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By Diana Diamond

Palo Alto officials: Stop milking us for more money!

Uploaded: Sep 28, 2021

Once again, another utilities rate hike is in store for Palo Alto residents, courtesy of our city manager and council. Will these almost annual hikes never stop? Or is the Utilities Department simply a golden cow to provide a green revenue stream to city coffers?

The delightful irony of their latest move is the result of a lawsuit from resident Miriam Green, filed in 2016, who challenged the city's long-term practice of transferring utility revenues to the city's "general fund/equities fund," as this transfer was labeled.

Green claimed the city's gas rate increases were really taxes, not increased gas prices. And voters never approved these hikes although taxes must get voter approval before any new rate increases. The Santa Clara County Superior Court agreed, and ordered the city to pay back to affected residents the $12 million of their money the city took in. These transfers were thus illegal, the court said last year.

The city implied last week that it knew it already spent the $12+ plus million we were illegally charged, and, presumably, didn't want to pay us back. It appealed the court decision and also asked the payback be allocated over 10 years. The court refused. Last week, the council, in turn, appealed to the court again because it was facing "these novel legal questions," which, rather than paying back the $6 million due in October, stops the payback clock for a while.

So, in its own unique manner, the council tried to figure out what to do. The city's revenue has significantly dropped the past two years, in part due to the pandemic. It did some creative thinking: Let's increase the utility rates we charge customers anywhere from 1 percent to 10 percent, and that way the city can collect millions!

That means the city is asking residents to pay for higher utility rates so that they can collect the money and give us our $12M back for the higher gas rates it charged us for years!!

Five stars for performance!

For more than a decade, the city has a raised half dozen or so of the utility rates we consumers pay monthly. As the Weekly reported in 2019: "The latest round of hikes marks the fifth year in a row in which the city has raised utility rates. Since 2014, the last year in which there were no rate increases, the average residential utility bill has gone up by more than $70." It's gone up a lot more since then.

Go to Google and check out Palo Alto's utility rate increases and you will see a long list of hikes on water, gas, electric, storm sewer, utility tax, etc. increases over the past several years.

And at its Sept. 21 meeting, the city's Finance Committee unsurprisingly considered a new 1% to a10% additional tax on utility usage. Currently tax rate is at 5% of electric, gas and water use.

According to staff analysis, a 1percent increase in the utility users' tax for electricity, gas and water customers would bring in about $2 million in annual revenues. Raising the current rate 10 percent more (from 5 to 15 percent) would bring in about $20 million in new annual revenues.

How nice for city coffers. But how about consumers' wallets?

Yes, this city's typical response to deficits is to charge those in town: raise taxes on businesses, charge more for utilities, hike permit fees, etc.

I am angry about and tired of these constant utilities hikes. Such taxes are regressive. We, the residents, are their golden cow. You, council and staff, are milking this cow.

And, by the way city, we are the ones who are paying for your court appeals -- especially those that delay giving us our money back. Irony squared.

If council agrees to the proposed raise, it would be on the November 2022 ballot, along with a business tax.

But wait, there's more, as TV ads proclaim.

It turns out the city council was recently told that Palo Alto has a $500 million debt for employee pensions. Yes, that's a half billion.

The staggering increase in Palo Alto's employee pension obligations is a whopping 23 percent growth over the past three years. And the amount the city has put in a special fund to help pay off this debt, has amounted to only $7 million to date.

Among those who continue to receive pension checks are former City Manager June Fleming, who retired in 2000 (21 years ago) and then moved to Virginia, and Frank Benest, who held the same post, "retiring" (with council nudging?) in 2008. There are thousands of other former employees getting very healthy pensions, in some cases equivalent to their former salaries -- with COLA adjustments.

Let's just turn off some faucets in town, some way. Pensions can't be changed -- or can they? Maybe this is the time we could use a good consultant. And huge spending doesn't have to be so huge.

Here are three "consent approval" items from next week's (Oct. 4) city council meeting. Typically, items like this are approved without discussion. Or, if a council member opposes an item, his comments as to why the "no" is heard after the approval vote.

1. Approval of an Exemption to Competitive Solicitation and Change Order No. 1 to Existing Contract C20172366A With Hotline Construction, Inc. for Additional Underground Construction and Emergency Construction On-call Services, Increasing the Contract Amount by $6,800,000 for a new Not-to-Exceed Amount of $11,300,000; and Approve a Budget Amendment in the Electric Fund
2. Approval of Advanced Metering Infrastructure (AMI) Contract with Sensus USA Inc. in the Amount of $15,283,218; and Authorization for the City Manager to Negotiate and Execute Change Orders up to a Not-to-Exceed Amount of $1,484,000, for a Total Contract Amount Not-to-Exceed $16,767,218; Approval of Amendment No. 2 with E Source in an Amount Not-to-Exceed $1,339,947 for Phase 3 AMI Consulting; and 3) Adoption of a Resolution to Transfer up to $18,900,000 from the Electric Special Project Reserves to the Smart Grid Technology Installation Project EL-11014

That's a lot of money for one council consent agenda!