Menlo Park utility tax set at highest rate without public discussion

Without any public input or discussion by the City Council, Menlo Park’s utility tax has been set at the maximum rate, and residents and businesses will be hit with the tax starting April 1.

In November, voters narrowly passed — by 65 votes — the two-tiered tax, greenlighting a tax rate up to 3.5 percent on utilities (water, gas, and electric bills) and 2.5 percent on communications (landline telephone, cell phone, cable TV and Internet bills).

There has been no public discussion of whether the full tax rates should be implemented immediately, or when exactly the tax would start, but the rates have been set as the default amount because council members have not suggested otherwise, said Finance Director Carol Augustine. She said the maximum tax rates, unless the council decides otherwise, will stick until at least June 30 — the end of the current fiscal year.

This spring, the council is scheduled to decide what the rates should be for the following fiscal year, Ms. Augustine said.

Public input

But the process laid out by Ms. Augustine doesn’t work for Councilman John Boyle, who said the council should hold off implementing the tax at the maximum rates — even if the rates will stay in effect for just three months — until the public has a say, and it’s clear how much revenue the city needs.

“It’s silly to set a tax at the highest rate when we don’t even know the numbers for the current fiscal year — we don’t even have a mid-year update on where our budget stands,” he said. “Let’s face it — when you set the tax at the highest rate, even for just three months, it can get addictive.”

Talk of the tax was limited to an information item presented after 1 a.m. at the council’s Dec. 19 meeting, when Mr. Boyle said the council and the public should more thoroughly consider what residents and businesses should be taxed from April through June, and put the topic on the agenda of a future meeting.

Although the other four council members have made calls for increasing public input on council decisions, none of them supported Mr. Boyle’s request.

“We need to implement the full tax, and get a real idea of what it can produce,” Councilman Richard Cline said after the meeting. “It may be a very rough idea of the revenue [the tax] will bring in, but at least it’s an idea.”

Mayor Kelly Fergusson said the city should implement the full rates for three months as a “data-gathering period,” and noted the council can change the rate at any time.

But Ms. Augustine said that because the council will likely review the tax as soon as May, there won’t be a lot of data available regarding how much it is adding to the city’s coffers.

Mr. Boyle said financial uncertainties, and the fact the tax measure passed by such a slim margin, should prompt the council to start slowly, and consider reducing the tax rates, rather than implementing the maximum amounts.

“Let’s have this discussion now, because once we get used to a certain tax rate, it could be hard for us to give up revenue and lower it,” Mr. Boyle said after the meeting.

Mayor Fergusson said aspects of the tax rate could be discussed at the council’s goal-setting session on Saturday, Jan. 6.

The tax also includes a provision that no single user can pay more than $12,000 in taxes on utility bills.