News

Editorial: Yes on Measure L to allow gas utility profits to continue supporting the general fund

Palo Alto Utilities workers restore gas lines after a truck drove over a curb meter manifold on Kipling Avenue in December 2017. Photo by Veronica Weber.

At a time when Palo Alto and other cities are moving toward reducing and possibly eventually eliminating the use of natural gas, a measure seeking voter approval for the city to continue transferring profits from the city-owned gas utility to the general fund might seem like a step in the wrong direction.

If an important long-term goal in addressing climate change and reducing carbon emissions is to phase out the use of natural gas in favor of electricity, why would we want to continue our dependence on profits from a shrinking gas utility to fund $7 million a year in city services and create an incentive for maintaining a robust gas utility?

The simple answer is that this measure doesn't change the city's current practice; it simply allows the continuation of an established important source of revenue for funding city services, for now. We think that makes sense and is in the community's best interest. This is the wrong time to cut off this source cold-turkey.

There is a legitimate difference of opinion about the wisdom of funding city services with transfers from profits earned from the gas utility, as has been happening for decades. The issue is before the voters because of a successful legal challenge to the practice by a Palo Alto resident who argued it was an illegal tax because it violated Proposition 26, passed by voters in 2010, requiring voter approval for such transfers. (Rather than appeal the trial court's decision, the city recently settled the suit by agreeing to refund $17 million to ratepayers.)

If voters reject Measure L, which corrects the legal problem, the city will be unable to continue the practice of transferring gas utility profits to the general fund, resulting in $7 million in cuts to city services.

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Supporters of Measure L, who include the city council, members of the Utilities Advisory Commission and many community leaders, argue that redirecting gas profits to a special dedicated fund to ease the future transition from gas to electric, as some opponents of Measure L have suggested as an alternative, may seem sensible and innovative. But doing so would put more pressure on the city's operating budget at a time when city services have already been cut back due to the loss of revenues due to the pandemic. The further loss of $7 million would only exacerbate the problem.

For the time being, the transfers from the gas utility need to continue, at least until the city develops a full financial plan for how to accomplish the carbon emissions reductions we all hope to achieve through a transition away from natural gas. We urge voters to support Measure L.

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Editorial: Yes on Measure L to allow gas utility profits to continue supporting the general fund

by Palo Alto Weekly editorial board / Palo Alto Weekly

Uploaded: Fri, Oct 14, 2022, 6:53 am
Updated: Tue, Oct 18, 2022, 9:06 am

At a time when Palo Alto and other cities are moving toward reducing and possibly eventually eliminating the use of natural gas, a measure seeking voter approval for the city to continue transferring profits from the city-owned gas utility to the general fund might seem like a step in the wrong direction.

If an important long-term goal in addressing climate change and reducing carbon emissions is to phase out the use of natural gas in favor of electricity, why would we want to continue our dependence on profits from a shrinking gas utility to fund $7 million a year in city services and create an incentive for maintaining a robust gas utility?

The simple answer is that this measure doesn't change the city's current practice; it simply allows the continuation of an established important source of revenue for funding city services, for now. We think that makes sense and is in the community's best interest. This is the wrong time to cut off this source cold-turkey.

There is a legitimate difference of opinion about the wisdom of funding city services with transfers from profits earned from the gas utility, as has been happening for decades. The issue is before the voters because of a successful legal challenge to the practice by a Palo Alto resident who argued it was an illegal tax because it violated Proposition 26, passed by voters in 2010, requiring voter approval for such transfers. (Rather than appeal the trial court's decision, the city recently settled the suit by agreeing to refund $17 million to ratepayers.)

If voters reject Measure L, which corrects the legal problem, the city will be unable to continue the practice of transferring gas utility profits to the general fund, resulting in $7 million in cuts to city services.

Supporters of Measure L, who include the city council, members of the Utilities Advisory Commission and many community leaders, argue that redirecting gas profits to a special dedicated fund to ease the future transition from gas to electric, as some opponents of Measure L have suggested as an alternative, may seem sensible and innovative. But doing so would put more pressure on the city's operating budget at a time when city services have already been cut back due to the loss of revenues due to the pandemic. The further loss of $7 million would only exacerbate the problem.

For the time being, the transfers from the gas utility need to continue, at least until the city develops a full financial plan for how to accomplish the carbon emissions reductions we all hope to achieve through a transition away from natural gas. We urge voters to support Measure L.

Comments

Bystander
Registered user
Another Palo Alto neighborhood
on Oct 14, 2022 at 11:23 am
Bystander, Another Palo Alto neighborhood
Registered user
on Oct 14, 2022 at 11:23 am

Sorry, but I feel strongly against this.

