PD Editorial: A mixed verdict on utility taxes

Taxes should be fair and equitable.

If nothing else was at stake, Measure N, a proposal to tax cellular and Internet phone service in Santa Rosa, might be more palatable. The city already taxes landline phone service, after all.

However, there’s a larger issue: Measure N wouldn’t alleviate. Measure N would fuel a growing chasm between richly funded public safety agencies and all other city services.

As such, Santa Rosa voters should reject Measure N.

Cloverdale and Sebastopol also have utility tax measures on the Nov. 4 ballot. Of the three, we recommend only Measure O in Cloverdale. But the clearest case for a no vote is in Santa Rosa, where city officials are in denial about the unintended consequences of a previous tax measure.

Measure O, a quarter-cent sales tax for public safety, passed in 2004. It guaranteed that spending on police and fire wouldn’t fall below 2004 and promised annual increases for inflation, but it didn’t account for an historic recession or the skyrocketing cost of retirement benefits.

Police and fire spending have grown to 56 percent of the city’s general fund, which is still below pre-recession spending levels. To keep public safety spending at or near 2004 levels, all other public services suffered. Streets are dark, roads are rutted, parks are eyesores, and you can count on waiting for help with a building permit or business license.

With the city projecting a return to budget deficits beginning next year, there’s a strong likelihood that the Measure N utility tax will be followed by a request to extend Measure P, a general purpose sales tax that’s set to expire in 2019.

With the city yoked to the minimum funding guarantee for public safety agencies, weak revenue growth and CalPERS raising rates to cover unfunded pension liabilities, non-public safety services will continue to get muscled aside.

We have urged the city to address Measure O for several years. Supporters say it’s the will of the people, or that the issue is too confusing for a ballot measure.

But voters weren’t given a menu of options in 2004, and no one - including Measure O’s authors at City Hall - expected that it would starve every service except police and fire.

As for complex, is the utility tax measure, which changes the rate from 5 percent to 4.5 percent while extending the base and, despite lots of talk from the City Council about being revenue neutral, increases the city’s take by 24 percent annually, any less complicated?

Until Santa Rosa addresses its budget constraints, it’s premature to raise taxes. The Press Democrat recommends a no vote on Measure N.

In Sebastopol, the city is asking voters to renew a six-year-old tax on natural gas and electricity bills that raises $300,000 a year. If that’s as far as it went, we’d be more inclined to support Measure R. But the city wants to extend the tax to more utilities - video service, telecommunications and garbage collection - with a rate reduction of 0.25 percent as an inducement. The projected revenue is $580,000 a year for 10 years. Local voters approved a half-cent sales tax increase just two years ago. Another tax increase, as opposed to a simple extension, is excessive.

Which brings us to Cloverdale, where voters will decide Measure O. It would assess a 3 percent tax on gas, electric, video and telecommunication bills for eight years.

Unlike most other Sonoma County cities, Cloverdale does not have a local sales tax. It had a utility tax, but it was allowed to expire in 2006, just before the Great Recession. The city has made deep budget cuts, and, because sales tax revenue hasn’t bounced back, it’s facing more cuts.

We have supported local tax measures in cities that have reduced spending and tried to address pension costs. Cloverdale has done both, and The Press Democrat recommends a yes vote on Measure O.

EDITOR’S NOTE: An earlier version of this editorial stated an incorrect rate for Measure N, Santa Rosa’s utility tax proposal. The correct rate for the proposed tax is 4.5 percent.