The Oakland City Council’s Finance and Management Committee has a busy meeting (PDF) to look forward to tomorrow. Below is a summary of four proposed measures they’ll be considering placing on a future ballot.
Amending the Transfer Tax Ordinance: When you sell property in Oakland, you have to pay something called transfer tax. In Oakland, that comes out to $15 for every $1000 of the value of the property sale price. Collection of transfer tax is expected to generate about $29 million (PDF) for the City of Oakland’s General Fund in the next fiscal year.
As it stands now, transfers of real estate resulting from corporate mergers, consolidations, and acquisitions are not subject to the transfer tax. Well, the City thinks they should be, but the language of the law doesn’t make it entirely clear that they are, which meant we lost out on about $12 million of transfer tax over the last few years that should have been generated by these types of transactions. This measure would change the transfer tax ordinance (PDF) to clarify that it applies to all forms of property transfer, explicitly including corporate mergers, consolidations, and acquisitions. This would probably generate an extra $500,000 to $1 million for the General Fund next year.
Hotel Tax increase: The Committee will also be considering placing a measure on the ballot that would increase the City’s Transient Occupancy Tax (PDF), usually known as the hotel tax, from 11% to 13%. This isn’t an unreasonable rate – Berkeley’s hotel tax is 12%, Emeryville’s is 12%, San Francisco’s is 14%. Problem is, since we don’t have very many hotel rooms, the hotel tax doesn’t really generate very much money – it brought it a little over $12 million in 2008.
The tax hike would bring in about $2 million extra dollars a year, which would be evenly divided between the Oakland Zoo, the Oakland Museum of California, the Chabot Space and Science Center, and Cultural Arts Programs and Festivals. If the tax passed, the money would be extra money for the purposes, not a replacement for the current General Fund contribution. In fact, if it were to pass, the tax could not be collected unless the City maintained the same appropriation for the Zoo, Museum, and Chabot Space and Science Center as allocated in the FY09-10 budget. So passage would effectively mean earmarking funding for these institutions, which would give the Council even less flexibility than they currently have in trying to address deficits.
Repealing Measure OO: November’s passage of Measure OO means that the City will be forced to take significant amounts of money away out of the General Fund and set it aside to be distributed as grants to organizations providing services for youth. This contribution would start at around $5 million and then rise to roughly $17 million per year. With the City already facing massive General Fund deficits, it really isn’t something we can afford.
Councilmembers Jean Quan and Pat Kernighan are now proposing three options (PDF) for addressing the budget problems created by Measure OO. The first, and most reasonable, would simply repeal Measure OO. Passage of this measure would return set-asides for the Oakland Fund for Children and Youth to the original levels established by Measure K in 1996, 2.5% of all unrestricted General Fund revenue. That would be around $10.1 million next year, and rise to $13.6 million by 2021.
The second option also put the set-aside at 2.5%, but would establish a minimum contribution from the City. So in the event of General Fund shortfalls, if 2.5% of the unrestricted revenue was lower than the amount spent in FY07-08, the City would have to cough up extra cash to cover the difference. The fund got $13.5 million in FY07-08, but 2.5% of the expected revenues for this year would be only $10.1 million. So we’d have to pay an addition $3.4 million on top of the 2.5%. Budget projections don’t show 2.5% of revenue amounting to more than $13.5 million until 2021. The third option would set aside a higher portion, 3% of unrestricted General Fund revenue to start, then 4% in 2013, 4.5% in 2017, and 5% in 2021. That would mean $12.1 million next year, an $24.6 million by 2021.
The Council should have worked harder to defeat Measure OO in the first place. It would have avoided the need now to spend extra time and money trying to repeal it. Furthermore, advocates of the repeal would now be placed in the unfortunate position of having to convince people to reduce money allocated for youth, a much more difficult sell than saying we shouldn’t increase it. But of the three options, the first is the only rational one. Frankly, when we’re facing the huge budget deficits, I can’t even fathom the logic behind a decision to try to repeal Measure OO, but increase the set-aside anyway.
New Parcel Tax: The final ballot measure being considered on Tuesday, proposed by District 4 Councilmember Jean Quan, would ask voters to approve a new parcel tax (PDF), $46 a year for single family homes and $34.50 per unit in multi-family properties. The tax would generate an estimate $8 million annually to fund park maintenance, landscaping, lighting, and tree services. It would need to be approved by a two-thirds vote.
I don’t even know why they would bother. After two failed attempts to raise the LLAD, an assessment district where the vote structure and weighting is far more favorable to passage prospects than a parcel tax, any Councilmember who seriously thinks that 67% general voting population is going to support this is straight up delusional. Oakland voters didn’t even come close to approving a new parcel tax for police. Why on earth would anyone expect them to do it for trees?
Complicating the issue is the fact that when these items were introduced, it was expected that the State was going to hold a special election on June 2nd. The deadline for the Council to place local measures on that ballot would have been March 6th. However, the recently approved State budget package moved the date of that special election up to May 19th. This means that we are already passed the deadline to place our own measures on the ballot. I have no information whatsoever about why this decision was made, but I imagine it was probably done at the insistence of one of the handful of Republicans who agreed to support the budget, specifically so local governments couldn’t load up the ballot with their own new taxes.
So if the Council decides to approve any of the proposed measures, they would either have to wait until the next election, which does nothing to address today’s budget problems, or they would have to pay for their own special election. With the City already facing ginormous budget deficits, funding a special election for new taxes that probably won’t pass anyway is pretty much like just throwing money in the trash, a stupid thing to do under any circumstances, but especially so when you don’t have any cash to spare.
A City that has the highest paid municipal workforce (PDF) of any large city in the country, and that awarded employees cost of living increases over six years that amounted to 10.1% more than CPI (PDF) has no business whatsoever asking voters to hand over anything else. The Council is in a tough position, no doubt, but they simply have to start learning to make do with what they have. District 5 Councilmember Ignacio De La Fuente has already declared his opposition to any increase in taxes. As for the rest of the Committee, we’ll have to wait until noon tomorrow to find out.