In 1996 the voters of Santa Cruz County approved a one-quarter percent increase in the sales tax applicable to all the jurisdictions within the County for public library funding purposes. The ballot measure which was approved at that time provided that the resulting ordinance and tax increment would expire on April 1, 2013.

California Revenue and Taxation Code section 7285.5 permits a County Board of Supervisors to levy, increase, or extend a transactions and use tax (i.e., a sales tax) for a specific purpose so long as the ordinance proposing the tax is approved by a two-thirds vote of the Board of Supervisors, and then subsequently approved by a two-thirds vote of the voters.

The Santa Cruz County Board of Supervisors has unanimously determined that the sales tax for library purposes described above should be permanently extended, and its termination date deleted, subject to approval of this ballot measure by two-thirds of those voting. The Board has unanimously adopted an ordinance for that purpose.

This measure would therefore permit the existing one-quarter of one percent being collected in the four cities and the unincorporated area of the County of Santa Cruz to continue indefinitely, rather than terminating on April 1, 2013. It would continue until changed by action of the voters or legislators. The cities and the unincorporated portion of the County vary as to the precise sales tax rates applicable within their jurisdictions, as the cities have independent authority to enact limited sales tax increments above the state-wide base rate to apply within their own boundaries.

A “yes” vote is to approve extension of the one-quarter percent sales tax for library purposes indefinitely.

A “no” vote is to disapprove extension of the tax, thereby keeping in place its termination on April 1, 2013.

DANA McRAE, COUNTY COUNSEL By Jane M. Scott, Assistant County Counsel

To Permanently Extend an Existing ¼¢ Transaction and Use Tax (Sales Tax) for Local Public Libraries

Measure R is to permanently extend an existing ¼¢ transaction and use tax to provide funds that can only be used for local public libraries. The transaction and use tax, also known as sales tax, was originally approved by voters in 1996 as Measure B, and will terminate in 2013 unless extended.

Fiscal Effect

This Measure does not increase the existing sales tax rates. During fiscal year 2007-08, sales tax revenues earned for local public libraries under the existing 1996 Measure B will be approximately $8.5 million.

Sales tax is paid by residents and visitors on all taxable sales occurring in Santa Cruz County. In general, taxable sales include all retail purchases except food. Taxable sales do not include services. The fiscal impact of a¼¢ sales tax is 25¢ for each one hundred dollars ($100) spent on taxable sales. Payment is collected at the time of sale.

The sales tax rate in the unincorporated County is 8.00%, of which 0.25% (25¢ per $100 of sales) is for the Countywide Library System approved in the 1996 Measure B. Voters in the cities of Capitola, Santa Cruz, Scotts Valley and Watsonville approved additional local sales tax rates, bringing those cities’ current rates to between 8.25% and 8.5%.

Distribution and Accountability of Funds

This Measure continues to restrict the ¼¢ sales tax for local library purposes. If this Measure passes, the sales tax revenues will continue to be distributed pursuant to the Library Financing Authority (the Authority) Agreement on the basis of population of the member agencies. During the current fiscal year, the County Auditor- Controller will distribute approximately 77% of these restricted sales tax revenues to the Cities/County Library System and 23% to the Watsonville City Library based on population.

The governing body of the Watsonville City Library is the Watsonville City Council. The governing body of the Cities/County Library System is the Library Joint Powers Board which consists of: two County Supervisors, two Santa Cruz City Councilors, one Scotts Valley City Councilor, one Capitola City Councilor, and three citizen appointees.

The Authority is required to have an annual financial audit as specified in Government Code Section 6505. If the Authority fails to have an audit performed, the Auditor- Controller shall perform or contract for the audit.

Maintenance of Effort Requirements

The Authority Agreement requires that these sales tax revenues cannot replace existing moneys committed by the cities and the county to support libraries. Each member agency will be required to continue contributing a Maintenance of Effort amount which is based on funding which those agencies provided during 1995-96 before Measure B, increased by the annual growth in property tax revenues each agency receives. The current Maintenance of Effort amount is approximately $6.6 million. This Maintenance of Effort amount, together with the ¼¢ sales tax, funds the local libraries.

s/ MARY JO WALKER
Auditor-Controller
County of Santa Cruz