Bankrupt California city to vote on sales tax hike
July 10, 2013
The city of Stockton, which last year became the largest U.S. city to file for bankruptcy, will vote on whether or not to raise taxes to help ease its financial troubles. [News10]
The Stockton City Council voted Tuesday night to place a measure on the city ballot that would raise sales tax three-quarters of a cent, increasing it from 8.25 percent to 9 percent.
Stockton City Manager Bob Deis says the increase would raise more than $300 million over 10 years. If approved by the voters, a third of the new revenue would go to helping get Stockton out of bankruptcy while the city would use the rest of the money to hire 120 new police officers.
Since filing for bankruptcy in July 2012, Stockton has lost many of its police officers, who fled while facing salary and pension cuts. The city has also suffered an increase in crime over the last year.
Prior to bankruptcy, Stockton issued a pension obligation to help pay down its unfunded pension liabilities. However, the market crashed, and the city fell deeper in debt.
San Luis Obispo, which has more than $100 million in unfunded pension liabilities, is currently considering issuing a pension obligation bond.
Likewise, San Luis Obispo voters will determine next year whether the city’s half cent sales continues beyond March 2015. The half-cent tax, known as Measure Y, brings in about $6 million a year.