Has Westminster Cut A Deal To Exempt Auto Dealers From Measure SS Sales Tax Hike?

According to multiple sources, the City of Westminster has unofficially agreed to craft a carve-out for the city’s automobile dealerships should voters approve Measure SS, which would increase the city’s sales tax from 8% to 9%.

At the June 23 meeting when the Westminster City Council voted 4-1 to place Measure SS on the November ballot, the most vocal, organized opposition came from Westminster’s automobile dealerships, who said it would be devastating to their businesses – leading to lost sales, lost revenue and ultimately lost jobs.

The Measure SS tax increase is strongly supported by Councilmembers Margie Rice and Diana Carey, the public safety unions and the city bureaucracy. A major threat to the fear-based Yes on Measure SS campaign would be a “No” campaign funded by the auto dealers. According to sources, a deal was struck to sideline them: if Measure SS is approved, the city would enact a de facto exemption of some kind to shield dealerships from the 1-cent sales tax increase.

The exact form is unknown, but would most likely take the form of the city reimbursing car buyers the extra 1% sales tax on purchases at Westminster auto dealers. OC Daily sources pointed to the September 14, 2016 meeting at which the Westminster City Council approved the General Plan Update. This agenda item included supporting documents in the form of 10 attachments. Attachment 10 describes a “Shop Westminster” program to be launched in January 2017 and which involves:

creat[ing] specific incentive programs in order to encourage residents to buy their products in Westminster. For example, currently less than ¼ of Westminster residents purchase their vehicles in the City. Even a moderate increase in this percentage would have a significant impact on the local economy by stimulating further business expansion, increasing the number of locally available jobs, and improving the City’s financial stability through the additional taxes generated.” [Emphasis added]

Measure SS proponents claim it will generate enough revenue to spare the city from painful budget cuts. However, creating a carve out for the city’s leading sales tax generators blows a hole in the revenue projections for the Measure SS tax hike. Furthermore, it raises fairness issues by effectively exempting a one group of business in order to increase Measure SS’s chances of passage, while leaving every other Westminster business and resident subject to the higher tax rate.

It’s a sign the City Hall establishment lacks of confidence that a public safety union-funded scare campaign can overcome traditional voter aversion to tax increases, and necessitates the sidelining of “No” campaign funders via special treatment.

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