Today, Stockton voters head to the polls to vote on a sales tax increase to fund more police officers and pay creditors. Certainly, a city struggling through bankruptcy needs to think creatively about increasing revenue. So, as Stocktonians decide the fate of Measures A and B, here is another idea to boost sales tax revenue: Annex Lincoln Center.
If you didn’t already know, Lincoln Center is not a part of Stockton, despite being right in the middle of the city. The shopping center technically doesn’t belong to any city, but exists only as an area of San Joaquin County. And as an unincorporated area, all revenue generated at Lincoln Center flows to the county, not the city, even though shoppers drive on Stockton roads to get there. There are actually areas like Lincoln Center throughout Stockton. Could annexing these areas help solve Stockton’s money woes?
These unincorporated areas—or “islands” as they are typically referred to—were built before the city of Stockton had developed around them. Stockton eventually grew around and beyond these areas, engulfing communities formerly surrounded by farmland (the easiest indicator of an “island” is the absence of sidewalks). These areas remained independent, even though they blended seamlessly into the city. Islands formed special districts to pay for services, either from the county or even through contracts with the city in the case of fire protection. Over time, some islands have been incorporated, but larger swaths such as Country Club and Lincoln Village are still technically outside of city limits.
This is problematic for a few reasons. On top of potential lost revenue, these islands make it awkward for the city to evenly administer services. The Stockton Police Department may be responsible for providing service on one side of the street, while the San Joaquin County Sheriff’s Department patrols the other side. School districts also reach across city lines. And instead of voting for city officials, residents of unincorporated areas vote for county officials, even though it’s the decisions made by the city that mostly affect their day-to-day lives.
These are not insignificant areas, either. In terms of population, there are approximately 40,000 people living in unincorporated Stockton, which would bring the city’s actual population closer to 340,000, larger than Pittsburgh, Pennsylvania and St. Louis, Missouri.
This of course begs the question: why not annex these areas to raise revenue through new property taxes? It’s an idea that has been kicked around before. In 2002, the city looked in to the costs and benefits of bringing large islands into the city. However, it was determined that doing so would actually cost the city money. Putting in sidewalks and bringing other infrastructure up to the city’s standards would cost more than property taxes would bring in, most likely resulting in a net loss revenue wise for the city.
Moreover, annexing large areas such as Lincoln Village or Country Club would be fairly complex. While state law allows cities to annex city-surrounded communities under 150 acres in size without protest, larger areas still must be approved by a vote from the area’s residents who may not be thrilled to be joining a city. In addition to new ordinances that would come along with being absorbed by another municipality, there are also added taxes. Stockton residents pay a 6% utility tax on water and sewage that newly annexed areas would be subject to as well (though property tax itself would remain the same).
For residential areas, clearly the city wouldn’t gain much in terms of revenue. However, commercial areas are another matter. For example, because Lincoln Center is technically not a part of Stockton, all tax revenue generated goes to the county. In theory, if Lincoln Center was annexed separately from surrounding residential areas, the city would have an instant, reliable new source of revenue from an area that already benefits from city services. Unfortunately, while good on paper, executing such a plan would be difficult as the county would be reluctant to give up a revenue-generating commercial property. If the annexation of Lincoln Center were pursued, the city and county would have to negotiate a tax-sharing agreement, meaning that even when annexed, the county would still get some percentage of tax revenue from the shopping center. Property owners may also object, triggering a protest vote.
But Stockton is bankrupt, so while this process seems lengthy (and potentially politically unpopular), anything that could bring in profit should be considered. Even if the county retains a chunk of the sales tax, as long as revenue exceeded costs, why would the city not look in to annexing Lincoln Center, or any other unincorporated commercial areas for that matter? There are commercial areas in Country Club as well as the strip of businesses along Thornton Road, north of Hammer Lane. If we are going to raise the sales tax, should the city also consider capturing money that is already being spent within Stockton?