Atherton seeks voter approval for $180-a-year tax hike Atherton seeks voter approval for $180-a-year tax hike (June 23, 2004)

By Renee Batti
Almanac News Editor

After a lengthy discussion that at times seemed like a ride on a merry-go-round -- without the "merry" -- the Atherton City Council on June 16 voted to put a measure on the November ballot that would raise the town's parcel tax by $180 annually for most parcels.

Although the vote was unanimous, the council members were far from optimistic that Atherton residents would agree to increase their parcel taxes by 24 percent. In fact, they appeared downright glum.

"I'm not even sure we can get (approval for ) $750," said Councilman Jim Janz, referring to the amount most Atherton property owners now pay.

The parcel tax for years has been a key source of revenue for the town, generating about $1.8 million annually. It will expire in June 2005, and the council for months has been struggling with a new four-year tax proposal for voters.

Under the proposal endorsed last week, the council will ask voters to authorize a tax hike from a maximum of $750 to a cap of $930 for parcels of one-half acre to two acres. Records show that 2,045 of the town's nearly 2,580 parcels fit in that category.

The town could levy a lower tax, noted Finance Director John Johns, and would set the rate each year, conducting an annual public hearing to do so. If levied at the highest level authorized, the higher tax would increase revenue by nearly $450,000, bringing in about $2.3 million.

But unless a new revenue source is found, it is unlikely that the council would set the tax at a lower amount. That's because even at the higher level, the tax wouldn't generate enough money to make up for property tax revenue the state has been taking away from the town, plus the added burden on the town from skyrocketing pension and other employee costs.

If the tax remains at its current level, Atherton's reserve fund would dip significantly -- dropping to about $1.7 million below the council-mandated minimum of $3.7 million by 2009, Mr. Johns said. With the higher rate, he added, the reserve would drop by about $1 million by 2009, but would still meet the minimum-reserve mandate set by the council.

Council members disagreed about whether November would be too soon to put a tax measure to voters. And they went back and forth about the wisdom of increasing the standard $750 assessment.

They all appeared to agree that the town must look to another source of revenue rather than rely on a tax that must be approved by two-thirds of Atherton voters every four years.

Councilman Alan Carlson, who has advocated more study of options such as taxes on business licenses and a utility-users fee, urged the council to delay a ballot measure until March. Placing a parcel-tax measure on the November ballot, then going back to voters with other tax proposals soon after could backfire, he said.

Arguing that the council should put together a complete plan to put before voters, Mr. Carlson said, "We need a long-term solution, not a short-term solution."

Other council members noted that time is short, and the town shouldn't wait beyond November to try to replace the soon-to-expire tax with a new one. They agreed that if the tax passes in the fall, they could still look at other taxes that would work in tandem with the parcel tax, perhaps allowing the town to lower that levy.

But they also expressed fears that voters would reject the proposed new four-year tax, leaving the council little choice but to cut staff and services. Councilman Bill Conwell noted that the tax "barely passed" three years ago "in a time of economic euphoria." With the economy far less robust, "I'm very concerned (the proposed tax) will not pass."

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