City grapples with tax increase

An effort to raise San Bruno's sales tax to a county high 8.75 percent has the support of city officials and the Chamber of Commerce - but not everyone has come on board with the idea. In fact, one council candidate is largely basing his campaign on defeating the tax aimed to raise approximately $2.7 million for the city's general fund every year. At least business owner is also less than pleased.

"The higher the sales tax, the less competitive the store can be," said Barry Gevertz, co-owner of Lullaby Lane on San Mateo Avenue.

Gevertz's store already competes with Web sites that can offer low or no sales tax. Some of Lullaby Lane's busiest days are when it offers to covers the sales tax, Gevertz said.

Despite the campaign of council candidate Miguel Araujo against the measure, city officials are touting the tax as a way to raise much-needed revenue. It would add a half-cent sales tax to purchases made in the city - raising the sales tax from 8.25 percent to 8.75 percent. For every $100 spent, an additional 50 cents would pour into city coffers.

If passed, it would become effective April 11, 2008 and is expected to raise $2.7 million annually for the city's general fund. The money could be used for anything at the city council's discretion, but officials claim their first goals include a new library, public safety facilities and sidewalk repairs.

The city has an $500,000 structural deficit and city officials preferred a sales tax - which requires a simple majority - over a bond or property tax measure since the burden would be spread. A property assessment or bond would add larger fees on property owners' yearly taxes.

Put simply, officials said, the more you buy, the more you are taxed.

"This seems to be the fairest thing to accomplish everything that needs to be accomplished," said Mayor Larry Franzella.

The city collects approximately an annual $6 million in sales tax revenue - representing 18 percent of the total budget. The 2008-2009 year would be the first year to benefit from the tax, said Finance Director Jim O'Leary.

"Many, many cities have approved such a measure in California. We worked with a firm in California and all their data indicates this has no impact on purchasing activity in the area," O'Leary said.

Such sales tax increases have been passed in at least 18 other California cities in the last few years. There are no indications in those cities that the increase has affected sales revenue, said City Manager Connie Jackson. In fact, studies indicate sales revenue is more closely tied with the economy rather than the sales tax of a particular community, Jackson said.

Despite some business owners' concerns, the San Bruno Chamber of Commerce supports the proposal.

"We are absolutely in favor of it. We feel it will help the city grow. We are kind of stuck in the '50s," said Laura Baughman, executive director of the San Bruno Chamber of Commerce.

The chamber believes the extra money will help improve the city' infrastructure, making it a more appealing place to do business, Baughman said.

The council is requiring a five-member citizen oversight committee, which is not legally required, but was thought to be a responsible gesture. If the tax is approved, a group would be created by March 18, 2008 and would need to report to the council annually.