City explores temporary sales tax

Rebecca Neipp

News Review Staff Writer

City</p><p>explores</p><p>temporary</p><p>sales tax</p><p>As communities throughout the nation are feeling the negative financial impacts associated with COVID-19 closures, City Manager Ron Strand told Ridgecrest City Council at its May 6 meeting that the Finance Committee is exploring a temporary half-cent sales tax to offset potential losses.

“We’ve had two natural disasters in one budget cycle,” said Strand, who noted that the city had not yet recovered from earthquake-related impacts when the coronavirus crisis hit.

He explained to members of the council that at this time, the scope of the budget impact was unknown. Transient occupancy taxes — one of the top revenue streams for the general fund — are most assuredly down. However, he noted, it will be several months before the city has any actual numbers.

Strand even said there is an outside possibility that sales taxes and other revenues may make up any deficit.

Councilman Scott Hayman, who is one of two council delegates to the Finance Committee, said the proposal “makes sense from a budget perspective.”

However, Mayor Pro Tem Lindsey Stephens said that approach seemed to be kicking businesses when they are already hurting. She noted that many business owners and their associated employees are already facing financial hardships because of lost wages and revenue opportunities.

Stylists, gyms, sit-down eateries and many other businesses remain closed during Gov. Gavin Newsom’s order to reduce outbreaks by closing nonessential businesses. Although the state entered Stage 2 of a four-phase plan to reopen, many businesses have no prospect for when the remaining restrictions will be listed.

Strand said he believes many businesses would be spared the tax burden, since proprietors purchase goods wholesale and pass taxes along to the consumers. Councilman Mike Mower noted, however, that many of those negatively impacted business owners and employees are also consumers who will bear the cost of the tax increase.

Citizens viewing the meeting online also called in to oppose the tax.

Others also questioned the timing of the proposal in light of existing hardships, and the lack of clarity and timeline associated with the plan.

Hayman said that he believes the city is wise to consider the option sooner rather than later. “It’s good to be preventative about it.”

Strand said that one of the reasons to consider the tax is that the city is still newly recovered from other financial hardships. He reminded the council that, just a few budget cycles before, the city was down to less than $200,000 in reserve funds.

However, he agreed that the city should examine actual revenues, options for funding from the CARES Act and possible service modifications before the discussion is necessary.

“And maybe it won’t be.”

In a follow-up interview, Strand said that no new information is available.

“We will know more in a couple of weeks,” he said. “But actual numbers will probably not be available for a couple of months.”

This article was updated from it's original version on May 15.

Story First Published: 2020-05-15