Commentary: Council Should Reconsider Type of Revenue Measure It Pursues

Politics in many ways is the art of the possible, and sometimes the more ideal solution must give way to the more pragmatic solution.  You could argue that, in an ideal world, the city of Davis would be well on its way to bringing online commercial development which could be a new source of revenue generation for the city.  And you can argue that the city has been irresponsible in the salaries and benefits they have given out – particularly past councils.

But we are where we are now, and large scale additional cuts seem impractical at best and harmful to city services at worst.  Our commercial development aspirations have been at best delayed by land use battles and financing uncertainties, and that leaves, as a short-term and immediate option, a new revenue measure.

Likewise, if I could put my ideal revenue measure on the ballot it might be a more progressive tax than a parcel tax, but the advantage we have with a two-thirds parcel tax is that, unlike the school district, it is actually visiting per unit, so that rental units are assessed at the same rate as single-family homes, and, more importantly for me, we have a good deal of control over how that money is spent.

For a parcel tax, each dollar must be allocated at the time it goes on the ballot.  Whereas for a general tax, there can be advisory measures, but there is no way to ensure that the council/city spends the money as they promise to do.  Famously now is the example of the 2004 sales tax, passed by the voters who were told the money was needed for public safety and parks, only to have council turn around and give it to city staff in a massive pay increase from 2005 to 2009.

However, in the face of potential organized opposition, attempting to gain two-thirds of the vote seems at the very least a tall task.  A much more modest sales tax increase in 2014 with an
immediate $5 million structural deficit only yielded 50 percent of support.  That measure didn’t even have real opposition.

Perhaps if the council made a concerted effort to lay out their proposal and the budget reality that the city faces, the community might step up to support a two-thirds tax, but that would be rolling the dice.

Back in December, Mayor Pro Tem Brett Lee attempted to open the door again to the Utility User Tax (UUT).

He 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 comments that expressed such 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.”

At that time, he seemed alone in his thinking.  But, given the potential threat of opposition, the general tax might be the best way to go.

Ironically, the decision to go to a general tax would move the city further away from concerns raised by some potential opponents of the tax.

One objection: “There is no fixed binding plan for cost reduction and containment. Are we supposed to trust the City to do it later if they get the tax revenue? There’s no plan to have a fixed list of exactly what the city would spend this new revenue on, and, Why don’t you write about these glaring deficiencies in their planning?”

The irony of course is that the city would have a good deal more ability to commit to certain spending for a special parcel tax – that would require them to commit to spending the money on specific policies.  They could then have a parcel tax oversight committee, just like the school district, made up of citizens that would be able to monitor the spending.

Or perhaps the city could just utilize the Finance and Budget Commission, which currently operates in that capacity already.

If opponents want “a fixed list of exactly what the city would spend this new revenue on…,” the best thing they can do is have a special tax on the ballot.  With a general tax, there is no fixed list.

The problem that we face is simple – the voters in a contested election probably are not going to support a $250 parcel tax and reach the two-thirds threshold.  So now we go, from the more ideal policy, back to the realm of the art of the possible.

Council has a lot of decisions to weigh tonight.  But one that needs to be laid out very clearly is what the cost of failure is, when they could reasonably try again, and whether the advantages of a special tax outweigh the risk of attempting to get to a two-thirds majority support for the tax.

—David M. Greenwald reporting