The district is also in the best financial shape it has been in for years, and we worry that going to the voters this May for a renewal and increase of the current parcel tax, as the school board is expected to decide next Tuesday night, may encounter push-back and even defeat if not perfectly executed.
While the current parcel tax of $638 was approved in 2010 with a 79 percent vote, the financial need then was more clear, and the election pre-dated the series of missteps and controversies that have plagued the board and administration over the last three years.
These have not been good years for district governance or transparency, and although two new school board members and a new superintendent bring promise of a new era, May is far too soon for those voters who are skeptical to have regained trust and confidence in the management of the district.
So in this climate we question the wisdom of going to the voters a full year before the current tax expires in 2016 and before the new board and superintendent demonstrate they can get their house in order.
We also worry about seeking an increase. The proposed new tax is $758 per parcel, an almost 20 percent increase from the current tax of $638, plus an automatic 2 percent per year escalator for the next six years. (The current parcel tax was originally approved in 2010 at $589 and was also subject to a 2 percent annual increase.) With the annual increases, in five years property owners will be paying $836.
A survey conducted for the board in December shows sufficient support to obtain two-thirds voter approval of the new, increased tax rate, but it also shows a significant drop in the perception of the district's financial need from similar surveys taken over the last decade. Only 14 percent said they felt the district had a "great" need for more money.
Palo Alto voters passed the first school parcel tax of $293 in June 2001 with a 75 percent "yes" vote. That tax was to last five years and was fixed, with no annual escalator.
In November 2004 an early attempt to renew and increase the parcel tax to $521 was narrowly defeated after an opposition campaign emerged and was not taken seriously by supporters of the measure. Another campaign was mounted in June 2005 and resulted in 73 percent approval of a $493 per parcel, six-year, flat-rate tax.
Then in May 2010, a year early, the 2005 tax was replaced with a new six-year $589 per parcel tax with a 2 percent per year automatic escalator. It was a perfectly executed special-election campaign, conducted entirely by mail (a first in Palo Alto) with a 50 percent voter turnout. The measure passed 16,000 to 4,000.
If a new parcel tax is to win this spring, the district and its supporters will need to go to extraordinary lengths to honestly and clearly explain the district's finances and avoid scare tactics as a device for gaining support. Key to this will be showing realistic projections of property-tax revenue, which makes up 72 percent of the district's $185 million budget, and of costly new pension-payment requirements.
Every year the district intentionally underestimates future revenue from property taxes, creating the false impression of a financial squeeze, and as a result almost every year there is a substantial surplus at the end of the year. As the largest driver of the budget, this overly conservative forecasting of property-tax revenue distorts the financial outlook, and instead of fully utilizing our revenues for programs, the surpluses merely add to our already large reserves or get spent on one-time expenditures that often aren't well-considered priorities.
We think Palo Alto voters will support an extension of the parcel tax, but only if presented with an unassailable, no-spin description of our finances and why, even with our good financial condition, we need money to deliver an even better educational program to our kids. But we are not confident that now is the best time to hold the election to maximize chances for success, or make the case for a significant increase in the tax.
Last week's editorial incorrectly stated that Councilman Marc Berman was among those who participated in closed sessions in 2012 to discuss the purchase of property from developer John Arrillaga. Berman was not on the Council at the time. The Weekly regrets the error.
This story contains 790 words.
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