Analysis: FBC’s Recommendations On What We Should Do About Taxes

Wallet Taxes

Wallet TaxesBefore February the Davis City Council will have to make a decision as to whether to put a revenue measure on the ballot and if so, in what form. On December 15, the council voted 3-2 to approve a motion to ask staff to return with information on a TOT (Transient Occupancy Tax), a parcel tax focusing on infrastructure needs that are critical to be addressed immediately, and more information on the sugar sweetened beverage tax.

The substitute motion was to focus on TOT and parcel tax. That motion, supported by Dan Wolk and Rochelle Swanson, subsequently failed. However, Mayor Dan Wolk, as we reported on Wednesday, continues to seek a parks tax on the order of $50 to $75 in additional annual dollars per parcel.

The Vanguard has a lot of concerns about the process here. It seems important to understand more fully the concerns of the Finance and Budget Commission about going forward with taxes.

Back in early November, the Finance and Budget Commission passed a motion with advice to Council specific to the Utility Users Tax – though it would seem to apply more generally as well. (For purposes of space and readability, I have truncated the motion, but the full motion is Attachment C at this link).

  1. Before making a final decision on a new tax measure, we recommend that the city update its multi-year projections of underlying city revenues and expenditures…
  1. The city should again review whether further economies in city government can be achieved (as just one example, restructuring city government so that some managers supervise a larger number of staff) to help free up city funding resources to address gaps in funding for infrastructure…
  1. In its decision-making process, the city should create a complete list of funding needs for deferred maintenance and capital improvement projects that are supported, at least in part, from the General Fund…
  1. If the city decides a new utility users tax is needed, it should adopt one that is fair and broad-based and that does not unduly burden one segment of individual or business consumers…
  1. The city should carefully consider the potential consequences and suitability of the specific utilities that might be taxed…
  1. Our perception is that even a majority-vote utility users tax measure – as opposed to a special tax requiring a two-thirds vote of the public — may be hard to pass muster with voters unless the city “gets the messaging right.” Accordingly, the city must be absolutely clear to the voters about why the additional revenues are needed and what the additional monies will be used for…
  1. We recognize that a general tax, such as the proposed utility users tax, unlike a special tax, cannot legally be restricted to particular purposes. However, we believe a number of steps are possible to provide reasonable assurance to the public that the revenues from a utility users tax would be spent as promised…

A. A sunset of four or six years on the duration of the tax measure…

B. Adoption of a detailed written plan by the City Council, through a resolution that could be adopted separately from the tax measure itself, explaining how the proceeds of the new tax measure would be spent…

C. Adoption of so-called maintenance of effort requirements, through a resolution or ordinance that could be adopted separately from the tax measure itself…

D. Formal annual review of city government expenditure of the proceeds of the new tax measure…

A second, stronger motion was then unanimously passed at the December 14 meeting, the day before the December 15 City Council meeting. Councilmember Swanson motioned this into the record.

Here is the full text of the December 14 motion:

That the F& B C is recommending that the Davis City Council not approve any new tax measures or utility rate increases for placement on a ballot measure until such time that:

  1. The staff provides a detailed scope of proposed and/or deferred capital infrastructure projects, as well as proposed new services.
  • Said scope document shall include specific measurable success metrics for the proposed new services and projects, along with an inventory of the specific costs that will be incurred to provide said proposed services or complete said projects.
  • Each deferred capital infrastructure project shall include its expected success metrics, as well as an anticipated budget.
  • The scope document will be updated each year as part of the Budget adoption process.
  1. The staff provides detailed report/s in conjunction with or as a part of the annual Budget adoption process documents submitted to City Council that reports the specific work done (accomplishments) the prior Fiscal Year on staff proposed services and project/s associated with item #1.
  2. The staff provides detailed report/s in conjunction with or as a part of the annual Budget adoption process documents submitted to City Council that defines where the revenues collected from any new tax/increased tax measure(s) spent on services and/or projects other than the services and/or projects associated with item #1.
  3. Background information

Under a proposed new General tax a fifty percent voter approval is required to implement the new tax. Additionally, these taxes are deposited in the General Fund and the citizens cannot mandate what services or project/s these new taxes are spent on. However, there is no law that prevents the citizens require staff and city council to provide the citizens with a detailed scope of proposed services or project/s, each year, including specific measurable metrics of those proposed services or project/s along with the detailed specific costs to provide said proposed services or project/s. And, there is no law preventing the staff from providing a report on specifically, including measurable metrics of services or project/s that were provided each year, where those additional new tax dollars were spent.

