Utility tax going on November ballot Utility tax going on November ballot (July 10, 2002)

Second tax, for hotels, could help fund nonprofit programs

by Don Kazak

East Palo Alto voters will go to the polls in November to decide if the city can keep collecting some $1 million a year in a utility-users tax.

The tax has been collected but not spent since a 2001 state Supreme Court ruling required voter approval -- not just City Council approval -- for such taxes.

The East Palo Alto City Council directed its staff last week to come back with ballot language July 16.

The city has a 5 percent tax on utility use, which translates into $998,000 a year in revenue. The city has been "escrowing" that money since the 2001 court decision. "We've been collecting the money but not spending it," said Mayor Duane Bay.

The City Council also agreed to put a sunset provision on the tax, meaning it will stop at the end of 2006. The tax will be needed until revenue streams from the planned IKEA store and Four Seasons Hotel kick in, he added.

Simple majority approval will be needed to approve the tax on Nov. 5.

City voters will also have a second tax measure on the ballot that day to agree to dedicate 10 percent of the city's hotel-tax revenue to programs for families and children, and 10 percent to an affordable-housing fund.

City Councilwoman Sharifa Wilson said that the plan is something she has wanted to do ever since she first was elected to the council 12 years ago.

"We've never been a position to this before, to help nonprofits," Wilson said. "This is an opportune time to make a commitment."

It's not necessary to win voter approval for the action, but Wilson said the council wants to place it on he ballot "to institutionalize it" so it can't be easily changed by a future council. "It sends a message to the kids that the community cares about them," Wilson added.

The city's hotel tax is expected to generate some $2 million a year in revenue to the city. That means about $200,000 a year will be collected for family and children's programs, and $200,000 will go to an already existing fund for affordable housing projects.

The City Council is expected to finalize language on both ballot measures at its July 16 meeting.

There are also two Council seats open Nov. 5. Both Wilson and Councilwoman Myrtle Walker are up for reelection. There is no word yet on whether either of them will seek another term. Wilson has been on the council since 1990, Walker since 1993.

E-mail Don Kazak at dkazak@paweekly.com