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November 02, 2005

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Publication Date: Wednesday, November 02, 2005

ELECTION 2005: Portola Valley utility tax in the cross hairs ELECTION 2005: Portola Valley utility tax in the cross hairs (November 02, 2005)

By David Boyce

Almanac Staff Writer

For 20 years Portola Valley residents have approved a tax on utility bills as a way to supplement the town's general fund. Today, the 5.5 percent "utility users" tax generates about $612,000 a year, some 12 percent of the town's annual revenue.

That tax, which voters on November 8 are asked to renew for another four years, is in jeopardy as a group of local residents have mounted a stiff campaign against it.

The group, which calls itself Taxpayers Committee Against Measure H and Utility Taxes, has bought two full-page ads in the Almanac in the last two weeks, the most recent ad signed by 172 people. It has started a Web site (, and some of its members have signed a statement opposing the tax in the county's sample ballot publication.

A key point they make is that utility tax revenues have gone, and will go, to a Town Center rebuild plan that they oppose. The vote on the tax is an opportunity for residents to express opposition to the Town Center project since the council doesn't intend to place the plan on the ballot, group members say.

The group's financial disclosure statement for August 1 through October 22, signed by treasurer Ed Wells, shows expenses of $7,235 that included costs for postage, ads, and mailers and total contributions of $8,764 from 62 residents, including 35 contributions of $100 or more. Two contributions of $1,000 were reported by Robert and Susan Adams, and by John and Christine Mumford.

The disclosure report for September 25 through October 22 for the Committee for Yes on Measures H and I, signed by treasurer Gary Nielsen, shows expenses of $1,146 for postage and a mailer and total contributions of $500 from three residents.

This group bought a half-page ad signed by 111 people for the November 2 issue of the Almanac.

Town Council members and council candidates on the November 8 ballot signed a joint letter in the October 19 Almanac rebutting the opposition group's points. The council says it has no intention to use future utility user tax revenues for anything other than general operating expenses, that it won't begin Town Center construction until sufficient funds are raised, and that it will only build a Town Center that "a consensus of town residents wants, and that we can afford."
Trojan horse?

The opposition group's ad in the Almanac shows a drawing of Town Council members pushing a Trojan horse labeled "Measure H" [the tax renewal proposal] into a gated edifice labeled Portola Valley.

Their point is that the tax measure, ostensibly for town operations, is also a device to help pay for a $20 million rebuild of the Town Center complex.

"There has been no clear imperative from the residents for a new, enlarged town center," says opponents in a sample ballot statement signed by John J. Hickey, chair of the Libertarian Park of San Mateo County, and these Portola Valley taxpayers and homeowners: William Henderson, Charles Engles, Ed Wells and Theodore Lamb.

The No on Measure H group, whose principals declined interviews by the Almanac, criticizes the Town Council for earmarking nearly all the town's reserves -- about $3 million -- for the Town Center project.

"If we should experience a natural disaster ... there will be no money available for repairs and recovery," the group says in a "letter to residents" on its Web site.

The proper way to finance the Town Center project is with a bond measure, requiring approval by two-thirds of the voters, the letter says. The utility tax requires only a simple majority. In addition, the letter notes, taxpayers can deduct payments on bonds, but not on the utility tax.

The letter says there is no need for town services to suffer should Measure H be defeated. Current spending levels (excluding Town Center spending) can be met with existing revenues and reserves, "at least until an independent source of financing for the Town Center is obtained or until an extension of the Utility Tax is voted on again and properly restricted."

In addition to Measure H, there is another utility tax proposal on the ballot: Measure I, a 2 percent tax for open space projects. But Measure I is written so it can't pass without Measure H's approval. The letter says the open space tax renewal, "which everyone should support," should be put back on the ballot, but not conditioned on approval of the other tax.
Council's position

Proponents of the tax point out that this is a renewal of a tax supported overwhelmingly by voters in 1993, 1997 and 2001.

The tax is needed because of the loss of property tax revenues due to state actions, and federal and state mandates that have reduced revenues and increased costs to local governments, the proponents say in a sample ballot measure signed by Mayor Ed Davis, former mayor Kirke Comstock, finance committee chair Michele Takei, former mayor Sue Crane and planning commissioner Chip McIntosh.

In addition, veteran council member and candidate Ted Driscoll pointed out at a recent election forum that Portola Valley receives only 4 percent of the property tax compared to 18 percent in Hillsborough and 10 percent in Atherton. "We can lower it [the 5.5 percent utility tax] if we don't need it," he said.

"Renewing the tax would allow the town to continue its present level of services and maintain prudent levels of reserves," says the proponents in the sample ballot statement.

On September 28, the council adopted a policy that it would not spend future utility tax revenues on capital projects, such as the Town Center. But the opponents say that's a shell game because the town can spend other general fund revenues on the Town Center.

Asked if the council would use general fund revenues beyond the approximately $3 million that has already been earmarked for the Town Center project, Councilman George Comstock replied: "I believe it's the present sense of the council not to do that." By the end of the current fiscal year in July 2006, the town will have spent about $1 million on the project, said Town Administrator Angela Howard.

On its Web site, the No on Measure H group accuses the council of "quietly working with underwriters" to use the town's general fund, including current and future utility tax revenues, as collateral for a private loan, thereby avoiding asking voters to approve a general obligation bond.

The charge "is a blatant falsehood," said Councilman Steve Toben in a letter to the Almanac this week. "This is pure fabrication. The Town Council does its business in plain view of the public. Those who would deliberately spread this kind of falsehood dishonor the tradition of civic service in Portola Valley."

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