Under a proposed new Special tax a two thirds voter approval is required from the Davis citizens of at to implement the new tax. Additionally, these taxes are deposited in a specific fund where the citizens can mandate what services or project/s these new taxes are spent on. However, there is no law that prevents the citizens from requiring staff and city council to provide the citizens with a detailed scope of proposed services or project/s, each year, including specific measurable metrics of those proposed services or project/s along with the detailed specific costs to provide said proposed services or project/s. And, there is no law preventing the staff from providing a report on specifically, including measurable metrics of services or project/s that were provided each year, where those additional new tax dollars were spent

Under a proposed new utility rate increase a fifty percent approval is required from the Davis citizens to implement the new tax. Additionally, these taxes are deposited in the General Fund and the citizens cannot mandate what services or project/s these new taxes are spent on. However, there is no law that prevents the citizens require staff and city council to provide the citizens with a detailed scope of proposed services or project/s, each year, including specific measurable metrics of those proposed services or project/s along with the detailed specific costs to provide said proposed services or project/s. And, there is no law preventing the staff from providing a report on specifically, including measurable metrics of services or project/s that were provided each year, where those additional new tax dollars were spent

The intent of this motion is to ensure that the Finance and Budget Commission uphold our new City Council approved mission statement where,

“Providing transparency of City Finances to the citizens of Davis.

  • Reviewing the spending outlined in the city budget in order to advise the Public that City Council/City Management is accountable for spending taxpayer dollars effectively and in keeping with important city priorities.
  • Searching for and advising actions that could maximize city revenues and reduce governmental costs and help ensure municipal fiscal stability.
  • Providing recommendations/special studies on financial and economic issues to the City Council.”

And, that the citizens of Davis are provided with a transparent and accurate accounting how specifically any new taxes are spent. The assumption being that the city staff and city council have planned, through their budget process, how to manage their ongoing projected costs of providing existing services or project/s along with any unfunded pension or OPEB liabilities. Or, if any these taxes are proposed to pay any compensation increases, unfunded pension or OPEB liabilities that the proposed scope for use of these taxes clearly presents how much and for whom these taxes will be used for paying any compensation increases, unfunded pension or OPEB liabilities each year.

The point of this motion is that if the city staff or city council intends to use these new taxes to pay for compensation increases, unfunded pension, OPEB or Infrastructure liabilities then they should transparently inform the citizens of Davis that this is what they are proposing.

—David M. Greenwald reporting

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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6 Comments

  1. Tia Will

    However, Mayor Dan Wolk, as we reported on Wednesday, continues to seek a parks tax on the order of $50 to $75 in additional annual dollars per parcel.”

    With no intent to derail the discussion of the specifics of this article, I did want to make one observation. The comment was made on a previous thread that the parks tax seemed to come “out of the blue” with the idea that there was something “odd” about this.

    My thought is that one of the major roles of elected leaders is to present alternatives. I have already stated my deep disappointment with Mayor Wolk’s decision to not support the soda tax, and my dislike of the probable reason for his having done so. But having said that, if he is not going to support the soda tax, and if it is the CC’s intent to put a tax measure on the ballot, would it not be best to consider all of the possible alternatives rather than to just stick with those already under public consideration ?

  2. TrueBlueDevil

    Their approach seems so ad hoc. But nothing seems to stop them from more spending for city employees… I guess that helps their re-election. The Romans had the same problems.

    Why propose a new parks tax, when the roads are in such dire need? And will our wet winter quicken the rate of decay of the same roads?

    1. hpierce

      I ignore the comments. Pretty gratuitous.

      First question is like a comment… so I ignore that as well.

      You second question and the answer to it, I wish every citizen knew… water, entering the subgrade/base of a street, thru cracks, etc., is ENEMY # 1, for streets…  base failures cause “pot-holes”  (a bit less severe in Davis due to lack of freeze/thaw cycles, common in colder climes).  Not all soils (base) are problematic, but soils that are clayey, particularly expansive clays are very much so [shrink/swell]… more similar to freeze/thaw… Davis, depending on area, have some very expansive clays.

      Well drained streets, if there is no ponding, where water can shed easily during a rainfall event, are less susceptible if the road cracks are small (narrow).

      To summarize, yes, increased water (rainfall) can increase deterioration of the streets, mainly if they are already compromised due to cracking, the cause of which vary, and may be covered in a subsequent missive… sometimes “overuse” (transit on street sections that were not designed for it, sometimes “underuse” (oxidation where there is not enough loads to keep the asphalt flexible), and sometimes other factors.  Good question though.

      The City, in it’s infinite wisdom, cut back on the street crews, who could do preventative maintenance, which made sense, given the equally ‘wise’ decision not to give them the equipment they needed, years ago (crack sealing and patching).  To save GF monies.   PW resisted that, to no avail.  But hey, we were able to cut DCEA employees, equipment costs. “saving money”.  Taxpayers should laud that!  [pay me now, or pay me later]

      The last paragraph was my editorial… the rest is absolutely factual… ask anyone who understands pavement management.

  3. Jim Frame

    I’ve always found it odd that a general tax, the use over which the electorate has no control, requires only a 50%+1 vote, but a special tax, which the voters designate for a particular purpose, requires a 2/3 vote.  It seems to me that a City Council that wanted to fund a pet project but knew they couldn’t get a 2/3 vote on a special tax could simply propose a general tax and then turn all its revenue toward the pet project.

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