To tax or not to tax, that is the question

From the April 1 McKinleyville Press:

By Elaine Weinreb
Press Staff Writer

On Tuesday, April 8, Trinidad residents will be voting on whether or not they want to continue their 1 percent municipal sales tax for another four years.

The Trinidad City Council is eager to have the measure passed and has formed a Tax Committee consisting of Julie Fulkerson, Don Ratzlaff, Richard Johnson and Don Zeman to pitch the tax to city residents. Fulkerson and Ratzlaff are on the council and Johnson is the Chair of the Planning Commission.

The tax was originally passed in 2004, when the city’s coffers were nearly empty as a result of a series of litigations with resident John Frame over a contested trail. The tax has since brought in between $120,000 and $150,000 per year, basically doubling the amount of money that the city was previously receiving from the state.

Without the special tax, the city would receive less than 1% of the state sales tax, an amount which would be about $113,000 for 2007-2008, according to a report prepared by the Tax Committee. With the special tax, the city would receive a total of $263,000.

The sales tax did indeed restore the city’s reserves. Fears that the tax would harm business and drive away tourists were unfounded, since business in the city increased by 50 percent and tourism increased by 70 percent, according to the Tax Committee’s report.

Tax proponents claim that most of the revenue is generated by tourists, rather than by residents. However, many people living outside the city limits are forced to pay the Trinidad sales tax, even though they do not have the opportunity to vote on it.

This is because merchants assess sales tax based on ZIP code, not street address. Between two and three thousand people share the 95570 ZIP code. but only 314 people live within the city limits, and they are the only ones who get to vote on the tax.

This situation has irritated many residents of Westhaven, Moonstone Beach, Moonstone Heights, Patrick’s Point and Big Lagoon, who all have 95570 ZIP codes.

“This is taxation without representation,” said Jan Brown, who lives outside the city limits. “We fought a revolution 200 years ago over this issue. Remember the Boston Tea Party?”

Sam Merryman of Moonstone Heights noted that when a 95570 resident buys a car – or a motor home – the city can end up with hundreds of dollars in sales taxes that don’t belong to it. The purchaser can retrieve the tax dollars, but it is a tedious, time-consuming process that can take up to a year, Merryman said.

Trinidad tax proponents say that the services provided by the city benefit the entire community. With the tax money, the city was able to acquire a new police station, get new firefighting equipment, protect beaches and maintain trails, construct a public restroom and start building a new library.

The sales tax protects the city against economic hard times, state and federal budget shortfalls, and cuts in grant funding, which pay for a large share of police, fire and road services. It can also be used to provide matching funds for grants, and provides a safety net against natural disasters.

This disturbs some city residents, who believed that the tax was intended for one purpose only – to rebuild the city’s reserves – and now fear that it will be a permanent part of the city budget.

“When they first passed this tax, they promised it was only going to last for four years, and now they want it to last indefinitely,” said Glenn Saunders, a long-time city resident and former mayor.

“I’m ambivalent about it,” said Dean Heyenga, another former mayor. “When I was the mayor, I was the instigator of this idea because the city was in such dire financial straits. But now the money is being used to run the government. It has become a lifeline for the city and will be needed forever.”

Unless extended, the special tax will end on Dec. 31, 2008.

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