The Atherton City Council is poised to approve a full-rate parcel tax for the 2014-15 fiscal year at its regular meeting later this month, although one councilman argued during a June 4 study session that the rate should be reduced 25 percent as a gesture to taxpayers during a period of robust revenue.
Councilman Bill Widmer said that even with conservative projections on the town's surplus revenues -- which this year are estimated at about $6 million and projected to grow as high as $11 million in five years -- the town should be able to give property owners some relief this coming year without promising reductions in the future.
His colleagues' reactions varied: Councilman Rick DeGolia said he is "sensitive to the idea" of reducing the tax rate for one year; Mayor Cary Wiest said he believes it's "premature" to discuss a reduction; and Councilwoman Elizabeth Lewis said it is "irresponsible to suggest that we (reduce) it at this time."
In the end, Mr. DeGolia joined Ms. Lewis and Mayor Wiest in directing the city manager to return to them on June 18 with a resolution to charge the tax at its maximum rate in the coming fiscal year. All three indicated, however, that they'd be open to discuss a reduction in the future.
Voters in November renewed the annual parcel tax, which costs most property owners in town $750 per parcel. It raises some $1.86 million a year, and through the years the town has relied heavily upon its revenue along with property tax revenue because Atherton has no commercial tax base.
The council must approve charging the tax each year, and can set its rate lower than the voter-approved maximum.
Parcel tax revenue can be used only for operational costs of the police department, and for drainage and roadway capital improvement projects. For the last few years, 60 percent of the revenue has gone toward police services, and 40 percent for capital improvement projects. This year, the council is supporting a plan that gives 80 percent to capital projects, and 20 percent for police services, which will pay for two new police officers.
City Manager George Rodericks presented two spending scenarios for the council to consider at the study session: One was based on reducing the tax by 25 percent, the other on charging the tax at its maximum rate. If the council had favored a reduction, it would have affected only the revenue that would fund capital projects.
Before the parcel tax discussion, the council heard a summary of the town's new five-year capital improvement program, and made some adjustments to the plan. The study that identified projects the town needs to focus on put a $20 million price tag on needed drainage projects alone.
The three council members who support keeping the tax at its maximum rate cited, among other things, needed drainage and other infrastructure projects as justification. "I haven't personally heard a lot of clamoring for a reduction of the parcel tax," Councilman DeGolia said. On the other hand, he said, he has heard from residents pushing for the town to undertake long-deferred infrastructure projects.
They also argued that master plans are in the works that may identify needs that could be costly to meet, and that the town has begun studying alternative revenue sources, making a tax reduction premature.
Calling a discussion of reducing the tax rate "irresponsible," Councilwoman Lewis asserted that Mr. Widmer's position was understandable, given he opposed renewing the parcel tax. Mr. Widmer challenged that assertion as inaccurate and unfair, and noted that the council vote to place the measure on the ballot was unanimous.
When Ms. Lewis began to contest her colleague's response, City Attorney Bill Conners called, "Time out." He then reminded council members that town code prohibits "personal attacks back and forth, and I've got to say it's uncomfortable at this point."
The council will vote on the tax and set its rate at the regular council meeting on Wednesday, June 18.