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After court defeat, Palo Alto eyes hike to utility tax

Original post made on Sep 22, 2021

After facing a costly court defeat over its historic practice of transferring money from its gas operation to pay for basic city services, Palo Alto is preparing to ask utility customers for help in filling the financial gap.

Read the full story here Web Link posted Wednesday, September 22, 2021, 2:12 PM

Comments (19)

Posted by Citizen
a resident of College Terrace
on Sep 22, 2021 at 3:11 pm

Citizen is a registered user.

Absolutely not - no new taxes.

Cut back City - clearly the City can't live within its means and has to surreptitiously tax us via fake utility charges. As for businesses? No new taxes - just to find the city's overspending.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 22, 2021 at 6:08 pm

Online Name is a registered user.

Greed, greed. SO very tired of being milked as a cash cow by a city that can't even be bothered to notify us of power outages. Let the CITY cut back its ridiculous expenditures instead of continuing to charge us for every little thing. Do you realize they're hiring a consultant to reformat the city handbook? WHY do we have a huge highly paid communications staff? Is not one of them capable of reformatting documents?

Also, do you realize that protesting utility rate hikes is a multi-step process and they ignore all results where fewer than 11,000 people have objected to the rate hikes?? Outrageous.

Where are our refunds?? Are we getting interest? Why are we paying the city's legal costs of fighting giving us our due?

Posted by KOhlson
a resident of Old Palo Alto
on Sep 22, 2021 at 7:32 pm

KOhlson is a registered user.

The optics of imposing a tax increase to pay off a court case about overcharging is, well, not good.

Posted by Local
a resident of Stanford
on Sep 23, 2021 at 5:44 am

Local is a registered user.

A business tax is best - the incidence of this (who ultimately pays) is on the owners of business property since their rents/values are lowered. I think the owners of business property in Palo Alto have done extremely well over the last few years, so happy for them to share some of these gains with the city. Property developers will squawk - nobody likes paying taxes - but those buildings are never going empty, so this tax will be paid in full and have little impact on anything.

The perfect tax - lots of revenue, little distortion - is the business tax.

Posted by Bystander
a resident of Another Palo Alto neighborhood
on Sep 23, 2021 at 8:55 am

Bystander is a registered user.

This reminds me of the time in drought when we were all told to reduce water usage and then those of us who did were given a drought surcharge that made up the difference utilities were losing.

We just can't win against our utilities. They think we have bottomless pockets.

Posted by Leland J.
a resident of Professorville
on Sep 23, 2021 at 9:19 am

Leland J. is a registered user.

Wait for it, because you know it's coming:

"Tax Larry Page!" "Tax Stanford!" "Tax Castilleja!" "Tax anyone but me!!"

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 23, 2021 at 10:06 am

Online Name is a registered user.

"Cormack disagreed and said she would not support a floor of $20 million or a ceiling of $50 million for the business tax."

Where's Ms Cormack been during all the years PA residents and taxpayers were bilked out of $20,000,000 each and every year resulting in this lawsuit??
It's ok to "overcharge" us but heaven forbid businesses pay their fair share.

Posted by Calius
a resident of Barron Park
on Sep 23, 2021 at 10:43 am

Calius is a registered user.

Instead of taxes, why doesn't the City turn off night lights in buildings it uses, in complexes where there are no people working at night, etc? In some places where a few people are working at night, use motion activated light switches to turn on lights as needed. By so doing, they can save on their power bill. I have asked Public Works about doing just that and now it seems as though they have indeed turned off the night lights at Byxbee Park's maintenance yard. This will save the City money and reduce the power load.

Posted by tpencek
a resident of Midtown
on Sep 23, 2021 at 11:03 am

tpencek is a registered user.

I am against an increase in utility tax. It is a very blunt instrument, and is difficult to titrate against fluctuating needs. The idea of taxing gas usage at a greater level that other utilities sounds like city leaders are suggesting using a mandatory tax as an instrument of social/environmental change. Regardless of my support for the goals (reduced carbon in the air), I think a mandatory tax on fuel needed to heat homes and water is high handed.

If a poll of residents indicates NO support for ANY tax increases, are those who support such measures going to resign or change their opinions? Those that are suggesting some Citywide belt tightening before demanding more from residents have merit to their argument, in my opinion.

Posted by PST
a resident of South of Midtown
on Sep 23, 2021 at 11:39 am

PST is a registered user.

Whatever revenue that is needed should come from a new business tax only. It’s long overdue.

Posted by Anne
a resident of Midtown
on Sep 23, 2021 at 11:52 am

Anne is a registered user.

Utility taxes are already too high. NO.

