In the last several days, we have looked into the impact of the soda tax discussion, but there is one angle we have not yet explored and it was one that became apparent from the start – why was the city exploring the soda tax in conjunction with the revenue measures they were considering for infrastructure needs, namely the parcel tax, Transient Occupancy Tax, and Utility User Tax?
From the start, setting the discussion on the four taxes seemed odd and, in fact, several people prior to the meeting asked me why they would put them all on together. It quickly created the impression that the council was going into a full court press on taxes or, as Bob Dunning would put it, “our esteemed City Council was considering ways of taxing the citizenry.”
Earlier in the week, he quoted a resident who wondered if the city council “sits around in boring meetings all day coming up with ideas on how to get more revenue from the citizens for them to spend.”
By lumping all the revenue measures together, it ignores the fact that, really, the soda tax is more about changing people’s dietary habits (whether you agree or not with the mechanism) than it is creating a revenue stream. Moreover, the revenue was to go more toward health programs than ongoing city needs.
That suggests that council should have separated the question, and considered the soda tax separately while figuring out which of the other taxes were the best way to address our infrastructure and ongoing needs.
The fact that all were placed on the same agenda aided Mayor Dan Wolk in his effort to kill the soda tax. That enabled him to argue, “We’re here tonight because council is concerned about the state of our community assets.” He was then able to lay out three goals of the revenue measure, stating that any revenue measure needs to address infrastructure, needs to have been studied and have public input, and finally needs to be successful at the ballot.
By that token, he argued that soda tax did not meet any of those goals and should be put off. The structure of the agenda item simply facilitated his making that case – coincidence? Probably not.
Beyond the soda tax discussion, however, I am increasingly concerned about the direction of the tax talks. I am generally in agreement that we should not pursue a Utility User Tax (UUT) as a means to create a revenue stream for roads. Councilmember Brett Lee laid out some concerns, but my chief concern is that I fail to see the consumption of utility services as being linked to use of roadways.
I prefer the parcel tax – it is relatively small, it can be bonded, and we can direct how the money is to be spent. If council can’t sell the parcel tax to two-thirds of the citizens as a way to fix our roads, then so be it.
When City Manager Dirk Brazil expressed concerns about lack of direction from council, Councilmember Swanson quickly blurted out, “TOT.” On the surface, TOT or Transient Occupancy Tax makes a lot of sense. After all, it is a tax that doesn’t impact the local residents. It is a tax that most won’t even notice.
On the other hand, unless we are really going to crank up the TOT by 5 to 10 percent, it doesn’t figure to generate a lot of revenue, with each percent increase generating just $130,000. If we are thinking about roads needs, you are talking about even a 10 percent increase only generating another $1.3 million.
The real bang for the buck might come if we can build a few more hotels in addition to the approved Hotel Conference Center on Richards Boulevard, at the site of the current University Park Inn.
Last week the Vanguard analyzed the PKF Consulting study that suggests that the city could add two or three more hotels and produce the kind of revenue they need. The interesting thing is that MRIC (Mace Ranch Innovation Center) is expected to produce about $2 million in revenue at full build out.
When the $2 million number came out, Councilmember Brett Lee called it “a big letdown.”
“Two hundred acres in play with the associated risks involved, when I can go and the city council can approve a hotel on two acres and get $500,000 a year pretty much guaranteed,” he said. “What’s wrong with this picture?” He said, “I need to know more about that.”
But some question the PKF study as being too optimistic about future revenue. The city, for their part, has commissioned a broader study on expected TOT revenue from a rival consulting firm, information that Community Development Director Mike Webb told the Vanguard should be out in mid-to-late January.
The problem now is that the clock is ticking. As Mayor Pro Tem Robb Davis noted on Tuesday, we have until February to put a general tax on the ballot. General taxes can be used for anything in the general fund. They only require a simple majority vote, but they must be placed concurrent with council elections.
If we miss this window, the council would have to wait until June 2018 for the next opportunity for a general tax.
That is one reason that City Manager Dirk Brazil’s pushing back on staff time and workload seemed inappropriate. It is, in fact, crunch time, and they have left all of these major decisions until the end.
We have known that we probably needed a revenue measure since June of 2014 when the council decided to hold off on the parcel tax from a potential November 2014 ballot date to the future. The good news is that they were able to hold a discussion in December without the gun of a deadline held to their head, the bad news is that we may not even be ready with an additional month.
We won’t know the prospects of TOT until the study comes out in January, we don’t have the information requested on the soda tax by Councilmember Lee, and we still have looming shortfalls in funding for infrastructure.
Yes, I agree there is a lot of work happening, but I also, at least from my standpoint, believe that the period of time from July 2014 until this fall was the slowest yearlong period since the Vanguard was launched in 2006.
Council needs to be able to make informed decisions, and the pushback by the city manager seemed to many people, myself included, more about the mayor and his political campaign for the assembly and less about the best interests of the city. That is a little concerning and bears further scrutiny.
—David M. Greenwald reporting