Santa Rosa sorting out impact of ‘no’ vote on cellphone tax

A slam dunk.

That’s essentially what Don Maynor, the consultant Santa Rosa hired earlier this year to help it update its utility tax to cover cellphones, told city officials Measure N would be.

As long as the city lowered the tax rate it levied on gas, electric, cable and landline telephone bills, residents would be willing to expand the “utility users tax” to cover their cellphones, as well.

Never in California history, as far as he was aware, had voters rejected a ballot measure to “modernize” a utility tax if that measure also simultaneously lowered the tax rate.

Santa Rosa’s Measure N proposed just that. It would have reduced the tax from 5 percent to 4.5 percent even as it expanded the tax, purportedly for equity reasons, to cover cellphone users.

And yet the measure failed, with 53 percent of voters rejecting it Tuesday.

Why?

Measure N faced two hurdles that similar efforts in other communities may not have: a sharply divided City Council and a well-financed, incensed group of business leaders.

It’s tough to say which did more damage.

Council members Gary Wysocky and Julie Combs publicly opposed the measure, arguing that the city had no right to ask for new taxes before passing needed changes to an existing one, the ever-increasing 2004 public safety sales tax Measure O.

Wysocky labeled the effort a “sleight of hand” that would effectively expand one tax to raise revenue to address the budgetary imbalance created by another.

Opponents also vastly outspent supporters of the measure. Rich Coombs, who is suing the city over $136,000 he says his businesses have been overcharged by the existing tax, and Bill Gallaher, chairman of First Community Bank, teamed up to torpedo the measure.

Coombs and entities controlled by Gallaher’s family contributed almost all of the $76,000 raised by “Citizens Against a Tax on our Cell Phones - No on N.”

The Yes on N campaign, by contrast, has to date reported just two donations: $250 from Mayor Scott Bartley and $150 from City Attorney Caroline Fowler.

Fowler said she doesn’t typically donate to city political campaigns, but in this case felt the effort was for the good of the city. She said she was compelled to donate “after seeing the misleading information” that was being circulated by opponents.

Coombs acknowledged that some of his group’s mailers inaccurately claimed the measure would tax “all Internet services.” Subsequent mailers backed off that claim.

Fowler wrote the impartial analysis of the measure for Santa Rosa voters. She noted that she did so before she decided to contribute to the campaign in favor of the measure.

“I have the same First Amendment rights as everyone else,” she said.

Officials for the city’s firefighters union, which formed the committee “Santa Rosans in support of public safety, parks and good roads, Yes on Measure N,” say they have received pledges for contributions sufficient to cover the $9,260 in TV ads, robocalls and advertisements taken out in support of the effort.

But because of how late the committee was formed, firefighters needed to hire a political consultant who could extend them the credit necessary to move quickly, said Tim Aboudara, president of local firefighters union.

That consultant was Nick Caston, owner of Tactical Communication Strategies Inc. Caston is the husband of Councilwoman Erin Carlstrom, a strong supporter of the city’s public safety unions who, in addition to serving as the treasurer of the Yes on N campaign appeared with her son in advertisements in favor of the measure.

The campaign has yet to file disclosures indicating it has received any donations beyond the $400 from Bartley and Fowler, raising questions about whether rules aimed at providing voters transparency into who is behind political campaigns were followed.

Aboudara called the Yes on N campaign “a bit of an anomaly” because of how late it was formed, but said there was never any intent to hide the firefighters’ involvement.

“We weren’t shy about our support for the Yes on N campaign,” Aboudara said.

What the defeat of the measure means for the city is unclear. Predictions were that the city was in imminent danger of losing $1.6 million because of legal challenges and people continuing to drop their landlines.

City Manager Sean McGlynn said he’s trying to sort out just what the real impact to the city will be.

There wasn’t exactly a “clarion call” or robust campaign in favor of the measure when he arrived in September. But now that the measure has failed, he’s tasked the city’s chief financial officer, Deborah Lauchner, with assessing the real financial impact.

“We’re working through it and analyzing the implications and will be back before the council very soon about what the direct impacts are going to be,” McGlynn said.