July 6, 2004 > Editorial
The Utility Tax Juggernaut
It has begun! The clarion call for a local tax that big, bad Sacramento cannot touch will begin its march to a feverish pitch, culminating with a November vote. The simple truth is that Fremont has run out of options and prior staff cuts have not halted its voracious appetite for money. The logic is simple. The city says that they have been shorted by the state for many years, starting with Proposition 13 when property taxes were apportioned based on a weighted formula that penalized cities that were lean on taxes. The conclusion we are to draw from this is that back in those days, Fremont was frugal and paid the price. I guess that explains why the staff grew tremendously during the ensuing years. City Manager Jan Perkins and Mayor Gus Morrison have presided over a good number of those years and will now both flee the scene. At least Gus will still live in the morass he helped create.
All this aside, let's look carefully at what the city is asking the voters to approve. It appears that a 7% - 8% tax is in the works but is that really what residents will pay? Looking at the overall picture, utility rates are on the rise and if cost of living increases are considered, we could easily move into double digits and keep right on going.
How about collection fees? A recent inquiry to East Bay Municipal Utility District received a reply from the Director of Finance about its tax collection experience when approached by several cities in the '90's. The pursuit of this tax by Richmond, Oakland, El Cerrito and San Pablo (the only one to seriously pursue the matter) reveals that the cost of collecting these tax dollars "outweighed the benefits of the tax." A California Court of Appeals case in 1995 resolved the issue of whether cities could compel utilities to collect a city's tax. In the ruling, it was determined that "the city must reimburse the district's cost to collect the city's utility tax."
At the time (early 1990's), setting up the billing system "would approximate $80,000 with ongoing processing costs of from $0.50 to $1.23 per customer per billing period." Remember, these costs are in the early 1990's. The letter ends with the statement that "East Bay MUD has not been approached by any city relative to implementing a utility user's tax on the District's services since 1992.
The tough part of this problem is the underlying threat that Fremont will lose protective and infrastructure services - fire, police, roads, etc. Who in their right mind can turn down this request? A check of the job postings at the City of Fremont website shows that there are currently nine full-time jobs available. The total of salaries for these vacancies is approximately $958,000 and of them, one is for a police office at an average salary of $74,000. One of the open positions is for a Deputy Redevelopment Agency Director at a salary of up to $118,000 with the boast that, "Over the next 5 years, the Agency expects to invest over $31 million in affordable housing initiatives and developments. Among California redevelopment agencies, Fremont ranks in the top 25% in tax increment received."
Let's see, we face a threat of minimal if any police protection and we are currently trying to hire one officer with a salary that represents approximately 8% of the total salaries on the current city jobs list. Where are the priorities? By the way, look under temporary jobs and volunteer jobs and the message is the same: "no job postings."