Pleasant Hill council pledges support for utility tax hike
By Lisa P. White
Contra Costa Times
Posted: 10/05/2010 02:24:56 PM PDT
Updated: 10/05/2010 02:24:56 PM PDT
PLEASANT HILL -- The Pleasant Hill City Council on Monday unanimously approved a resolution supporting Measure T, which would raise the utility tax to 1.5 percent and expand it to most utilities, including cable, electricity, gas, water and sewer bills.
The proposal has generated plenty of heat this election season. Opponents say the council should nix the tax increase and instead cut employee health care and pension benefits, which cost the city a combined $2.2 million in the 2009 fiscal year. Supporters argue that the tax hike would provide a stable source of revenue to pay for police, library hours and road maintenance.
On Monday, several residents urged the council to reject the resolution. Kevin Gregory said the utility tax would come on top of possible state and federal tax increases and higher property tax bills to repay bonds for the Mt. Diablo Unified School District.
"When it all adds up, it is a big deal," Gregory said.
Councilman David Durant said he is sensitive to the fact that residents are struggling and the economic recovery remains sluggish. Still, he said Pleasant Hill probably faces another two to three years of declining sales tax revenue, so it's better to have a stable source of funding.
"Do we wait until two years from now to see how bad it is before we turn to the public?" he asked.
Durant also said city workers will have to pay more of their health care premiums and pension contributions, even if voters approve Measure T. Contracts with the city's four employee bargaining groups expire next year.
City Manager June Catalano took the opportunity Monday to correct an error the city has repeated in documents and on the website. For months, the city had been telling residents the current 1 percent utility tax applied only to intrastate landline phone service. However, cell phone service also is taxed.
Although Councilman Michael Harris called the error "regrettable," he said people make mistakes, adding that the city had done the right thing by admitting it and correcting the misinformation.
The city estimates the higher utility tax would generate about $1.2 million annually. Critics question the accuracy of the revenue projections and suggest that the city may reap much more.
The utility tax would apply to residential and business customers, but public schools, Diablo Valley College and residents participating in utility rate reduction programs for low-income households would be exempt. The ordinance also gives the council the authority to reduce or suspend the tax without voter approval.
Vice Mayor John Hanecak said initially he opposed the measure because it would establish a long-term tax to cover a short-term revenue shortfall. He changed his mind, he said, when the council included a provision in the ordinance requiring an annual audit to figure out if the city needs to collect the utility tax.