Publication Date: Friday, December 19, 2003
Palo Alto joins car tax fight
Palo Alto joins car tax fight
(December 19, 2003) Using League of California Cities' playbook, Palo Alto pressures citizens to lobby Governor for funds
by Bill D'Agostino
Mimicing a playbook that cities and counties across California used this month, Palo Alto officials tried to huddle residents together this week to tackle the issue of funding snatched by the state's newly elected governor.
This week, cities and counties across the state banded together and stirred a press frenzy over Gov. Arnold Schwarzenegger's November repeal of an increase in the Vehicle License Fee, the tax car owners pay annually to license their vehicles. Cities and counties rely on a portion of the funding to pay for such core services as police and fire.
In a press release sent out Wednesday, Palo Alto attempted to motivate residents to defend city finances, although officials didn't budget for income from the license fee. The efforts to engage residents in letter writing campaigns closely resembles the type of tactics Palo Alto schools engaged in earlier this year when then-Gov. Gray Davis proposed a cut in school funding.
"Frankly, I'm hoping the public will quickly come to understand that it's a bum deal all the way around" and lobby their state representatives, Palo Alto Mayor Dena Mossar said.
Palo Alto's share of the state car tax loss could amount to $2.6 million a year, around 2 percent of its $120.7 million general fund budget. The city, carefully watching the state's situation, made its 2003-2004 budget not expecting to get the car tax revenue, although it's included in future years' projections.
Still, officials cautioned of possible ramifications further down the line.
"If it (lobbying the state) doesn't work, people will start seeing changes. No doubt," Mossar said.
Before resting for the holidays, the state Legislature, struggling with its massive budget crises, failed to approve any new sources of funding to make up for the car tax loss. That wrought an outcry from cities and counties around the state, prompted by the California League of Cities.
In the league's newsletter last week, it recommended "talking points" for local officials to raise while discussing the dropping of the car tax dollars with citizens and the media. "The loss of this revenue is forcing severe cutbacks in public safety and other services in cities throughout the state," was among the points recommended.
In the Wednesday press release, the city noted that the $2.6 million "equates to a reduction of 22 police officers and firefighters." The headline for the press release was "State Takes Palo Alto Money."
With Palo Alto's flush reserves and myriad of other programs, it's unlikely many, if any, officers and firefighters would be on the chopping block if further cuts were needed this year.
Palo Alto's seemingly better financial situation in comparison to other cities means it most likely wouldn't benefit from a state declared "financial emergency" - something Schwarzenegger was expected to announce on Thursday. The declaration would give $40 million of the funds back to cities and counties without legislative approval. All California cities and counties lose approximately $355 million a month without the tax's "backfill."
"I don't think Palo Alto would be a hardship city because it (the car tax revenue) is a relatively low percentage of our budget," said Joe Saccio, a city finance director.
Santa Clara County, however, relies even more heavily on the car tax funds than the city, and possible cuts in that budget are likely to impact local nonprofits (see sidebar).
Facing a $11 million shortfall, including the car tax loss, Palo Alto cut library hours, vacant positions, and special events this year.
Other city revenues are down more than expected this year, including sales tax and a tax on hotel occupants, possibly forcing more cuts if the revenue of the state funds are not returned, city officials warned.
Mossar hopes residents will do something now, rather than waiting.
"The saddest outcome -- and a possible one -- is people won't rally until some significant cuts are made."
So far, residents have yet to answer the city's call in anywhere near the same numbers or with anything resembling the same passion.
"I think that in the public's mind, there's a clear connection between money and their child's education," Mossar said. With city dollars, though, "people are less directly connected, but absolutely affected."
E-mail Bill D'Agostino at bdagostino@paweekly.com
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