Atherton debates parcel tax, other tax measures Atherton debates parcel tax, other tax measures (May 26, 2004)

By Andrea Gemmet
Almanac Staff Writer

The Atherton City Council got one step closer to putting a renewal of the special parcel tax on the November ballot, despite Councilman Alan Carlson's pitch to do away with the tax entirely.

With no commercial district to provide the town with sales-tax revenues, Atherton relies on the more than $1.8 million raised by the parcel tax annually to fund services and pay for capital projects such as road repairs.

The council has yet to decide how high to set the parcel tax; the average Atherton homeowner now pays $750 a year, up from $650 the previous year. Finance Director John Johns has said that voters would need to approve significantly higher parcel-tax levies for the town to make up revenue shortfalls caused by the state's budget crisis, and the rising costs of pension plan contributions and workers comp premiums.

The council has indicated that it will once again ask for a four-year term on the parcel tax measure. The current measure expires June 30, 2005.

A public hearing on the parcel-tax measure is scheduled for the council's regular meeting of Wednesday, June 16.

Besides discussing the tax measure at the May 19 meeting, council members also contemplated two other strategies for raising more money and saving the town from having to cut services or lay off staff -- instituting a utility-users tax and imposing a business-license fee on real estate agents and construction firms.

Real estate agents earn an estimated $20 million in commission annually on property sold in Atherton, said Finance Director John Johns.

Calling the parcel tax a "stopgap measure," Mr. Carlson said the town's reliance on it created an ongoing funding crisis. He proposed using the business-license tax and utility-users tax to replace parcel-tax revenues.

"Neither one is a tax on property, so as long as it is not funding any specialized purpose, (it can pass with) a majority, not a two-thirds, vote," Mr. Carlson said. "The parcel tax will never be a long-term solution to the revenue problems of the town."

While council members expressed support for the concept of taxing real estate construction and sales, no one supported Mr. Carlson's pitch to postpone putting a tax measure before voters until March, giving the council more time to consider alternatives to the parcel tax.

"People have become used to it," Councilman Bill Conwell said of the parcel tax. "You say it's not a long-term solution -- well, it is. It's become a way of life in this town."

He proposed getting the parcel-tax measure passed in November at its current level, and telling voters that if other tax measures passed in March, it would have an "ameliorating effect" on the size of parcel tax levy. The other tax measures could make up the town's revenue shortfall, he said.

"We're too close to the expiration of the parcel tax to change gears," said Councilman Charles Marsala.

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