One of the most visible political signs in El Cerrito this year is a placard asking voters to support Measure K. The measure, placed on the ballot by the city, would approve an 8 percent utility tax that the city already charges, which provides $2.2 million, about 12 percent, of the city’s general fund.
A number of residents say they will not vote for the tax. They have formed a group, El Cerritans for Tax Justice, and claim the tax is poorly drafted and allows the city to escape proper fiscal mismanagement.
“They’ve panicked the gullible,” said Peter Loubal, an El Cerrito resident, an opponent of the measure. “Everyone is in a tizzy.”
The City Council passed the tax in 1991. At the time, they believed that general taxes, or taxes that don’t fund a particular program, did not need voter approval. In 2001, the California Supreme Court ruled to the contrary, which means El Cerrito must now put the utility tax to a vote.
According to city officials, if voters do not approve the measure, city services that depend on the money, such the police and fire departments, senior programs and the swim center, will be scaled back.
Opponents counter that the city should suspend the tax and draft another version with more citizen oversight before the tax is brought before the voters. In the meantime, they want the city to use some of its reserve funds to keep existing programs alive.
A delay would also force the city to review its fiscal management, said Brit Johnson, a member of the group and husband of Gina Brusatori, a city council member. The tax justice coalition, he said, is confident the city could reduce the tax rate “substantially below 8 percent” if there were better management of the city budget.
They point to a recent 19 percent raise for Scott Hanin, the city manager, and a near doubling of city attorney fees since fiscal year 2001-2002 as proof that the city is in good financial shape and does not need the full tax.
The group wants the inclusion of a sunset clause, which would require renewal of the tax at a specified time, and protection against increases when energy costs rise. They are also irked that the measure would allow the city to charge for water services for the first time and possibly levy the tax against people who use solar power.
“This was snuck in,” said Councilmember Brusatori about the ability of the city to target solar power. “And it’s completely wrong.”
City Manager Hanin said the group’s proposal to rely on reserve funds for city services is dangerous. “There is a limit to how much you can use one-time money to fund on-going operations,” he said.
Hanin said that El Cerrito’s reserve fund contains about $2.4 million.
He added, “If we lost, there is no guarantee we would win next time.”
Hanin also said the reserve funds might be sucked up by residents filing for tax refunds. Residents would be eligible to regain what they paid for the utility tax during the previous two years if the measure fails, as a result of the 2001 ruling.
Several residents have already won refunds in small claims court, said Hanin.
When questioned about why the city failed to put the tax up for a vote before, all he would say is, “Councils have known about this in the past.”
The old ordinance also included a provision to tax solar power, he said, but the city never enforced it.
“If you generate [energy] on site, you would have to self report,” Hanin said about the proposal in the new ordinance. “But historically the city has not gone after self reporters.”