Cloverdale voters will decide in November whether to impose a tax on their utility bills to help bolster the city’s shaky general fund.
The City Council voted 4-1 this week to place the proposed 3 percent tax on the ballot, estimated to cost the average household about $122 per year.
The tax would raise approximately $375,000 annually and would apply to electric, gas, telephone and cable TV bills and also include cellphones. It would expire in eight years.
“The bottom line is we need to shore up the city’s finances,” Mayor Carol Russell said.
Cloverdale joins two other cities in the county that also have placed utility tax measures on the November ballot.
Santa Rosa proposes to reduce its existing tax from 5 percent to 4.25 percent, but broaden it to cover cellphones.
Sebastopol is asking voters to impose a 3.75 percent tax on gas and electrical service, cellphones and landlines, cable service and garbage collection. It would replace the current 4 percent tax on energy service that expires Jan. 1.
Utility user taxes for local government are common in California, with 154 cities and four counties collecting them, and generate about $2 billion annually, according to CaliforniaCityFinance.com, a government finance almanac.
Cloverdale had a utility tax in effect from 1994 until it expired in 2006, just before the recession hit.
Despite numerous belt-tightening measures, city government has been unable to emerge from its dire financial predicament.
Cloverdale has reduced its city workforce by 20 percent, frozen salaries the past six years, negotiated less-generous pensions and closed City Hall on Fridays.
“There is no one I work with on the council that is pro tax,” Russell said of the reluctance of council members to ask residents to pay more to keep city government solvent. “What is the alternative? None of us has been able to come up with another solution.”
City Councilman Mike Maacks cast a lone dissenting vote against the proposed tax. He said utility customers would end up being taxed twice, because they already are paying taxes on their utility bills in the form of franchise fees and surcharges.
“We’re making people pay a tax upon a tax,” he said. “I find it a little disingenuous.”
But Russell said, “We can argue that ad infinitum.” She suggested the charges on utility bills that Maacks sees as taxes are considered fees.
“A fee is a charge for service. It’s not a tax,” she said.
City Manager Paul Cayler said without an additional form of revenue such as the utility tax, a number of budget reductions would need to be made.
Those include cutting two police officer positions and a dispatcher; losing a public works maintenance position; and reductions in street striping, storm drains and park maintenance. He said funds that support the Cloverdale Chamber of Commerce also would be cut.
Cayler said projections show all fund balances being depleted toward the end of fiscal year 2016-17. “We’d have to reduce positions very quickly. There are no reserves left in the city of Cloverdale,” he said.
But with the utility users tax, he said the city will be able to refill a police officer position; add a new patrol car annually for five years to modernize the aged police fleet; and build up general fund reserves to 6 percent of the budget.