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Tax Fax : October 2001

UPDATE ON CITY UTILITY TAX At the September 20th Taxpayers League Director's meeting the issue of windfall tax increases, developed by rapidly escalating utility costs, was, once again, discussed in detail. Covered were Utility User Taxes (UUT) charged by the County (2.5%) and the Cities of Sacramento (7.5%), Citrus Heights (2.5%), and Elk Grove (2.5%). It was noted that the City of Sacramento's UUT was 5% higher than the County, and the other two Cites that have a UUT. Also noted was that the League already has a lawsuit filed against the County challenging the legality of its UUT, which could be repealed, if not supported by the County voters. The Board's decision was that the Sacramento City Council should be offered the opportunity to voluntarily reduce its 7.5% UUT to 2.5% over a five year period. If the recommendation is ignored, the League will put a Measure on the November 2002 ballot, which would give city voters the opportunity to reduce the tax directly to 2.5%. The Insert to this Tax Fax is the Taxpayers League letter sent to City Manger Bob Thomas, and the City Council, covering the League's request. REFUSE (GARBAGE) RATE INCREASE CANCELED In July, the staff of the Waste Management and Recycling Division of the County presented the Board of Supervisors (BOS) a proposed residential rate increase of $2.40 per month for residential garbage pickup and disposal. The rate increase was challenged by the League's Executive Director. He related that the increase could be covered by use of Tobacco Litigation Settlement Funds. The BOS deferred Staff's request until August. In August the staff presented an updated version of needs. Once again the League opposed the rate increase, pointing out that the $5 million to be gained from the increase was already in hand. Waste Management had reported a profit of $3.4 million in last year's finances, and the County's proposed Budget had over $2 million of undesignated Tobacco Litigation Settlement Funds on hand. Combining the two would cover the $5 million that would be paid by ratepayers if the rate increase were approved. The BOS needing additional clarification regarding funds, voted to continue the rate hearing until August 29th. On August 29th, the staff asked the BOS to continue the rate hearing until September, stating they were going through a reevaluation of financial options. The BOS agreed, and set the rate hearing for September 5th. At the September 5th hearing staff told the BOS that an increase in garbage collection fees was not needed. Set aside was $2.2 million originally programmed for new garbage cans, and found was $7.5 million in surplus funds. In addition, tobacco settlement money will be used to buy new trucks, offsetting nearly $20 million in future capital funds, part of which would have had to been collected from residential ratepayers in the unincorporated county. Public Works Director Warren Harada also told the Board that, based on this reassessment, they could go two to three years without a rate increase. The revised Waste Management fiscal plan was approved by the BOS. The Association's Executive Director thanked the BOS, and told the Board he would reexamine the League's 3-year ongoing request that the $13.5 million of Waste Management's Enterprise Fund money, illegally transferred to the County's General Fund after approval of Proposition 218, be returned using Tobacco Litigation Settlement Funds. The plan to use up to $20 million of the tobacco money to buy new trucks would seem to more than cover the League's $13.5 million transfer request. THE BONDS ARE COMING, THE BONDS ARE COMING! We expect a rush of school bond issues, probably on both the Primary and General Ballots during elections in 2002. The fever to generate the bonds has been augmented by the success of Silicon Valley billionaire's Proposition 39, which reduced the bond approval rate from 66.6 to 55 percent of the votes cast. The dirty little secret of this change is that repayment of the bonds falls on property owners only, whereas all voters, property owners or not, will vote on the local bond issues. Saying yes to bond Measures paid for by property owners is easy for non-property owners, as it will not cost them a cent. Already announced is that the Folsom Cordova Unified School District Trustees will vote on a $53 million Measure for the March Ballot, which will cost property owners $7.25 per month for each $200,000 of assessed valuation. Los Rios Community College District will probably also place a $265 million bond Measure to the voters next March. That Measure will cost property owners $9.96 per month for each $100,000 of assessed valuation. At a recent joint press conference involving Jonathan Coupal of the Howard Jarvis Taxpayers Association, Ted Costa of the People's Advocate, Lew Uhler of the National Tax Limitation Committee, and Joe Sullivan of the Sacramento Taxpayers Association, opposing Governor Davis's approving increased spending by the State, Sullivan told the press that organizations like the 40 year old Taxpayers League represent the taxpayer's last line of defense. He used Chancellor Brice Harris crying need for money for the Los Rios Community College District as an example. Sullivan said that when the state does not fulfill its obligation to fund higher education needs, in desperation community colleges turn to local property owners for money. If successful, the state escapes it's obligation, and lends to the Legislator's attitude of "let the locals fund it." Historically, the Education Reserve Augmentation Fund (ERAF) is the classic example. In the 1990's Gov. Wilson and the Legislature took property taxes away from