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1. What is a sales tax?

A sales tax is a tax placed on retail purchases, excluding certain purchases like food for home consumption, utilities, medicines, and services such as accounting or yard maintenance services. Revenue generated from a sales tax is then used to pay for state and local projects, facilities and services. 

The State of California has a helpful resource to explain sales tax information in greater detail. Read this resource from The California Department of Tax and Fee Administration (CDTFA) for full details about sales tax exemptions and exclusions.

2. What is Arroyo Grande’s current sales tax and how might it change?

In California, there is a statewide baseline sales tax of 7.25%. Arroyo Grande has a 7.75% sales tax, of which 6.25% goes to the State and County of San Luis Obispo and 1.5% goes directly to the City of Arroyo Grande.

If Measure D-22 is passed by voters, the sales tax rate will increase by 1.0%, raising the sales tax rate to 8.75%. With this increased tax, Arroyo Grande would receive a total of 2.5% of sales tax directly to the City General Fund.

3. Why will measure D-22 be placed on the November 2022 ballot?

On Tuesday, May 24, 2022, the Arroyo Grande City Council unanimously adopted a resolution calling for the placement of a 1.0% Transaction and Use Tax (Sales Tax) measure on the November 2022 ballot. This will let voters decide whether to approve the sales tax.

4. Have Arroyo Grande residents passed any other sales tax measures?

In 2006, voters in Arroyo Grande voted to approve Measure O-06, which added a 0.5% sales tax to the local sales tax rate. This 0.5% goes directly to the City of Arroyo Grande General Fund. General Fund dollars can be used for any municipal programs, facilities, and services throughout the City. 

Currently, the City spends the Measure O-06 funds consistent with the wishes expressed by the voting public in advisory measures that accompanied the 0.5% sales tax measure in 2006. Visit this webpage to learn more about Measure O-06: http://www.arroyogrande.org/128/Sales-Tax

5. How will Measure D-22 impact me?

If approved, shoppers will pay an additional 1.0% sales tax on certain taxable purchases of goods and services in Arroyo Grande. If voters pass Measure D-22, the new City tax rate will increase to 2.5%, which is equivalent to $2.50 on each $100 spent on taxable goods. All Measure D-22 revenue would go to the Arroyo Grande General Fund to be used for municipal purposes.

6. What will happen if Measure D-22 does not pass?

If Measure D-22 does not pass, the City sales tax will remain at 7.75%. While the tax will stay the same, the City will not have additional monies to apply towards addressing funding needs that have been identified for streets, sidewalks, stormwater infrastructure, and other City programs and facilities.

7. How can Measure D-22 help resolve infrastructure issues in our City?

Measure D-22, if passed by voters, will generate an estimated $5.6 million annually in additional revenues until ended by the City Council. These funds will go into the General Fund for general use, and the City could choose to allocate spending to fund road and sidewalk improvements and stormwater infrastructure throughout the City. 

City engineering resources and third-party experts have analyzed City infrastructure, with a particular focus on city streets. Current estimates show that the City needs to invest over $6M a year to maintain current street conditions. With the current status, the pavement condition index will continue to degrade and streets are likely to decay further and increase long term costs to fix them. 

8. What are the sales tax rates in other cities in San Luis Obispo County?

Arroyo Grande - 7.75% (Measure D-22 would increase this to 8.75%), Atascadero - 8.75%, Grover Beach - 8.75%, Morro Bay - 8.75%, Paso Robles - 8.75%, Pismo Beach - 7.75%, San Luis Obispo - 8.75%, Santa Maria - 8.75%

9. Is Measure D-22 a special tax or a general tax?

Measure D-22 is a "general tax," not a "special tax." Since this is a general tax, a simple majority voter approval ("50 percent plus one") is required to pass the sales tax measure. The transactions and use general tax proposed by Measure D-22 would take effect only if it receives a majority "YES" vote at the November 8, 2022, general municipal election.

10. Will Measure D-22 fund the roundabout at the Brisco-Halcyon Road interchange?

No, the Arroyo Grande City Council voted to only allocate federal and State grant funds to the Brisco-Halcyon Road interchange roundtable project. No sales tax revenue will be used to fund this project.

11. How has the City spent its “gas tax” money?

 
Arroyo Grande uses all of its gas tax funding for the maintenance and paving of City streets. The City receives gas tax funding from the State through the Highway Users Tax Fund and SB1 (Road Maintenance and Rehabilitation Account). The State audits Arroyo Grande's use of gas tax revenue to ensure that it is spent on City street and pavement maintenance. 
  
Since July 2018, the City received approximately $690,000-$975,000 annually in gas tax funding from the State. The amount varies based upon changes in the economy and purchase activity by consumers. Within that time, the City has spent between $1 million and $2.9 million annually on street and pavement maintenance. The City has supplemented State gas tax revenue with additional funding sources such as general fund monies.