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Tax increase not raising much concern
• Proposed by Gov. Jerry Brown, approved by 55 percent of the voters on Nov. 6.
• Applies higher rates to residents making more than $250,000 for income tax returns. Higher rates last for seven years.
• Sales tax raises by one-quarter of 1 cent starting Tuesday, increasing the price 1 cent for every $4 spent. Higher rates last for four years.
• Expected to bring in $8.5 billion in first year and $6 billion in later years for the state.
• Revenues to be split 89 for K-12 and 11 percent community colleges.
• Guarantees funding from other sources for criminal justice realignment.
By Rick Longley and Todd R. Hansen
Short of going out of state, California consumers cannot avoid the new quarter-cent sales tax increase that went into effect on Tuesday.
Consumers started paying 1 cent more in sales tax for every $4 spent.
And at least in Glenn County, merchants do not seem to be terribly concerned that the increase will impact sales.
"A quarter-cent will not make a big difference in my environment: home improvement," said Ben Pforsich. "Things have to get done anyway."
Pforsich owns Orland Ace Hardware and said the only area he can think there might be an impact is where a company pays the sales tax for a sale event.
Otherwise, people are more inclined to pay a small percentage in tax increases than paying a huge jump in their property taxes, he said.
Even car dealerships, at which the purchase of a $40,000 car would add only $100 to the sales tax, are fairly confident the impact will be minor if anything at all.
"It is just what it is, and we will have to deal with it," said Tom Wayman, general sales manager for Hoblit Motors in Colusa. The dealership operates a used-car lot in Willows.
If anything, Wayman thinks the new law may have helped boost sales in December, although in an agricultural community like Colusa County, December is a busy month anyway.
"Our December business did pick up because a lot of people are trying to get in under the wire," Wayman said. "But December is usually pretty busy anyway because people are trying to spend their money for the tax write-offs."
In Orland, Shawn Hibdon of Hibdon Auto Center said "Most of my customers, when I've mentioned the sales tax increase, are not aware of it."
Hibdon added the quarter-cent increase is not significant, and he has not heard of anyone coming to his dealership to buy in order to avoid the tax increase.
"We sold more cars (in December) than we did in November," Hibdon said, and he anticipates business to be better in 2013 as his customer base is growing.
And with gas prices down, Hibdon is still selling pickups and SUVs.
"I don't think it will hurt anything. I think we need it," said Liz Riegel, of Terry's TV and Satellite in Orland.
These days the store sells a lot of cell phones and electronics, she said, in the $10 range as those gadgets sell, she said.
The store gave up selling appliances after the recession, Riegel said, but still carries satelites and does television repairs.
And ag equipment sellers like Bianchi Ag Services in Willows do not see a problem coming, either.
Marketing Director Logan Wilson said agricultural tractors sell with a two percent sales tax, so it should not impact those sales.
Shop work and parts may be slightly impacted, he said, particularly with hobby farmers on bills of $2,000 to $3,000.
However, farm equipment repairs are not luxury items, Wilson said, so "those who do it (farm) for a living have to work" and get their tractors repaired.
Prop. 30 also raises the income tax rate on those who make $250,000 or more over the next seven years.
The measure is expected to generate billions in new revenue — $8.5 billion in the first year alone — with the funds earmarked primarily for schools up through community college.
However, the measure also created a constitutional funding protection for state realignment, a program by which low-level felony offenders serve sentences in countty jails rather than state prisons.
It also sends some parolees back to county Probation Departments to handle.
Gov. Jerry Brown has promised the state will pay for the realignment mandate, but he also made it very clear during the campaign that Prop. 30 was designed to help the schools.
How the Prop. 30 funds are ultimately split will be under a watchful eye of schools and county officials alike.
Moreover, the state budget is projects to have another deficit for the 2013-14 fiscal year, officials reported, so there has been some concern that the state will "rob" that funding source for other purposes.
Opponents of the measure campaigned on a platform that there is no guarantee the taxes generated will go to schools as promoted.