counties, cities, special districts, and redevelopment agencies, and transferred the money to a special fund to meet the state's needs to fund schools and community colleges. This saved money in the state's General Fund. The process continues to this day. Notwithstanding that when running for office Gov. Davis branded ERAF as "larceny', and promised the voters he would give it back, he has fought ending ERAF at every turn. And from these kinds of actions local school bond Measures grow across the state. UPDATE ON LAWSUIT AGAINST SACRAMENTO COUNTY Sacramento County illegally passed its Utility Tax, and increased its Transient Occupancy Tax (Hotel Tax) during the 1990s in violation of Proposition 62, which required the taxes to be put before the voters for approval. These actions resulted in the Howard Jarvis Taxpayers Association (HJTA) and the Sacramento Taxpayers Association filing a lawsuit as plaintiffs against the County, asking that they put the taxes before the voters as required by law. The County's answer to the complaint was an admission that it had imposed the taxes, that Proposition 62 was constitutional, and that they did not submit the taxes to the voters for approval. Their defense was that we exceeded the Statute of Limitations (didn't file in time) and that the delay prejudiced the County. At the time, two other cases came into play, which involved similar defenses regarding the statute of limitations. Oddly, the two came out with opposite decisions. The HJTA asked for a California Supreme Court Review, and our case against the County was held in abeyance, pending the outcome. On June 4, 2001 the Supreme Court in a unanimous decision stated that a three-year statute of limitations for legal challenges begins to run, not when a tax was passed, but when the last illegal tax was collected. The Supreme Court decision has been published, and at the time The Sacramento Bee wrote that County Counsel Robert A. Ryan Jr. stated that county officials will meet with the plaintiffs (HJTA and the Taxpayers League) to discuss a resolution. Notwithstanding County counsel's comment, we haven't heard from them. Consequently, a letter was sent to the County asking when the County intended to put the illegal taxes before the voters. The County responded that, while it is true their defense regarding the Statute of Limitations has been disapproved by the Supreme Court, the County has a new defense. Its new defense is that Proposition 218 impliedly supersedes Proposition 62 and grandfathers all pre-1995 unvoted taxes. Since this issue is presented in a case pending in Monterey County, the County of Sacramento wants to wait until a decision is rendered in the Monterey case. It seems that the intent is, once again to delay resolution. Remember this. Every time you pay any utility bill that lists the County's utility tax as part of the total cost, the County once again has violated the law. They have admitted it. And their reaction is not to follow the law, but instead to continue to violate it many times every month. It is time for accountability. Perhaps the time has come to elect replacements for those charged with representing us, with people whom, when they swear to uphold the State's Constitution will obey its laws, rather than flaunt their violations. WHY TWO-THIRDS VOTE FOR SPECIAL TAXES [Excerpt from Howard Jarvis Taxpayers Assoc. Taxing Times] Over the years some taxpayers have suggested that earmarked taxes should be encouraged so that everyone will know where their money is spent. Unfortunately this is not how it works. For example, in 1993 in a statewide special election, voters approved Proposition 72, a half-cent sales tax to be used for local public safety purposes. The result was that while the money raised by the new tax went to public safety, many counties cut back on the money they would otherwise have spent on public safety and diverted it into other programs. Some counties saw no significant increase in spending on public safety programs, but all taxpayers saw higher taxes. This "money laundering" process, where citizens are asked for more tax money for a purpose they support, but most if not all funds formerly provided for that purpose are shifted to other less popular projects, is a common practice in local government. "It's a lot like a 'bait and switch' scam," Jonathan Coupal said. "Officials convince voters to approve a tax for something like more police, and after they have the money, they take funds that were formerly committed to law enforcement and spend them on some other pet project. The two-thirds vote for these special taxes helps taxpayers from becoming victims." LETTERS As a new member to the league, let me thank you for your ongoing efforts to benefit the taxpayers of Sacramento. I am a registered Libertarian and greatly appreciate the dedication to reign in the obscene growth of government in our lives and taxpayer financing of the same. But I would like to ask that you make one small correction to your sentiments in the most recent newsletter, taxpayers without offspring do not benefit from the college plan you illustrated. So to say that the "taxpayer" (which is a holistic term) is a winner is not entirely correct. Only taxpayers with offspring are winners. And it once again proves our tax system continues to 'target" groups of special interests rather than provide across the board. Don't misunderstand me, its not that I'm ungrateful for tax relief of any kind, but it is important to note to correctly describe tax relief so that taxpayers are not disillusioned into thinking that something greater is taking place than what is taking place. In addition, it is noteworthy to continue to discuss the unequal treatment of individuals and married