Posted by jr1
a resident of Greenmeadow
on Sep 23, 2021 at 1:31 pm

jr1 is a registered user.

Palo Alto always needs more money, they never look to eliminate waste.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 23, 2021 at 3:26 pm

Online Name is a registered user.

The City's unfunded pension liability is now $500,000.000 and it only has 65% of what's needed to pay it off.

Yet they keep dithering about a business tax while spending money on all sorts of absurdities. They waste months of people time considering "medical retail" without ever bothering to define. Same waste with the Casti "planning" process.

For all those "leaders" and "planners" who decided to make our whole tax base dependent on commuters and business travel, how about reducing their salaries and retirement by the amounts of the declines? Instead, they keep getting raises while using OUR money to appeal the judgement to pay US what's owed to US!

Los Altos fired their city manager for ignoring City Council dictates.

Posted by peppered
a resident of Community Center
on Sep 23, 2021 at 6:38 pm

peppered is a registered user.

CPAU is a scam. Thank Ms. Green and the court for exposing it.
The City is BLOATED. This is a golden opportunity for the Council to do the right thing: CUT staff and OUTSOURCE.
Of course the Unions are gonna scream.
But if there's no money...

Posted by Giraffe
a resident of Duveneck/St. Francis
on Sep 23, 2021 at 7:19 pm

Giraffe is a registered user.

The city has to stop "transferring money from its gas operation to pay for basic city services". Won't the city then have to reduce the gas charges by the amount that is no longer being transferred? So, the gas charge on our bills goes down while the new tax probably adds about the same amount back to the bottom line of the bill. We just will have a clearer pic of the costs.

Posted by William Hitchens
a resident of Mountain View
on Sep 26, 2021 at 5:18 pm

William Hitchens is a registered user.

Maybe the correct option for PA to explore is to shed under-performing and redundant staff by layoffs, and to freeze the pay and pension payouts for the rest of its administrative employees. If this means abrogating existing union contracts, they by all means DO SO. "Make them an offer they can't refuse" and if they refuse, renegotiate those contracts.

Posted by Rebecca Eisenberg
a resident of Old Palo Alto
on Sep 30, 2021 at 12:24 pm

Rebecca Eisenberg is a registered user.

City Council should be recalled. Palo Alto is the ONLY city in the state -- and likely country -- with a business presence that fails to tax its businesses *at all*.

The biggest and most profitable companies in the world have large offices serving thousands of employees in Palo Alto, including Tesla, Amazon (AWS), Facebook (Occulus), Alphabet (Nest and Google), and Palantir, that still has not given up one square foot of office space. These companies generate billions of dollars annually using our streets and utilities without paying for their maintenance or delivery. It is literally criminal.

Because City Council refuses to fix this situation, despite having years to do so, relying on the pandemic state of emergency like all better run cities have done, City Council agreed to overcharge residents for utilities. Once the courts correctly found the City liable for stealing money from residents, now City Council is refusing to repay the money we stole, and proposes to steal more. All because they refuse to tax Tesla, which has never paid one dime in business tax to our city.

We do we stand for this? City Council is acting with the least possible degree of integrity and courage. When there is a way to screw residents at the hands of the billionaires, our elected leaders choose to do so. Shame on the Palo Alto Weekly for urging voters to elect them. Our city deserves better.

Posted by Rebecca Eisenberg
a resident of Old Palo Alto
on Sep 30, 2021 at 12:26 pm

Rebecca Eisenberg is a registered user.

("we" stole should be "they" stole - thanks!)

Posted by Rebecca Eisenberg
a resident of Old Palo Alto
on Sep 30, 2021 at 12:35 pm

Rebecca Eisenberg is a registered user.

Specifically as to the business tax, no rational business taxes are based on "type" or "size" of businesses. Not one person in city leadership appears to have the slightest understanding of how businesses taxes work, despite the fact that EVERY other city with a business presence has one.

The best business taxes are based on:

- Revenues generated; and
- Payroll ; with
- Overpaid executive enhancement - for companies that pay their top executives more than 100 times median salary (this tax has generated hundreds of millions of dollars in other cities!)

It's not rocket science, guys. Tax based on revenue generated and payroll, have a very generous threshold -- eg don't tax businesses that generate under $50 million annually, and that have a payroll (including equity comp) under $10 million and/or 200 employees. You loop in all the VCs but leave out the retail and restaurants. There are frameworks for this online! There are also frameworks in the countless emails I have sent to Council members, including most recently to Pat Burt.

Such a shame that our elected leaders act with ignorance and willful blindness instead of courage and integrity. Our city deserves so much better!

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