Jessica Cejnar / Wednesday, Aug. 26 @ 5:22 p.m. / COVID-19, Local Government
Gitlin, Howard Spar Over Tax Measure During Discussion On COVID-19 Relief Money; $2.78 M in CARES Act Dollars Can't Offset Revenue Loss, DN CAO Says
Supervisors Roger Gitlin and Chris Howard traded barbs over Del Norte’s COVID-19 relief apportionment and a sales tax initiative county voters will weigh in on in November.
Gitlin argued Tuesday that the $2.78 million the county is expected to receive in federal Coronavirus Aid, Relief and Economic Security (CARES) Act dollars makes the proposed 1 percent sales tax increase unnecessary.
Howard questioned Gitlin’s understanding of how the CARES Act apportionment works and the constraints the county is under when it comes to spending those dollars.
“I’m scratching my head about how these dollars all of a sudden solve our general fund woes, especially as it’s related to public safety,” Howard said. “I’m not sure how our (tax) initiative is affected by these CARES Act dollars coming around, especially CARES Act dollars that have to be spent by 12/31/2020.”
Despite the spat between Gitlin and Howard, the Board of Supervisors unanimously approved an expenditure plan and priorities for Del Norte County’s CARES Act apportionment. The county received an initial allocation of $465,880 and will receive five more payments of equal amounts through October 2021, according to a county staff report.
The money must be spent before Jan. 1, 2021 and must cover COVID-19 response expenses between March 1 and Dec. 30, 2020, County Administrative Officer Jay Sarina told the Board of Supervisors. The money is part of the CARES Act apportionment to the State of California that it has allocated to counties with less than 500,000 people.
According to Sarina, CARES Act dollars can be spent on payroll for front-line employees, enhancements that enable staff to work from home, including IT expenses, personal protective equipment, facility improvements that further social distancing as well as disinfecting and cleaning.
“This is short-term funding to offset the coronavirus pandemic,” he said. “It doesn’t offset the loss of revenue. What this can be used for is to deal with essential county services that have been provided specific to the pandemic that were not budgeted for and were not expected prior to the pandemic.”
County administration is also working with the Public Health Branch to determine what its expenses are and how Del Norte’s CARES Act dollars could be used to offset those costs, Sarina said. Those expenses are in excess of the county’s first $465,880 allocation, he said.
In his board member report, Gitlin argued that if they pass, Measure R and Measure S, the proposed 1 percent sales tax increases in the county and city respectively, would drive people to Brookings to purchase, gas, tires and other big and small ticket items.
In response to Howard, Gitlin said he spoke with Auditor-Controller Clinton Schaad and County Tax Collector Barbara Lopez. Gitlin said Lopez told him that the county’s transiency occupancy tax revenue was off by about 18 percent.
“Everything seems to be operating at full tilt now,” Gitlin said. “The anticipated losses of up to $500,000 or $600,000 are not going to be realized going into the new year. So I believe the PPP (Paycheck Protection Program) moneys affected that compromise where we didn’t get all the transiency occupancy taxes for the county.”
Gitlin added that Schaad told him the $2.78 million in CARES Act dollars will make Del Norte County healthy.
“We’re about to embark on a 1 percent sales tax increase, which will raise our tax to 8-and-a-half percent, Mr. Howard,” Gitlin said. “And I’m kind of wondering about where you’re going to buy your next set of tires — at Les Schwab, or are you going to drive up to Brookings like so many other people will and buy all kinds of different products whether it’s gasoline, appliances, smaller or big ticket items. That’s going to be a hit on our budget.”
According to Sarina, revenue to the county from transiency occupancy tax is down about 14.5 percent, roughly $76,000, from the previously budgeted amount was the year prior.
In addition to TOT, which is remitted to the city and county from visitors at local lodging facilities, the county relies on sales and property taxes for its general fund services, Sarina told the Wild Rivers Outpost. He noted that sales tax collected in Del Norte County is sent to the state and is reapportioned back to the county.
“We get 1 percent of what we send off to the state,” he said. “For our 19-20 year, we were only down about 2 percent from what we projected.”
Though, Sarina said he didn’t want to speak for the city, he noted that apart from Walmart, Ace Hardware and Dollar General, most businesses are within Crescent City limits. Sarina also pointed out that most of the hotels are also within city limits.
Sarina said he’ll provide more details about the county’s budget to supervisors next month.
Responding to Gitlin, Howard said very few businesses qualify for Paycheck Protection Program dollars and if they did those moneys go to staff who were unable to work or laid off due to the pandemic. Those dollars could also be used to offset utility and rent costs, Howard said.
Howard also argued that a hotel having to close not only isn’t collecting rent, it’s not collecting TOT revenue to remit to the county.
“You got nothing to pay the bill, PPP didn’t take care of that and there was no other program offered by the federal government that did support the losses of revenue for that three months,” he said. “So getting us back to whole, however you describe it, didn’t occur. We still have a shortfall. Not only the businesses in our community, but the government.”
When Howard said he would continue correcting Gitlin, the District 1 representative retorted with, “you’re a real fiscal watchdog, supervisor.”
Measure R is a proposed 1 percent sales tax increase to pay for law enforcement, road repair, first responders and other public safety items. The tax increase will take effect if 50 percent plus 1 of voters in the unincorporated areas of the county approve it on Nov. 3.
A similar 1 percent sales tax increase, Measure S, would apply to areas within Crescent City limits if it passes in November. Both taxes are expected to generate $1.2 million in revenue for each agency. In Crescent City those dollars would be used for fire, police, road repair and to ensure the Fred Endert Municipal Pool is more fiscally sustainable.
The Crescent City-Del Norte County Chamber of Commerce has endorsed both measures, according to District 5 Supervisor Bob Berkowitz.