Murrieta's Sales Tax Untruth

By Douglas V. Gibbs
Author, Speaker, Instructor, Radio Host

Murrieta is considering a one percent sales tax increase as some of the other cities have done in the area.  It is expected to be on the November ballot for the people of the City of Murrieta to vote on.

I have been doing some research and I contacted Murrieta City Hall with the hopes that they would give me a little help.  Of the five city council members, only one responded, and he did not give me an answer.  Instead, Kelly Seyarto, who in my opinion is the most liberal of the group, only provided a bunch of gobbly gook that pretty much said nothing other than a lot of impressive sounding words that really didn't say anything at all.  Then, a member of staff contacted me, basically asking me to provide to them the research I have already gathered regarding other cities.

Here's my response:

Thank you for contacting me regarding this matter.  To be honest, The Board of Equalization has provided me with pretty much all of the information I need from 1997 to 2016.  However, they do not have 2017 data for any of the cities.  In discussions with various persons from other cities, it has been difficult to receive any information regarding 2017, though I have received approximations from a few.  Surely, this far into 2018, those numbers (which are usually provided in the terms of taxable transactions by thousands of dollars) from 2017 are available.

I am also curious, if it is possible, about viewing the calculations that convinced staff to advise our fine city council that a one percent additional sales tax would increase revenue by $14M.  That would be quite a feat since in the fiscal year ending in 2015 total sales tax revenue to the city was a little over ten million, and I hear that the total for last year was $17M.  How is it possible for sales tax revenue to nearly double with only a one percent increase on a previously 7.75 rate?  By my calculations, even if we had a better year, and were to hit an $20M revenue from sales tax without the increase, an eighth of that (7.75% rounded up to eight, which means 1% represents about one-eighth of the sales tax revenue) is about two and a half million (which is a more realistic number when it comes to the likely revenue expected from a 1% increase).  Also, there's the age old adage that if you tax something you receive less of the activity.  Murrieta has been enjoying a larger than usual increase in sales tax revenue without necessarily creating a massive increase of shopping opportunities.  Can we say that places like CarMax has been the result of the entire boon of sales tax increases over the last couple years?  Likely, the new businesses are a strong part of that increase, but I believe a portion of it is also that some consumers have been shopping in Murrieta instead of cities like Temecula, who has increased their sales tax, because we have not increased our sales tax . . . yet.  If Murrieta does decide to follow the other cities like a mindless lemming, claiming that fire services suffers if we don't, which wouldn't be a problem with some changes in spending habits, and their sales tax one percent, those shoppers will then leave us and go to the next city that has not increased their sales tax.  Other shoppers will follow them.  I am thinking that if Murrieta increases her sales tax rate, first of all a $14M revenue expectation is foolish and unrealistic, and second, we will lose a large number of consumers to Wildomar, Lake Elsinore, and unincorporated areas where the sales tax will remain at the county level.

-- Political Pistachio Conservative News and Commentary

Here's some links to some of my research:

http://www.boe.ca.gov/annual/pdf/2014/table21a_2014-15.pdf

http://www.boe.ca.gov/news/tsalescont.htm