualified police officers protecting our citizens. We feel fortunate that we don't have many of the issues and turmoil that plague other police departments. Two thumbs up to our professional public safety officers who keep our city safe.
DUMP ON US:
January's "Dump on Us" day, sponsored by the Public Works Dept. was again a success. I got my chainsaw out and trimmed up a few of my trees, taking advantage of the free refuse disposal. Mark your calendar for our next "Dump on Us" day, April 11, 2015.
If you have questions or topics regarding the city which you would like to have addressed in future articles, please email Warren at wgubler@ci.visalia.ca.us, or call (559) 713-4400 x 3313. For past articles, visit directfromwarren.blogspot.com.
Warren Gubler
Visalia Vice Mayor
