Revenue Measure Continues to Evolve – Utility User Back on the Table

Utility User Tax

Time is growing short and the council now will have two meetings to act to put a revenue measure on the ballot.  They have asked city staff to come back on January 23 with a more refined proposal in the hopes of putting it on the ballot by the deadline at the February 6 meeting.

The form of the tax continues to change as the council now has re-opened the door for a possible two percent Utility User Tax (UUT) on gas, cable and electricity – although there is some dispute over whether electricity would be included.  One thing that was off the table was water and wastewater.

In addition, there was the possibility of an expansion of a parcel tax for parks, between $100 and $125 per year.  As of now, it appears the social services tax would wait, as Mayor Davis acknowledged that “it is not ready for prime time in the sense that more details are needed.”

As Robb Davis acknowledged, the combination of a Utility User Tax and Parcel Tax would get “roughly half of what we need.”  He also said, “It pushes us to look at cost containment.”

This was in response to a question from Councilmember Rochelle Swanson on the idea of blending approaches.  She said she was cognizant that they had to figure out a way to pass the tax measure because “zero percent of zero, is zero.”

For Brett Lee, the key to the approach is the need not to bite off everything at once.

“I’m not sure we need to eliminate the shortfall in one go in terms of a revenue measure.  The question is of course, what percent,” he said.  “I’m sort of thinking a reasonable approach is to cut that gap by half.”

That would mean taxes that generate about $4 million of the $8 million gap between current funding and what is needed for basic levels of full funding, although some estimates are that the gap is a good deal higher, potentially as high as $16 million.

Mayor Pro Tem Lee is looking at the combination of cost containment and economic development, as well as the revenue from legal cannabis to further cut that gap and then tackle the rest in a second go-around, possibly in 2020.

He said going to a $250 parcel tax: “That seems like a big ask and there seem to be other ways to address that gap.”

His conception would be to do a $90 parks tax with an inflator and a ten-year term with two percent tax on electricity, cable and gas.  That would generate $1.4 million from the UUT and $2.6 million from parks.

Will Arnold, who had previously rejected the idea of a UUT and a blended approach, now said, “I’m more open to it now than I was when we met previously.”  He added, “Brett offers a fairly prudent approach to this, that spreads the investment that’s being made through multiple ways among the community, gives us some more flexibility but the key effort I have stated… is that this parks tax ought to be renewed at the bare minimum here.

“No matter what we choose here, the needs are such that I trust my fellow community members to understand that this is an investment not in our community but in our own homes’ values,” Councilmember Arnold explained.

He added, “I’m very confident that if we choose any of the prudent approaches that are in front of us…”

He was supportive of a $99 tax for parks and $99 for roads, but he added, “I’ve become a little more flexible in my approach and I think that there is some merit in the blending idea.”

He added, “I want to keep all the options open.”

Councilmember Lucas Frerichs was in some ways the dissenter.  He said, “I appreciate the blending notion, but I’m not sure I want to do the blending with the Utility User Tax as well as the parcel tax.”

He was concerned that the Valley Clean Energy that Davis is launching with Woodland and Yolo County is predicated on the idea of savings for electricity, which he sees as potentially undermined through the creation of a new tax.

Councilmember Rochelle Swanson warned her colleagues not to lose site of the roads.  She argued that the roads have not been repaired and we should not just focus on parks.

Mayor Robb Davis noted that there was consensus growing on the blended approach, although with some disagreement over whether electricity should be included in the UUT – however, he did point out that electricity was the biggest component of the tax and believed it would be difficult to work without it.

The mayor noted that “there are people who are willing to stand up and say, I will fight that tax, no matter what the tax is.

“The philosophy there actually worries me a little bit,” he said.  “Davis as a city just needs to crash and burn and learn to live differently from the reality that hasn’t grown in appropriate ways.  We need to fight any tax because we need to get to the point where it hurts.  We need to then make the hard decisions.”

He, as a policy leader, said, “I can’t support that.  We’re always going to make decisions within constraints.”

He added, “I hear people say, you need to equally focus on economic development.  I honestly want to know that means.”  He later said, “I want to know what else we’re supposed to do.

“In terms of cost containment, I do think that we have taken real steps,” he said.  “We have held the line on staff compensation increases.  We continue to work very hard, even tonight, on making that happen.

“I believe we have done what the community has asked,” he said.  So the opposition that has emerged, he said that “it troubles me.”  He added that “we need to figure out a way to maintain what we have.”

In summary then,  the staff will return on the 23rd with proposals of a two percent UUT and a parcel tax between $100 and $125.

The mayor believes that covers about half of what we need, while pushing them to be more vigilant on cost containment.

—David M. Greenwald reporting



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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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10 thoughts on “Revenue Measure Continues to Evolve – Utility User Back on the Table”

  1. Keith O

    n summary then.  The staff will come back on the 23rd with proposals of a two percent UUT and a parcel tax between $100 and $125.

    2/3’s votes or 50% general funds votes?

  2. John D

    Quoting the Mayor, and I assume that David’s quote is accurate:

    “I hear people say, you need to equally focus on economic development.  I honestly want to know that means.”

    From my view, truer words were never spoken.  And this isn’t meant to be a critique or indictment of the Mayor.  He could equally have said, “we honestly want to know what that means” – but sadly, we don’t.

    What that fact means, for today, is that we have no choice other than to pivot towards more new taxes as the source for the city’s increased municipal revenue needs.

    What that fact also means, for tomorrow, is that we really don’t have any idea what more “economic development would look like” or “why  economic development would be beneficial to the community, its residents, our schools or the university” – beyond its secondary role in generating more new tax revenue to the city.

    Bottom line, we really don’t know how to talk about economic development as a necessary, positive element in the maintaining and fostering, and sustaining of healthy communities.