taxpayers without children with respect to the tax system. Evidence exists in many areas that demonstrate that childless taxpayers pay a disproportional share of the taxes. - Craig B. Kincaid Your article on utility taxes reminded me of the way city management conned the city council while I was on the Garden Grove City Council for 18 1/2 years beginning in April 1980. Prior to Prop. 13, city departments provided budgets of what they would like to spend. If there was a shortfall, property taxes were increased. After Prop. 13 was passed, the city had to tighten its belt. It was found that some departments could operate with fewer employees, vehicles could last longer, less money was donated to charitable organizations, etc. One thing management didn't want to do was eliminate the employee pay raises of about 14 percent per year so fees, charges and assessments were innovated or increased. The council was told that pay raises given 3 months into the year were only for 9 months of the year so they only counted 3/4 of the raise. The same logic had raises given 6 months into the year figured as half the raise and those given 9 months into the year amounted to only 1/4 of the raise. Using this logic, we were told that a 4 percent raise 3 months into the year, 4 percent at mid-year, and 6 percent 9 months into the year made the raise only 6 1/2 percent. Later the city increased the A, B, C, D, E employee pay steps to include steps F, G, and H, claiming it saved money because the raises would only be merit raises. Later when I checked, I found the extra pay steps were practically automatic. The point is that when management of a local government entity claims there is a shortfall of funds, such shortfall usually depends on the method used in figuring the budget. - Bob Dinsen LETTERS TO THE ASSOCIATION We seek "Letters to the League" from members on present projects and issues on which we are working, and recommendations on those we should look at. Letters may be edited and republished in any format, primarily in the interest of available space. Send letters, faxes, or e-mail to the Sacramento Taxpayers Association. Our e-mail is info@sactax.org, our phone/fax number is (916) 331-5991, and our address is: Sacramento Taxpayers Association 1832 Tribute Road, #210 Sacramento, CA 95815 MEMBERSHIP Our Members constitute the League's strength and Members provide coverage on many issues we try to resolve. We welcome new members G. Ross Popkey and Paul Hrabal to our 40-year old tax fighting organization. Over 120 taxing agencies in Sacramento County and its six Cities, handle billions of taxpayer's dollars yearly. The Association's constant surveillance of their activities has been our mission for 40 years. We have been successful in rooting out many illegal uses of taxpayer's money, and have defeated the last three attempts to raise sales taxes in the city and county of Sacramento. The last alone kept $90 million in the pockets of taxpayers over the last three years. We receive no outside funding. Funds are raised in the form of membership dues and donations to our defense fund. We always search for new members to build our strength. In the next two years the League will be part of, or in charge of, some of the most serious battles we have ever been engaged in involving taxpayer's protection. These fights will be local and statewide, joining with a lead taxpayer organization sponsoring a statewide fight for all taxpaying property owners. To win these endeavors we are asking all members to help by recruiting new members, and contributing to our defense fund. If each member were to recruit just one other, we could double our strength in one year. Please call (916) 921-5991 if you have someone you believe would be interested in becoming a Member of the Taxpayers League. ONE MAN ALONE After writing the President's Column, I reflected on actions of individuals and the impact they have on others surrounding them. In this vein I wish to bring to your attention the actions of a single individual...someone dear to us all, who has served his nation in time of war, but who now serves all of us in the Sacramento community and members of the Sacramento Taxpayers Association in particular: our own Joe Sullivan. As you will read throughout this month's Tax Fax, after literally years of hard-fought effort, the County of Sacramento has acknowledged that it need not again raise monthly refuse rates, and in discussion last month County staff actually admitted that according to their own computations, no such raise will be needed for the next three years. While this outcome constitutes yet another victory of the League, I can assure you that "our" victory is in fact the result of the efforts of one individual, working alone, to make his community better: our own Joe Sullivan. Joe has achieved a truly worthy goal, for which we all owe him a debt of thanks. Now I know Joe will be embarrassed to read this, and he - and perhaps you - may even wonder why I have linked his efforts in my own mind to the incredible acts of individual heroism and sacrifice we have witnessed over the last month. Again, any such heresy is my own, and is utterly unintended. My goal, however imperfect, is to ensure that as the months and years pass, and the raw emotion and vivid memories of September 11th pass from us as well, we are forever reminded that in each and every day of our lives, there exists an opportunity for one individual, acting alone, to make a real difference. We pray God that we are never tested as those heroic rescue personnel, those airline passengers, and so many other families have been tested, but we must forever carry the spark which saw them act so bravely and so well in the face of so much more. But