EDITORIAL: Atherton can't escape tax knot EDITORIAL: Atherton can't escape tax knot (December 08, 2004)

Despite being home to some of the priciest real estate in the Bay Area, Atherton has a problem when it comes to property taxes. For the last 20 years, the town, which has virtually no commercial business and thus generates little sales tax, has paid for much of its government expense by assessing a $500 to $750 a year parcel tax on most lots, with a few property owners paying less and a few paying slightly more. The revenue has become even more important as the state continues to divert more property-tax revenue away from local governments, including Atherton.

But although the parcel tax is by far the most equitable way to address the problem, many Atherton voters view the quadrennial tax election as a referendum on the performance of town government. If so, it appears that during the last four years voters have not been happy despite positive changes in the administration that have been applauded by many town residents.

The last time the tax was defeated was in March of 2000 amid turmoil and turnover in staff. But the tax was approved a year later after a concerted campaign by town leaders. The cycle continued this year, when a lackluster council effort to pass the tax won only 57.2 percent approval, considerably shy of the required two-thirds majority.

Tired of fighting, the council voted November 17 to discard the parcel tax and plug the $1.85 million budget gap by changing the business-license tax, enabling the town to dramatically hike the fee on home construction and real estate sales transactions.

If approved in a special March 8 election, the change means that anyone who buys, sells, builds or remodels a home in Atherton will have to contend with the taxes, which, if passed by a simple majority, will not need to be renewed and will be self-indexing -- that is, it will generate more money as the cost of construction and real estate goes up.

Finance Director John Johns estimates that income from each new fee would generate $1.15 million per year, or a total of $2.3 million. He also thinks that about 30 percent of Atherton households would be impacted by the higher fees each year, adding that over a four-year period, virtually everyone in town might in some way pay a share of the new tax. The 0.53 percent real estate tax on a $2 million home would be $10,600, and 1.53 percent levy on $1 million worth of construction would be $15,300.

Looking back, it is difficult to understand why homeowners who pay their gardener or country club thousands of dollars a year balked at approving a $750-a-year parcel tax, especially since it is tax-deductible. It is even more quizzical when every resident benefits from one of the Peninsula's highest levels of police protection.

We can understand why some residents feel Atherton spends too much on its police services, but it wasn't that many years ago when a crime spree panicked residents, who demanded a higher level of policing.

Atherton residents should remember that the way to effect change is through City Council, not parcel tax, elections. Voting against the town's primary revenue stream impacts the complete lineup of town services, not just police.

Atherton residents need and deserve a lean, but effective, town government, but like every other community, they have to pay for it. The business license changes will raise the funds necessary, if Atherton residents can be convinced to vote for it. We will find out March 8.

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