    I don’t know how we got here, to a place where we don’t feel confident and eager to discuss the potential opportunities available from economic development, but I’d feel a lot more comfortable if I knew there were at least some explicit, concrete efforts or initiatives, beyond the upcoming form based code review, currently underway.

    For without some earnest engagement and leadership on the topic, economic development doesn’t just happen – particularly if we start from the position that we don’t really know what it means.   And, if economic development is supposed to be the long term strategy for increasing revenue – it sure seems like we need to commence the process and the discussions sooner than later.  Otherwise, the inevitable conclusion is that revenues are generated by new taxes and that’s precisely where we are today.

    1. Mark West

      The only fiscally sustainable way to increase City revenues is by expanding commercial activity through economic development. So it is quite depressing to hear City Council members and local business owners state that they don’t know what economic development looks like, or how we go about doing it. These comments really are absurd because economic development is well understood and described. In fact, the City has a document on its own website describing a vision for economic development in Davis and a roadmap for how we implement that vision.

      http://city-council.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/Innovation-Park-Task-Force-Committee/Documents/achieving-the-vision-2014-2016-workplan-draft-2014-02-11.pdf

      How can we hope to move forward if our City Staff takes the time (and money) to prepare clear plans that we then ignore and never implement?

      So let’s make this simple. The way we foster economic development is by making it easier, quicker, and less expensive to start and grow a business in Davis.  We are fortunate to have a gigantic engine of innovation and new business ideas right next door known as the University of California, Davis. All we need to do to grow our commercial sector is allow those new businesses to open and flourish, but what we do instead in many cases is say, ‘no you can’t start that business here because it might harm one of our existing businesses, or ‘no you can’t start that business here because it might cause more people to want to move here,  ‘no you can’t start that business here until we pay a consultant a few hundred thousand dollars of your money to waste a year determining if we even want your business.’

      The recipe is straightforward, remove the protectionist policies in our zoning and municipal code that prevent business innovation and get rid of the protectionist thinking in our dialog. Reduce the costs and time necessary to start a business by speeding up the Planning and Review processes, and make the City accountable when we fail to live up to the new timelines. Finally, try reading and implementing the reports and ideas that City Staff created and posted on the City’s own website.

       

       

      1. John D

        Mark, all of what you say is true, but what does that look like at the end of the process?  I think that’s where we lose a lot of people who want to see what the “there” is, what it looks like, what it means for them and their family, and how it is likely to improve community as a whole.   I ask you, is that unreasonable?  Have we done all that?

        With respect to the Downtown, it has been determined that the “process” needs to be undertaken in context of a professionally curated, comprehensive, systematic, and wholistic approach.

        Perhaps what we need is a forms based review of the entire community with a dual emphasis on its economic sustainability while also devising a strategy to manage and improve its cultural traditions, heritage and overall quality of life?  A comprehensive, general plan review by any other name.

        Despite the reports to which you refer, any successful movement towards an economic development model will necessarily require more than targeted reports espousing the virtues of innovation parks, increased focus on disbursed technology clusters and glowing reports on other successful communities.

        It is going to require community level understand and embrace of the outcomes thereby envisioned.  In order to “get there” it will necessarily require a working model with a broader scope than the innovation park task force reports.  And, perhaps most important of all, it will require sustained civic leadership, advocacy, and a willingness to invest the funding, staffing and resources necessary to “get there”.

        Clearly, today, we are not yet there.   So, where do we go next in this process of exploration and engagement?

        1. Mark West

          “Mark, all of what you say is true, but what does that look like at the end of the process?”

          John, do we live in a command/control society, where we must predetermine the outcomes before we do anything? What you are describing is what I call protectionist thinking, worrying about keeping ‘what I have’ instead of creating opportunities for all.

          Do you think that the residents of our highly educated city should ignore decades of research and evidence from communities around the world on how economic development increases local economic activity creating good jobs, sustainable revenues to support services, increasing wealth in the community, and providing opportunities for all to improve their quality of life? Are we to ignore that evidence just because some lack the vision to see a future that is different than what they are currently experiencing?

          “I think that’s where we lose a lot of people who want to see what the “there” is, what it looks like, what it means for them and their family, and how it is likely to improve community as a whole. I ask you, is that unreasonable?”

          Yes.

          The process we should be focusing on is called evolution. We don’t predetermine the outcomes, we create incentives for incremental change, some large steps, some small, some moving us forward, some not. Some businesses thrive and some fail, but those that fail are quickly replaced by something new. It is not fear based, focused on protecting what we have, but rather opportunity based, embracing the reality of our changing environment and the need for the City to evolve to meet the new challenges to come.

          We need to create a culture of economic opportunity, not one based on a fear of the future.

           

        2. John D

          Mark,

          What you say, it all sounds good to me.  Trying to address the Mayor’s frustration, I am simply inquiring about the appropriate process and forum to put forward the issues.

          Most communities, if that is to be our reference point, seem able to muster the resources to conduct General Plan Reviews on a regular, comprehensive basis – sometimes referring to them as Comprehensive Plans – as opposed to the single-issues-oriented, tinkering approach which Davis has followed for much of the past twenty years.   That difference in approach may, in itself, serve to explain much of what hampers the conversation today.

  3. Mark West

    “No matter what we choose here, the needs are such that I trust my fellow community members to understand that this is an investment not in our community but in our own homes’ values,” [emphasis added]

    55% of the residents of Davis (otherwise known as the majority) live in rental housing. Raising taxes is not an investment in their home values, it is an added cost of living on top of what is already a very expensive place to live.

    1. Howard P

      You are correct… the “property value” argument IS specious… I opine that there is a value in the here and now, for day to day living… that both property owners and renters will benefit from… at what level, is where we will need to discern, as individuals…

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