Officials in Atwater, a Central Valley California city that narrowly avoided bankruptcy last year, have proposed a half-cent sales tax specifically earmarked for public safety for the March 5 electoral ballot, according to the Merced Sun Star.
The sales tax measure will need a two-thirds majority to pass, because it targets a specific budget item.
It would expire after 10 years and is expected to raise $1 million.
The city of 28,000 has embarked on pay cuts and has laid off workers to close a $4 million general-fund budget gap, and cover deficits in the city’s water and sanitation funds, all of which contributed to the municipality’s financial crisis, according to the report.
Since 2008, the city has cut staff by nearly 30%.
The additional tax would increase Atwater’s sales tax to 8%, the same level as nearby Merced.
If it passes, the city manager would appoint an oversight committee for the tax.
According to Atwater’s fiscal 2011 audited financial report, the city has $94 million of outstanding debt that includes mostly tax-allocation bonds and wastewater revenue bonds.
In October 2012, Standard & Poor’s analysts downgraded its underlying rating on the Atwater Public Financing Authority’s wastewater revenue bonds to BBB-minus from A, and placed the rating on credit watch with negative implications.
Over the past decade similar tax measures passed in 219 California cities, according to the report.
The measures have a 49% passage rate.