Atherton committee recommends a 22 percent boost to parcel tax Atherton committee recommends a 22 percent boost to parcel tax (April 28, 2004)

By Andrea Gemmet
Almanac Staff Writer

Ask Atherton voters to approve a 22 percent increase in the town's special parcel tax and get an early start on explaining why the money is needed.

That's the recommendation of the Atherton Audit Committee, which issued a report offering suggestions for boosting the town's revenues and further cutting expenses to offset a projected $1 million annual budget deficit in the next four years.

The town's current four-year parcel tax measure, which raises about $1.8 million annually, is set to expire in June 2005, and the City Council plans to ask voters to pass a renewal measure this November.

The average Atherton homeowner is assessed $750 a year, and those with parcels larger than two acres pay $960. Those with smaller parcels and undeveloped lots pay less. Proceeds from the parcel tax are used for capital improvement projects such as roadwork, and to augment the town's general fund.

Even if the parcel tax is approved for another four years at the current level, Atherton Finance Director John Johns is projecting the town will face $1 million deficits, assuming the state budget crisis continues to siphon revenues from local governments and that the economy makes a slow recovery.

The 22 percent increase in the town's special parcel tax recommended by the audit committee is half of what town staff said would be needed to keep Atherton from having to tap into its reserve fund to make up for revenue shortfalls. The finance department's projected budgets are a "worst-case scenario, but within reasonable ranges," Mark Hebert, chair of the committee, told the City Council at its April 21 meeting.

By increasing the parcel tax assessment by 44 percent to an average of $1,110, Atherton could preserve its $1 million annual capital improvement budget and dedicate $1.8 million to maintaining town staff and services at current levels, according to Mr. Johns.

"That's so high, it stands a fairly large chance of not being approved by voters," said Mr. Hebert.

The town's revenues might not be as poor as projected, and a combination of cutbacks and "revenue enhancements" could be used to keep Atherton in the black, he said.

Council members pressed for details on where further cutbacks could be made and how much money could be saved if, for instance, staff salaries were lowered but staff turnover increased. The council also wanted more specific advice on how to increase revenue. Town staff is currently researching the possibility of instituting a property transfer tax at the City Council's request.

"We need to have a number on these items," said Councilman Bill Conwell.

Mr. Hebert said the audit committee would work on specifics as its next task, and the City Council tentatively scheduled a study session with the committee in early May.

The town should not lose time in showing voters how the parcel tax money is used and how the town has cut costs, Mr. Hebert said.

The serious deficits expected in the next four years are the results of revenues lost to the state's budget crisis and the increasing cost of retirement contributions, not because the town hasn't done a good job managing its finances, he said. He praised Atherton's dramatic improvement in the control of costs and the management of the town in recent years.

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