Where Does Your Sales Tax Go?

The City of Mill Valley saw an uptick in sales tax revenue in the first quarter of its current fiscal year, as first reported by the Mill Valley Herald, with city finance director Eric Erickson calling the increase a sign of "a small but encouraging economic recovery here."

Sales tax revenue in the transportation sector, which includes gas and auto sales and repairs, saw the highest gain at a 31 percent increase in the quarter ended Sept. 30 compared to the same period a year ago, according to Erickson's report to the City Council last month. Food products, which includes restaurants and grocery stores, rose 16.6 percent, while general retail sales saw a 6.8 percent hike, according to Erickson.

The news provides good reason to look at exactly where revenue from our 9 percent sales tax actually goes. Sales tax revenue accounts for nearly 10 percent of the city’s budget, a stark contrast to the 55 percent of general fund revenue that comes from .

This pie chart from the City of Mill Valley for the 2010-2011 fiscal year provides a breakdown of the distribution of local sales taxes. It shows that the lion's share of the tax, 6.75 percent of the 9 percent, goes to the state's general fund. The city gets the next largest chunk at 1 percent, with the state safety fund and the county's half-cent transportation sales tax. The tax was approved by voters via Measure A in 2004 and is projected to raise appproximately $331 million through 2024 for local transportation projects, including the . The oft-debated accounts for .25 percent of total 9 percent sales tax.