There could still be a sales tax election in Manteca’s future not in spite of the COVID-19 pandemic but because of it.

Instead of a tax to wed with growth fees to build an $81.4 million recreation complex with an aquatics center, gym/community center, and more playing fields the tax could be placed on the ballot in a bid to shore up city funding expected to take unprecedented draconian hits from the economic fallout from efforts to flatten the coronavirus infection rate.

Interim City Manager Miranda Lutzow said the focus on a recreation facilities tax was scuttled when it became apparent based on actions and advisories that are coming out of Sacramento that the state expects to wipe out out its $21 billion deficit and then some fighting the pandemic and backfilling lost revenues.

The state has already taken actions that will shortchange cities or delay sending revenue that are municipalities’ two biggest sources of income — sales tax and property tax. The state has extended property tax payment deadlines. Gov. Newsom is also allowing small businesses to defer paying up to $50,000 in sales tax of which a sixth goes to local government. At the same time sales tax is plunging with the state indicating it dropped 30 to 37 percent in March. Nearly half of the month non-essential businesses were ordered closed due to the pandemic.

Hotel room taxes that can’t be legally withheld by the state, are expected to take a dive in excess of 90 percent due to room occupancy rates plummeting. Room taxes are the fourth largest source of general fund income that helps pay for day-to-day services such as police, fire and streets in Manteca. The city was projected to bring in nearly $1.7 million annually in room taxes even before Great Wolf opened.

The City Council last year hired a consultant to research voter sentiment and devise a game plan to secure funding for building $81.4 million worth of recreation facilities.

At Wednesday’s special council meeting Councilman Gary Singh questioned whether it made sense to continue pursuing the tax given the economic hit the community is taking. Council members Jose Nuño and Debby Moorhead echoed those sentiments. Mayor Ben Cantu also conceded this might not be the best time to seek a tax. Councilman Dave Breitenbucher missed the meeting due to a family emergency.

Ludlow explained the consultant was still in the “education” phase and that the next point for a council decision to be made to take the next step and decide whether to schedule an election is this summer.

The consultant’s survey of select city residents showed 59 percent in favor of a sales tax proposal being placed on the ballot for voter consideration. Lutzow cautioned that didn’t mean they would outright vote for a sales tax increase but that they agreed voters should be given the option to do so.

That was predicated on the wording authorizing a tax to give the voters the ability down the road to qualify a measure for the ballot once they collect the prerequisite number of signatures to allow voters to repeal the tax.

The question about a sales tax election was asked with three different amounts — a ½ cent, a cent, and 1½ cents. Lutzow said given the same 59 percent response was received with all three amounts staff opted to have the consultant proceed using a one cent sales tax model.

The city currently has $17 million in reserves that are not restricted that are available to backfill Manteca’s $45 million in projected general fund expenditures.

It is clear revenue still expected for the current fiscal year ending June 30 will be less than  projected due to drop offs in taxable retail sales and room taxes that by themselves could easily exceed $3 million. The city is tracking unexpected costs relating to the pandemic emergency to seek reimbursement for the state and federal government but are assuming at the same time that is not likely to happen.

The longer the economy is “shut down” as well as the gradual reopening outlined by Gov. Newsom means the drop off in city revenue that is expected to be major for April — the first full month of the stay-at-home orders — will continue into July and beyond. It is conceivable in the next fiscal year starting July 1 Manteca could lose upwards of half of its annual $13.8 million in sales tax and more than $1 million in room tax. That alone — assuming next year’s budget is also $45 million — would require raiding reserves of at least another $8 million to balance the budget.

Assistant City Manager Lisa Blackmon noted a tax could be needed in order to allow the city to maintain existing service levels.

Sales tax elections can also only take place at regular general elections. The next opportunity would be this November.

After that the next window is 2022.

A sales tax would go into effect roughly three or so months after it is approved. Then it would take close to a year for the city to receive any revenue from it.

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com