Atherton Parcel Tax
Original post made by History Repeats, Atherton: other, on Apr 21, 2013
Nothing has changed, and it is clear the Town does not have the revenue to sustain all the services it provides. The lack of a sales tax dooms it to alternate revenue. Utility tax proposals and real estate transfer taxes are once again being considered by the Council by the consideration to turn Atherton into a Charter city. However that dog is unlikely to hunt. Demands that savings be made will again be made in government and the usual discussion of the cost of the Police Department, salaries, medical and pension cost etc. It is clear the city staff has been cut to the bone and the police are understaffed and the Town is faced with the need to be competitive for officer retention in a very competitive marketplace.
All these arguments have been made before in the last decade or more, and it still comes back to the reality of the need of approving a Parcel Tax and probably increasing it this time. Hopefully the Council will spend the time making the case to the residents.
An Almanac article from the past...
Publication Date: Wednesday, December 08, 2004
By John and Dianne "Didi" Fisher
Mayor Kathy McKeithen said in the press recently, "We have run out of options," after the failure of the Atherton parcel tax to win a two-thirds vote in the November election.
Now the Council has voted to put two new tax increases on the March ballot. One is an increase in home construction/remodeling fees (an increase of an existing tax on contractors) and the other is a tax on title insurance, due on sale of any property.
Is there an emergency? No way. Have we run out of options? Nuts! The town has had the parcel tax defeated before. After a thoughtful explanation to the residents of the need for the tax, it has always passed. This last fall, the council did remarkably little to remind residents of the level of town services, and why we need the parcel tax. That's why it failed to pass. But even with an indifferent selling effort, it won 57 percent of the vote.
There is plenty of time for the City Council and the Atherton electorate to do the right thing. Back in 2000, the parcel tax failed to win the required two-thirds. We had no tax the next year. The council did have to tighten spending, but reserves were not depleted. And the parcel tax was passed by a two-thirds majority and reinstated the next year. The current tax runs through this coming June. Town reserves have been increasing annually in recent years and are now over $5 million.
Are we trying to keep young people out of Atherton with all of these proposed increased levies on real estate? Should buyers and sellers have to pick up large fees for basic Atherton services? Shouldn't all of the people who enjoy services be paying for them?
Council member Jim Janz said, "this is the cost of admission" to living in Atherton. We don't think a toll gate at the city limits is the way to finance core town services.
"We desperately need this," says Mayor Kathy McKeithen, when speaking of the new tax proposals. We think this is an exaggeration.
Not even the rest of the council really believes that these proposals are the last chance. Council member Charles Marsala has asked to put renewal of the Atherton parcel tax on the council's agenda the week before the March election -- as a fail-safe measure.
Let's be fair. The council has a tough job. It stands between the staff's need to get paid, and the residents' right to be fairly taxed. And the council members get no pay for their voluntary labor. That's no reason that they should take the easy way out by proposing two new taxes, just because they are easier to pass.
As residents we deserve to understand the real alternatives and not be panicked into voting as if it's our last chance. If asked whether we're in any crisis and whether the proposed new taxes are the right things to do, we say "we don't think so." We'd rather vote bad taxes down in March, and do the right thing in June.
John and Dianne Fisher have each served on the City Council and as Mayor of Atherton.
The Atherton tax debate
Here's the Fishers' assessment of the pros and cons of Atherton's tax options:
The New Taxes -- Pros
** Such "fees" need only 50 percent voter passage (versus two-thirds for parcel or other special taxes). * No sunset date -- it's the tax that keeps on taxing. * No more campaigns for the parcel tax every four years -- less work for the council. * The tax increases with inflation of real estate and construction costs ... sound familiar? * The Parcel Tax -- Pros
** Accountability of the council for how the tax money is spent (re-authorized by residents every four years). * All residents pay their fair share (not just contractors and residents who sell their homes). * Income tax-deductible to the resident taxpayer. * Tax has a fixed dollar ceiling with a sunset date.
The New Taxes -- Cons
A 0.53 percent levy is added to a property's purchase price, as a title insurance tax ($15,900 for a $3 million property) that raises the property basis but is not deductible. * A 1.23 percent tax increase for construction projects ($12,300 in new taxes on $1 million project). * Reduces the City Council's accountability to the residents for both taxing and spending. * Creates two classes of Atherton residents -- those who pay because of real estate transactions or construction projects and those who get services -- for nothing. * No sunset provision (continues forever). * A tax on title insurance is a back-door ad-valorem (based on property value) tax, and may be illegal under California statute. Atherton could have to fight it out in court.
The Parcel Tax -- Cons * Periodic renewal requires work. * Fixed dollar amount limits flexibility to increase spending. * Supermajority vote (two-thirds of voters voting) is required by statute. * In other words, passage requires work. You need to run a campaign to inform residents.