Oct 20 2014

OPINION: Evaluation of Future Parcel Taxes Should Address Service Levels

To the Piedmont City Council:                                                                                                                                                          October 20, 2014
Congratulations to the new members of the Budget Advisory and Financial Planning Committee (BAFPC).  Expanding the size of the committee is probably wise given the many long-term financial challenges facing the city. Alternatively, eliminating the explicit addition of members to conduct a biennial review of the municipal parcel tax is not advisable given the important role this volunteer review has served in maintaining citizen support for the tax.
  I have commented before that subsuming the role of the Municipal Tax Review Committee (MTRC) to the BAFPC is not wise – the committees by definition took different views of city annual and long-term financial needs, to the betterment of city budgeting and fiscal planning.  In fact, it was the 2011 MTRC that recommended the establishment of a committee to look at the long-term financial needs of the city.  By overburdening the BAFPC, the biennial review of city services will likely not be as comprehensive as was undertaken by the MTRC.  The review of city services is especially called for given two recent developments:
            – Recommendations from the 2011 MTRC report:           “The committee recommends that the City undertake a prioritizing of City services and modify the detailed budget presentation designating certain services (costs, etc) as “mission-critical” and other services as not in that category in order to assist future Councils to create a priority of funding.   The City should adopt formal objectives for the appropriate fund balance levels of funds related to capital and equipment replacement and use these levels as guidelines in allocating revenues.”  These two unanimous MTRC recommendations are meant to assist Council with annual budgeting for city services but have not been undertaken.
Annual property transfer tax receipts: Piedmont has realized unprecedented property transfer tax receipts these past two years. The trend in this revenue source needs to be examined and considered by Council when setting the annual tax rate for city services.
Finally, the role of the BAFPC in reviewing the sufficiency of the Municipal Services Special Tax (Parcel Tax) needs to be clarified.  As the Piedmont City Code indicates, the purpose of the parcel tax is to provide annual municipal service levels that Council considers are necessary:
If in any fiscal year commencing on or after July 1, 2013, the City Council shall determine that municipal services, including, but not limited to, police and fire protection, street maintenance, building regulations, library services, recreation, parks maintenance, planning and public works and similar services, are necessary for the public good, welfare and safety, and that the cost of making available such services will exceed the amount of funds generated through other revenue and income of the City for such services, then it may levy a special tax for such fiscal year on each parcel of real property within the City in a manner provided herein. This is a non-ad valorem parcel tax which, pursuant to California Constitution Article XIII D, Section 3, shall be deemed a special tax as defined pursuant to Section 53721 of the California Government Code.
The purpose of the tax is not to meet the “ongoing financial needs of the city” such as unmet pension and retiree health care obligations.   No doubt BAFPC may consider other revenue sources to meet those needs but the parcel tax should not be part of that consideration.  I recommend that you modify the resolution with the following text:
e)            Periodically review and comment on the sufficiency of the Municipal Services Special Tax (Parcel Tax) to address the municipal services levels of City. This charge shall be accomplished not later than eighteen (18) months prior to the expiration of the tax as set forth in Chapter 20B of the City Code.
Garrett Keating, Former City Council Member and Public Safety Committee Member
Editors’ Note:  The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.

One Response to “OPINION: Evaluation of Future Parcel Taxes Should Address Service Levels”

  1. Recommendation e) is, of course, a two-way street:

    1. Are the parcel tax revenues adequate to fund the expected services? This is relatively easy and painless to determine.

    2. Are the services being received acceptable considering the current level of funding? Herein might lie a loaded issue.

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