Road to Recovery: Transit Plan Raises Sales Tax on Friday

Friday is April Fools’ Day. But it will be no joke for San Diego consumers who make purchases beginning April 1 because that’s when a half-cent increase in the sales tax takes effect countywide.

The increase, which will raise the local sales tax to 6.5%, is the outgrowth of Proposition A, which was passed by voters last November to raise money to improve and expand local roads and mass transit systems.

Expected to generate an estimated $2.25 billion during its 20-year life, the tax boost will be divided into equal parts for repair and construction of local streets, expansion of mass transit countywide and construction or widening of state highways.

With the new tax equaling only an additional 50 cents on a $100 purchase, local businesses have not been deluged by consumers trying to beat the new tax bite. Some auto dealers, however, noted that a few buyers expedited their purchases to save a few dollars.

About $40 Per Family

Despite the millions of dollars that the tax will generate, Bill Tuomi, manager of transportation programs for the San Diego Assn. of Governments, said it will take only a nip out of most consumers’ pockets. The average middle-income family will pay only about $40 extra a year in sales taxes, he said.

Ernest J. Dronenburg Jr., chairman of the State Board of Equalization, said Wednesday that he is worried that small retailers might be unaware of the new tax.

“We are trying to make sure that all of the small retailers know that the tax goes into effect on Friday,” Dronenburg said. “Hopefully, they will adjust their cash registers and start charging the right amount.”

Dronenburg’s department sent letters to the 65,000 registered businesses in San Diego County, warning them of the impending increase, but there is no way of knowing whether business owners received the missives, he said.

“We mailed letters directly to the taxpayers (retailers),” Dronenburg said. “But sometimes, the mail goes directly to the bookkeepers. There is concern that some of them might have not told the businesses . . . . We want the retailer to know so that they will charge the tax.”

Retailers will be responsible for paying the tax even if they did not receive the letters notifying them of the tax’s effective date.

Joe Rodriguez, operating manager of the Gateway Marketplace, said he believes that most retailers received the letters and will make the necessary changes.

“I don’t see any kind of effect on us,” Rodriguez said. “Just minor adjustments on our computer system and that’s about all. We will be talking with the customers one on one to address their concerns and questions about the tax.”

Similarly, Chuck McVay, manager at Miramar Lincoln-Mercury, said he doubts that the tax will have a significant effect on customers.

“That half a cent won’t do anything. We received a letter about the increase and will reprogram our computer,” McVay said.

But he added that several customers bought cars quickly to escape paying the tax, which would increase the price of a $10,000 automobile by $50.

“It’s unbelieveable,” McVay said. “I sold 10 cars in the last few days because (they) wanted to save the few dollars.”

Jim Luleff, general manager of Cousins Photo and Appliance Warehouse, expressed concern that the tax increase, despite its relatively moderate economic consequences on the average individual, would produce grumbling among consumers.

“The average consumer probably feels that he has enough of a burden without another tax,” Luleff said. “This is the same thing all the time. The poor consumer will carry the bill.

Overall, however, Luleff predicted that the tax would not discourage consumers.

From a business point of view, Luleff said the new tax means only a few adjustments to cash registers and instructions to sales people to calculate their invoices differently.

The tax will mainly benefit San Diego County residents, but other areas of the state may be affected, Dronenburg said.

“For cars, boats and airplanes the tax is based on where you live,” he said. “So if somebody lives in San Diego County, but buys a car in Orange County, the Orange County car dealership is responsible for collecting the tax.”

$95 Million First Year

The tax is expected to generate $95 million during its first year. The major highway construction and improvement programs scheduled to be financed with the $750 million allocated from the local sales tax revenues and $85 million from other sources include:

- California 52 extension from Tierrasanta east to Santee, $240 million.

- California 54, South Bay freeway, widening to an eight-lane freeway, $90 million.

- California 56, from Del Mar east to California 67 near Poway, $75 million.

- California 76, widening to four lanes from Oceanside to Interstate 15, $100 million.

- California 78, widening to six lanes from Oceanside to Escondido, $40 million; reserves from bridge widening and off-ramp improvements along the California 78 corridor, $40 million.

- California 125, eight-lane freeway from California 94 south to South Bay Freeway, $90 million; six-lane freeway from Grossmont Summit north to California 52, $135 million.

Public transit improvements planned for the $750 million in anticipated sales tax funds and $190 million from other sources include:

- Trolley extension from downtown to Old Town, $55 million.

- Extension of East Line trolley from El Cajon to Santee, $35 million.

- Construction of Mission Valley trolley line from Old Town to San Diego Jack Murphy Stadium, $150 million.

- Construction of Mid-Coast trolley line from Old Town to North University City (Golden Triangle), $130 million.

- Extension of Mission Valley trolley lines from stadium to La Mesa, $150 million.

- Extension of North Coast trolley line from North University City to North City West, $100 million.

- Commuter rail service from Oceanside to San Diego and from Oceanside to Escondido, $130 million.

The final $750 million for local streets will be spent according to need at the time.

“It’s money well spent,” Dronenburg said. “It’s a well-thought-out initiative, and the county as a whole will be improved.

But consumers who consider the new tax to be a bad joke, even on April Fools’ Day, can ponder this fact as they make their purchases: In June, another proposition will appear on the countywide ballot seeking an additional half-cent sales-tax increase to raise funds to build new jails and courts.