Oct 7 2012

OPINION: City Parcel Tax Is Not the Culprit

 Resident Believes Parcel Tax is Not the Problem-

Employee benefit liabilities and costly missteps recently made by city officials are cause for community concern, but the [City] parcel tax is not the culprit.

The parcel tax contributes to the revenue that enables the city to provide above-average municipal services. A decade ago it did allow generous (competitive) compensation packages for city employees. The parcel tax, however, is not a slush fund. Nor is it onerous, amounting to about five percent of annual property taxes for most households. The school tax is five times that amount. 

The parcel tax also provides a cushion to absorb unexpected expenditures or revenue reductions. This, in itself, is reason to support the parcel tax. No rational business or homeowner would intentionally reduce income in the face of rising expenses.

The nearly $40 million in unfunded liabilities for employee benefits is a rising debt that must be curtailed. It is not unmanageable, however. If, for example, the entire $40 million were to be amortized over the next 25 years, the annual impact would be only $400 per household and hardly a cause for alarm. Current obligations are fully accounted for in the FY 2012/13 budget and its five-year projections. These budget projections show an ending surplus of $4.6 million with the parcel tax but a deficit of $2.3 million without it, a $7 million difference!

The MTRC and the Budget Advisory Committee did what they were asked to do: advise the City Council of impending fiscal problems, highlight fiscal and managerial deficiencies, and suggest steps to improve decisions and accountability. Both committees unequivocally supported continuing the parcel tax. Without it, the City would be forced to make “unprecedented” cuts, so said the report of the Budget Advisory Committee.

Several citizens who served on these committees agree that defeating the parcel tax will force the City to cut expenses, but they now mistakenly believe that cutting the expenses will also force the City to make certain fiscal reforms, some of which have already been made. Ironically, defeat of the parcel tax deprives the City of the very revenue needed to meet these expectations, including the setting aside of meaningful reserves. Defeat of the parcel tax also precludes funding for any improvements such as a new swimming pool and expansion of KCOM coverage, and would likely end library services.

The parcel tax does not make decisions. The City Council makes decisions — good and bad — based on citizen input and staff recommendations. Adding an independent budget analyst and an experienced project manager would help avoid future missteps. Electing a City Council that represents a cross-section of the city’s neighborhoods would offset the undue influence of special interests groups. But defeating the parcel tax does not accomplish anything.

William Blackwell

Piedmont Resident

Editors Note:  The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.  The Piedmont Civic Association does not support or oppose candidates or ballot measures.

3 Responses to “OPINION: City Parcel Tax Is Not the Culprit”

  1. Mr Blackwell – thank you for your thoughtful comments on the parcel tax debate.

    I’m one of nine members of the Piedmont City Council-appointed Municipal Tax Review Committee to review Piedmont’s finances and advise on future parcel and sewer tax measures in 2011.

    At the outset I support your suggestion that adding an independent budget analyst and an experienced project manager “help avoid future missteps”. However, only electing a City Council that represents a cross-section of neighborhoods may not help achieve much. In addition, we need Council members who have the will and experience necessary to tackle the tough problems that Piedmont faces, as well as the independence to act regardless of the influence of “special interests” you refer to.

    The 2011 MTRC determined that current trends of over-spending and out-of-control budgets are unsustainable.
    The MTRC unanimously recognized that “passing the current parcel tax without addressing expense commitments is not fiscally prudent”.

    An MTRC supplemental statement delineated expectations for the Council to control expenses, manage risk and set budget priorities before seeking a tax renewal.

    Over the past year the Council has made little to no progress on the critical expectations and recommendations of the MTRC – the very body it appointed to review and recommend on the matter of the parcel tax. The Council has so far ignored the most serious recommendations presented. Ill-advised spending continues its upward trend.
    Now, the majority of MTRC (including Chair Michael Rancer) opposes Measure Y.

    We say it’s time to stop the bail-out and force those actions and decisions by the City Council. The Council will have to set priorities and establish proper controls.

    As reasonable and experienced citizens and taxpayers we are not opposed in principle to parcel taxes. If the Council takes needed actions to control costs, we will support one for essential purposes in the future. Today, however, the tax is not being used wisely or efficiently. A NO Vote on Measure Y is our majority recommendation.

    Ryan Gilbert

  2. Bill, we are in agreement that that City Hall has not been a responsible or reasonable steward of our tax money. You cite the benefit liabilities and costly missteps. While money itself cannot be the culprit, the questionable allocation and waste of our tax dollars by those responsible for the missteps is blameworthy. While missteps are regrettable, Council’s failure to adequately investigate the Undergrounding Debacle and follow its own risk assessments going forward is mind boggling.

    The parcel tax becomes a slush fund when the definition of essential services extends well beyond what is reasonable and universally recognized: Police, Ambulance, Fire, clean streets & amp; parks and underground maintenance. A group of politically connected residents, enthusiastically supported by the Piedmont Post, equate new recreation and sports fields as essential services to be paid by general tax dollars rather than promised private “Gifts.” The issue is not about appropriately done new sports fields, the issue is of false information and poorly managed non-essential projects.

    We share a lack of faith in City Hall. You concede them the money as evidently you accept nothing will alter their errant course. I advocate for our referendum right by voting the tax down to stop the missteps.


  3. To Ryan Gilbert:

    I read and appreciate your considered reply to my letter published by the PCA.

    As you know, MTRC 2011 was formed to advise the city council regarding the need for the parcel tax. It did that, advising the city that the parcel tax is essential to the city’s financial health. The MTRC also found that the city has a problem of escalating expenditures that must be resolved. A minority statement within the report agreed that renewal of the parcel tax is necessary, but gave equal importance to the need for fiscal reform. To do one without the other would be a serious mistake, it said.

    Now, you and four others who were members of the MTRC are demanding that the city make certain fiscal reforms without the parcel tax. This will force the city to cut expenses, which will somehow result in meaningful reforms. You will then restore the tax. Fair enough, except depriving the city of revenue doesn’t make it any easier to implement the reforms. Piedmonters expect above-average municipal service; the costly missteps of the recent past had little to do with the parcel tax; the unfunded pension liabilities must be paid with or without the parcel tax.

    Steps are being taken to moderate the unsustainable expenditure trends and more can be done to prevent the recurrence of fiscal missteps. But city spending is clearly not out of control if the current budget and its 5-year projections are believable. Overall, the Budget Advisory Committee believes these projections are reasonable.

    I agree that finding City Council candidates with independent judgment and a broad vision is essential. Of course, it is always good to have candidates who regularly attend committee meetings and have prior experience and public exposure on any one of the city’s commissions and boards.

    William Blackwell

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