failing such a moment, may we not fail to do that of which we are capable when the moment presents itself. In fighting for the Sacramento Taxpayers Association, Joe Sullivan has done precisely that - and done so in our name - and for that he again deserves our thanks. Richard Mersereau SEPTEMBER 11TH - A DAUGHTER'S QUESTION AND A FATHER'S ANSWER (My daughter Patricia (Lulu) Wheeler manages the office, and her husband Jeff manages a shift in the City of Alexandria, Virginia Sewer Plant - Her e-mail was sent Tuesday, September 11, 2001 - Joe Sullivan) Oh my God poppa. How do you describe the horrific scene I saw today. My God daddy, explain to me how there can be so much hatred in a group of people that they need to cause so much destruction? I've wept all day. I was sitting at work when I heard the first report of the Trade Center, then the second…then I felt our building shake from the explosion at the Pentagon. I ran to the window and could see the huge clouds of black billowing smoke as the radio announced that the Pentagon had been hit. People were walking around in disbelief, as if in a daze. I started to weep. At that point the Directors told all non-essential personnel to leave…which meant that Jeff and I stayed because we are considered essential. The building emptied as I began to set up a command post. I gathered a list of all personnel still on the site and locations of all of them. I manned the radio base station and no one made a move around the plant without giving me their location first, We were then informed that we might have to stay all night because the next shift could not make it in due to all the road closures and traffic jams. I made sure that I had enough provisions for everyone overnight and had all the first aid kits brought to my office just in case. I guess people really don't think about what might be the next target…but we have been well informed that what would go next would be the utilities…no power, no water and no way to purify it. I sat at my desk as I watched military helicopters circle overhead. We had security guards at both gates and the Alexandria police sealed off the roads armed with shotguns. We could see and hear the fighter jets as they circled DC…My God daddy, this was the closest I've ever been to a war and I'm afraid it's not over yet… Jeff and I are fine…a little worn out and I think still walking in the same fog as everyone else. We got home at 9:00 after going in at 6:30…and you know what daddy…we'll be right back there in the morning…trying to protect what has become so very dear to us…clean water. - I love you daddy… Lulu Wednesday, September 12, 2001 11:06 AM Lulu. History seems a poor teacher. Human's memories, or perhaps lack of knowledge, result in not recognizing that wars, and the horror yesterday is an open declaration of war that until now has been a limited guerrilla action, have been with us since time immemorial. They start for many reasons, conquests to gain access to raw materials (Japan in WW II), subjugation of peoples to increase national power (Germany WW I and WW II), national interests (American Civil War), and Religious Wars (Irish Catholics against Protestants, Muslims against Jews, and some African Tribal Wars, among others). But of all, religious wars are the worst because they are not battles of military might, but rather battles between those with different faiths, deeply imbedded from childhood in almost all humans. Religious wars don't end because one nation, or a group of nations, conquers others who surrender, and are disarmed. Religious wars don't end because you cannot conquer one's faith. Even though you may conquer and control one's actions, the faith remains. The history of the Jews is a classic demonstration of the strength of faith, along with the martyred Christians. And that's what yesterday's terror may have been about. There is no doubt that yesterday's military action was a well-coordinated and extremely successful Islamic attack. The fact that it was not done by men in uniform does not mean that it was not contrived as a military objective. I believe it will be proven that Osama bin Laden was at the root of this attack, aided by one or more of the Islamic nations. His personal hatred of the US, along with his conviction that all Jews and Christians are infidels, has made his efforts a Jihad, a holy war. We, in the US have been insulated from the horrors of war within the boundaries of our nation since the end of the Civil War in 1865. But in virtually every other nation in the world, the sort of destruction we witnessed yesterday is in many cases almost daily fare. Look at Northern Ireland, Israel, the Sudan, many parts of Africa, Mexico, and parts of the dissolved Soviet Union. The world shrinks every day, and we can no longer think in terms of two oceans, and semi-safe borders as safeguards from the rest of the world. Our association with our allies, and particularly Israel, mark us as an enemy by many Islamic nations in the world. We are at war. A new type war that we must learn to fight. And it's going to be very difficult as the enemy is almost invisible. I don't know what God has in mind for the world, but I think bin Laden and his allies have misjudged the American people. My birthday, December 7th, has made me a student of the attack on Pearl Harbor. And I remember the quote of Japanese Admiral Isoroku Yamamoto, the planner and leader of the attack. He said: "I fear we have only awakened a sleeping giant, and his reaction will be terrible." Yesterday's attack has awakened that giant again and united the people of the US. God help the perpetrators when we find out for sure who is responsible. I Love you, - Poppa

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