Monday Jan 19 2009
Auburn worked hard to defend against tax raid
By: Kevin Hanley, Auburn City Councilman
Strange as it may seem, serving as a city councilman occasionally resembles an innocent walk in the park that is suddenly interrupted by a steroid-pumped, tattooed man with a knife jumping out from behind a tree. He demands — “Your money or your life!” As you reach for your wallet, you notice that the thief has a patch on his right arm that incongruously says — “State of California.” A less visible but no less vital role for members of a city council and its city manager is to do everything possible to defend its residents against sudden raids of city tax dollars by the California Legislature. State policymakers have created, despite numerous calls for reform, a rollercoaster tax and revenue system that is overly reliant on huge bursts of capital gains income in the good times and then dramatic declines in revenue during economic slowdowns. Because state politicians don’t have the maturity to resist creating brand new and expensive programs during the boom times, they are left with multi-billion dollar deficits when the stock market goes down. First, they try to borrow their way out of the crisis or raise taxes on hard-working Californians. Then, instead of taming their spending habits, they pursue legislation that grabs tax dollars from local governments and their residents and puts the money into state coffers. No reform occurs. The problem just rolls downhill. More obstacles are put in the way of local governments trying to provide vital municipal services like public safety, road repair, and sidewalk construction. Three weeks ago, just before Christmas, the city council and city manager had to drop everything and act quickly in response to the sudden passage of AB 2X. This bill, which was written in the middle of the night, would have swapped the gas tax for a new gas “fee.” Sounds simple on the surface. It wasn’t. In quickly passing this gas tax/fee swap without public hearings, the Legislature either hastily overlooked or just plain didn’t care about its potential impact on cities like Auburn that negotiate sales tax agreements with card-lock fueling operations. A few years ago, we aggressively worked to shift the headquarters of the locally owned Nella Oil Company from South San Francisco to Auburn. Through this arrangement, the city receives $800,000 annually in sales tax from fuel and service station operations during normal economic times. This money has helped the city fund vital services to residents. However, AB 2X, without clarification on how it would impact card-lock agreements, threatened to remove the entire $800,000 from the city treasury. The $800,000 is about 10 percent of the city’s discretionary General Fund, which allows us to hire highly skilled police officers, firefighters and other highly valued city employees. It was a crisis situation at City Hall and we turned around a veto letter to the governor the very next day. The city manager worked long hours during the holiday season with staff at the Board of Equalization to understand how AB 2X would be implemented if enacted into law. Fortunately, the governor vetoed the bill. That clarified things for now. Of course, as everyone knows, the state crisis is not resolved and is getting worse day by day. There are many good ideas on how to reform the state so that they can live within their means and provide vital services. A report published by the California Performance Review (CPR), after thousands of hours of auditing of state functions, contains hundreds of reform ideas that would save the state government billions of dollars every year. Yet, these reform ideas have been completely ignored. Shifting local tax dollars to the state is not the answer. Residents should urge their state legislators to enact the far-reaching reforms of CPR even though they may threaten the privileges of special interest groups. The City of Auburn will continue to work, in these uncertain times, with other local governments and our state representatives to defend local tax dollars and the provision of vital municipal services to the residents of Auburn. Kevin Hanley is a member of the Auburn City Council.