Council Refines Revenue Measure, but Not Ready to Approve It

The Davis City Council is not waiting till the midnight hour to put a revenue measure on the ballot, and as a result they were able to further refine their ask without being forced to approve the measure at this time.  The council asked for staff to return with a more refined proposal at a time when Councilmember Lucas Frerichs, who was on vacation, would be available.

While Brett Lee attempted to open the door again to the Utility User Tax, his colleagues seem to be coalescing around a consolidated single measure for infrastructure – both parks and roads – while leaving the door open for a social services tax that would address homelessness and affordable housing.

As Robb Davis noted, the city used to fund affordable housing through the Redevelopment Agency.  The state took away RDA, so now is the city no longer committed to affordable housing, he asked.  “I’m not buying it,” he said.

In addition to consolidating the two infrastructure asks into one measure at $250, the three members of council were supportive of a built-in inflator and a longer duration for the tax.

Council will be looking to come back in January to take this issue up again and, at that time, hopefully approve language to put it on the ballot.  Although the three councilmembers, Robb Davis, Will Arnold and Rochelle Swanson, seemed to lean toward a parcel tax, they did not rule out a UUT altogether, but it was clearly not their preference – as they saw it potentially conflicting with the Valley Clean Energy initiative where they were afraid a new tax on electricity would create the impression that the Community Choice Energy was not saving sufficient energy.

Even with electricity, the largest single component of the UUT, it would generate roughly $5.9 million at the 5.5 percent level, a reduction from the projected $7.2 million of a $250 parcel tax.  They talked about the idea of taking out electricity and delaying it for six months to create separation between the UUT and the CCE.  However, the council majority seemed skeptical.

Mayor Pro Tem Brett Lee said, “We have to find a way to make the city’s finances sustainable.

“We’re not there,” he said.  “There does need to be some economic development but on the revenue side, for tax measures.”

If the city has an $8 million annual deficit, Mayor Pro Tem Lee said, “I would like to see half that gap made up with economic development and the other half made up with taxes of some sort.

“There is a fair amount of skepticism in the public,” he said, alluding to the public comment that expressed skepticism, and noted that “the public doesn’t trust us to do the right thing.”

Mayor Pro Tem Lee said, “I think the fundamental issue is the transparency and the trust.  So I’m leaning away from a specific two-thirds required parcel tax.  I think we really should address the
fundamental issue which is really trust in government and transparency.”

He noted that the last tax that passed was the sales tax and it only passed at 58 percent back in 2014.  And he added, “The community’s temperature is probably a little less open at this point.”

He argued that his “thinking has shifted a bit” and he believes the UUT has some pluses and is “a reasonable way to go.”

But the mayor pro tem might be alone in this thinking.

Councilmember Will Arnold said, “I understand the financial burdens that are real for homeowners,” but he also believes that a good portion of the value of those homes is so strong not because of their great design, but because of the strength of our amenities with schools being number one, and also parks, roads and transportation infrastructure.

“As go those services, so goes your home’s value,” he said.  The value added to the homeowners “goes far beyond $300 per year…  If you’re a homeowner, this investment is worth it.”

City Attorney Harriett Steiner was able to fully explain the difference between how a school district and the city assess parcel taxes.

“The city’s authorization for a parcel tax is different than a school district’s authorization for a parcel tax,” she said.  The school district has issues about how their authorization was drafted “and how that relates to parcels.”  She explained, “The city has the ability to set parcel taxes as they wish so long as it is not an ad valorum tax.”

So Mike Webb explained an apartment complex of ten units for the purpose of school district parcel taxes “counts as one parcel, versus the city tax right… is basically per door, so a 100-unit apartment complex is 100 parcels.”

Councilmember Rochelle Swanson, “I find myself leaning towards a single tax and something related to infrastructure.”  She said, “The pavement index was a huge eye opener and something people would get behind.”  She added, “Our parks are a huge part of who we are and that becomes important.”

Later she said, “I think a longer tax probably behooves us.”

Mayor Robb Davis said, “We have tasked staff with doing careful analysis of our needs.”  He noted that when staff got the Kitchell report, staff recognized that the turf replacement portion was not how the city does business and “they corrected it.”  He said, “There was no sense that there were other parts of the report that were lacking, that was the sole part that the FBC [Finance and Budget Commission] thought was problematic, staff agreed and did something about it.”

He also noted on pensions that “our own consultant has made it clear to us that if we give zero raises over the next ten years, our pension costs are going to go up by over $6 million.  That’s just a reality.

“We can’t lie to the community,” he said.  “We’re not hiding anything.  Some of the money from these parcel taxes will go to compensation.  It can’t not go to compensation.

“Even if we did zero in terms of any compensation changes and added zero staff, those millions would be hard-baked in,” he said.  “That doesn’t mean we can’t seek cost containment.”

Later he said that he didn’t agree that parcel taxes are a burden to the taxpayers.  He noted that “these taxes are an extremely efficient way of funding our local infrastructure.”  He pointed out that normally only about 27.8 cents on the dollar of local taxes stay local.  “The money that we’re generating locally flows out of this community and when we tax ourselves, when we say we’re going to put $250 of our taxes in, we keep all of it – we keep every single dollar.”

Mayor Davis noted that he saw support for the social services tax waning.  “I’m not giving up on it right now,” and he made a lengthy pitch that since the state took away RDA money, we have to decide whether to make a local commitment to fund affordable housing.

He said, “To me this is something that is the very essence of progressivism – and we should be doing it first.”  He added, “I believe we need a $50 parcel tax for those things.”

Councilmember Arnold agreed: “I believe we need a separate measure than the combined infrastructure tax.”  He said, “Potentially this $50 or social services tax.”  He said, “This was a core service that the city was able to provide through means that, through no fault of our own, disappeared more or less immediately.”

For now though, the council is focused on a potential $250 combined parcel tax, although it is not completely closing the door on the UUT (although the writing appears to be on the wall).

—David M. Greenwald reporting

We Have Five Days to Raise $750 – Please Donate to the Vanguard