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The Portola Valley Town Council meets tonight to consider the fate of the 4.5 percent-rate portion of a two-tiered utility users tax in a ballot measure in June. Unless the council puts a measure on the ballot, that portion of the tax reverts to a 5.5 percent rate.
Residents of Portola Valley have been paying a two-tiered tax on their utility bills since 1985, over the past six years adding to the town’s bottom line an average of $800,000 in revenues.
Revenue from one tier of the tax, currently set at a 4.5 percent rate, goes into the general fund. Another tier of the tax is set at a 2 percent rate, and revenue generated goes into the town’s open space fund. That brings the total UUT residents pay to 6.5 percent
The tax has friends – some see it as resembling a carbon tax on the use of fossil fuels – and enemies, in part because it is not tax-deductible and in part because the town may no longer need the money.
A group of fierce opponents of the tax in 2005, including the late Ed Wells, fought to cancel it and stop the use of its revenues to help replace and relocate the old town center buildings. The council noted at the time that it had no intention of using the revenues for that purpose.
The town has not reached the spending limit associated with the tax in recent years, according to a recent staff report by Town Manager Jeremy Dennis.
The Town Council meets at 7 p.m. in the Historic Schoolhouse at 765 Portola Road tonight (Jan. 10) to consider the tax’s fate. Unless the council puts a measure on the ballot in November, the tax rate will revert to 5.5 percent, as specified in the municipal code.
Should the council ask the voters to leave the rate at 4.5 percent, allow it to rise to the 5.5 percent set, or amend the code to allow the council to set it is as appropriate for the town’s needs reflected in the annual budget?
Among the points to consider going forward, according to Mr. Dennis’s report: an analysis of the general fund reserves, revising the disposition of the reserves, determining the long-term allocation of reserves that are not part of the general fund, and developing a five-year capital projects plan.
In a unanimous decision in December, the town’s Finance Committee recommended to the council that it reassess the rate of the tax annually.
After a discussion of the options, the council then asked staff to draft language for a ballot measure that would codify the rate at 4.5 percent. The council was not endorsing a 4.5 percent rate, but creating an opportunity to review the language and further discuss the matter, Mr. Dennis said.
Why does our PG&E bill always show a rate of 6.5%? Does this story have the numbers right?
This tax was put on us years ago when the county told PV that it was not going to get as much in,property taxes as before.Then a couple of years later the county said it had made a “mistake” and reinstated the previous amount. But the utility tax DID NOT GO AWAY, as many thought it should have!
It’s time to abolish it now, or drastically reduce it. It amounts to quite a lot in the winter months.
Time to let it go. Many of us will be facing a new tax picture with the new tax laws and don’t need this in addition. The School Board will have its hand out for additional, nondeductiable , taxes later this year as well.
Of course, there is no such thing as a temporary tax. Government will always make it difficult to get rid of them.
Yes, time to get rid of this tax. We are so over taxed in this town, which is the real reason so many of the town’s long time residents are leaving. Affordable housing starts with affordable taxes.
@Elaine you’re correct: the total rate is 6.5%, I think there’s an error/confusion in the first paragraph. The tax is split into two chunks: 2% which goes to the open-space fund, and 4.5% which goes to the general fund. The 4.5% portion is actually a “temporary” reduction from 5.5% as mentioned, which reduction will expire in July if we do nothing. Last night, we agreed to put a measure on the ballot (hopefully in June) to permanently reduce it from 5.5% to 4.5%; the 2% for open space will be unchanged.
The correction suggested for this story are accurate.
Before coming to work on Wednesday and writing this story, I had had a health scare that apparently affected my concentration and allowed me to bollix the math and the election date. Very sorry for the confusion.