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By Diana Diamond

Lucky Palo Alto voters – maybe two tax increases to approve in November

Uploaded: Aug 2, 2022

There’s a duplicitous November ballot measure the Palo Alto City Council is considering -- asking voters to approve a natural gas usage rate tax charged by the Utilities Department that a judge declared illegal. In a suit filed in 2016 by resident Miriam Green (Miriam Green v. City of Palo Alto) claiming the charge was an illegal tax because voters had never approved of it, the judge not only agreed but ordered the city last year to refund the $12.6 million in overpayments back to the residents. One year later, no refund.

The city has appealed the judge’s decision, and right now that appeal is on hold in hopes that Green and the city can settle their differences. The council has considered this case in closed sessions several times so far.

The slippery way the city has conjured up is to continue getting the money is to put it a measure on the ballot this November and continue with the gas rate overcharge is. The thinking is that if voters approve the transfer, then that will satisfy the court. And the city hasn’t said anything about when and how residents will get their overcharges back, although the judge said it could not use future utility gas revenues for the rebate.

Mayor Pat Burt described the overcharges as just “a profit” that was returned to the general fund. What an interesting choice of words.

The city simply wants to keep the money it already got from utilities customers – even though Palo Alto’s annual budget is now almost $1 billion – used to run a city of 62,000 residents. It seems the city never has enough money – it always wants more.

I want my money back –as the TV ad proclaims -- for all those overpayments I made each month for gas usage.

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Well, by next Monday night, the city council will, in all likelihood, agree to let Palo Alto voters decide e on a November ballot measure to impose a heavy tax on all businesses with 10,000+ square feet of space – permanently. If adopted, the tax will bring in $15 million annually into city coffers.

The proposed tax has been whittled down substantially from the original version which would have collected $45 million annually from businesses, so it’s a good step in the right direction.

We knew all along that at least five of the seven council members would support the business tax (Allison Cormack and Greg Tanaka are the exceptions). But Mayor Burt pushed it strongly as did City Manager Ed Shikada. They want the money.

The city said it plans to use the new tax revenues for grade separations at track crossings, affordable housing and public safety. Promises are fine, but the revenues would go into the city’s general fund, where the city ca use the money to pay for anything, e.g., community services, new bike paths and (ahem) emp0loyee salaries.

The business community continues to object to a tax, saying the cost of retail rental space (about $7/sq ft.) is high in this city, compared to other municipalities, as are the monthly utility costs retail and offices pay.

I oppose the business tax, fearing that it could force businesses here to close or relocate, which is very important because so many businesses downtown and around California Avenue have disappeared during the pandemic. If we want new businesses to locate here, an added forever tax sure doesn’t seem like an inducement to move here. And while sales tax revenues are coming back to the city, that is certainly not any indication yet of a thriving,bustling downtown. Just a few years ago this city used to be full of shoppers and restaurant customers morning, noon and night. Ever since Cal Ave has been closed to traffic, sales tax revenues are dropping in that area. And the street barricades at both entrances that block the traffic say to me keep out, rather than come in.

While the city council did not discuss the gas tax transfer in depth this past Monday night, some members indicated that maybe having two tax proposals on the November ballot was one too many. That’s for sure. Of course, if the gas tax measure is delayed until the 2024 election, there was no indication of when residents may get their court-ordered refunds.

In any case, despite the inflation, I predict the city council will go ahead and place one of the measures – most likely the business tax -- on the ballot this November. It will be an interesting election.