To begin with I can't see why there should be excess profits. Our utility charges contain many taxes that we as customers have no control over. We have to pay for garbage pickup even when we are away for a month so it should be called a tax not a charge for a service we often don't utilize.

Secondly, and more importantly, any surplus (can't see it should be called a profit) should be used in improving our service. We have had far too many power outages in the past year, some 4 outages in 7 days, due to everything from a road accident, to squirrels on wires causing problems to underground equipment. I would suggest that any surplus should be used to improve our power supply, undergrounding lines, and improving service reliability to all these new housing, new EVs, and new gas transfers they want us to switch. Even the solar permits process is in dire need of improvement. We deserve better and any surplus should be used for improvements.


Online Name
Registered user
Embarcadero Oaks/Leland
on Oct 14, 2022 at 12:20 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Oct 14, 2022 at 12:20 pm

I too am strongly against this at a time when the city has proposed spending our money on so many NEW big ticket items: a new guy, a risky $144,000,000 fiber network --0 while failing to provide good, sensible oversight and management of existing projects.

If the money were going to undergrounding the power lines, providing more reliable electrical service, restored library hours and so many other BASICS, I might change ny mind but the city's too addicted to sexy-sounding NEW endeavors to bother with the basics.

Vote NO.


Local Resident
Registered user
Community Center
on Oct 14, 2022 at 1:07 pm
Local Resident, Community Center
Registered user
on Oct 14, 2022 at 1:07 pm

The transfer money is going to fund city services like libraries and all the city services residents enjoy that will need to be cut otherwise. This is why, not only the Mercury News and Palo Alto Weekly endorsed it but also every city council and school board candidate. Vote YES


Online Name
Registered user
Embarcadero Oaks/Leland
on Oct 14, 2022 at 2:10 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Oct 14, 2022 at 2:10 pm

"The transfer money is going to fund city services like libraries and all the city services residents enjoy that will need to be cut otherwise."

@Local Resident, I wish that were the case but CC members and city staff have said repeatedly claim the funds will be used for all sorts of other things like the poorly conceived Junior Museum that failed to meet attendance goals because -- surprise surprise -- not enough people want to pay $18 per visit for what was previously free.

In fact whenever the tax comes up, they threaten to cut all the VALUABLE services like 911 dispatch serviced WHILE ignoring the proposals for NEW big-ticket items like a new city gym, funding of appliance purchases and the infamously risky $144,000,000 fiber network when we don't even have reliable electrical service or an outage reporting system.

I resent being treated like an idiotic cash cow who can't see the contradictions.


resident3
Registered user
Another Palo Alto neighborhood
on Oct 14, 2022 at 4:13 pm
resident3, Another Palo Alto neighborhood
Registered user
on Oct 14, 2022 at 4:13 pm

@Local resident

“This is why, not only the Mercury News and Palo Alto Weekly endorsed it but also every city council and school board candidate. “

The opinion of SJ Mercury News, and the Weekly this year have no credibility for me because they endorsed 2 unqualified Council candidates (an author on “adulting” with no skills or experience to handle things like the financial straits the city is in) and an attorney with no record of working on city issues but who is heavily backed by a string of career politicians. What would school board endorsements offer?

The “why” for these endorsements could be anything and I would take all with a grain of salt.


Aletheia
Registered user
Greenmeadow
on Oct 18, 2022 at 9:55 am
Aletheia, Greenmeadow
Registered user
on Oct 18, 2022 at 9:55 am

Thank you Palo Alto Online! You always make it so easy for me to vote. I simply vote the opposite of all your recommendations because you are consistently wrong.


ALB
Registered user
College Terrace
on Oct 18, 2022 at 10:32 am
ALB, College Terrace
Registered user
on Oct 18, 2022 at 10:32 am

I agree that the PA Weekly misjudged a candidate and endorsed this person who referred to another candidate for CC as embracing Jim Crow. It is true that the endorsement was before JLH’s accusatory remark. JLH does not have the maturity and temperament IMO to work with fellow CC members who might not agree with her should she be elected. See Monday’s column by Dave Price in The Daily Post.

Re: Measure L we need funding for our libraries etc. Here the PA Weekly’s editorial board got it right.


Online Name
Registered user
Embarcadero Oaks/Leland
on Oct 18, 2022 at 11:31 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Oct 18, 2022 at 11:31 am

While I disagree with ALB and the Weekly on Measure L, I'll echo ALB's point that the Weekly misjudged the candidate who indulges herself in repeated gratuitous insults not limited to other candidates but also against her neighbors as racist and PASZ "as the loudest voice in the room" while ignoring her own deep-pocketed backers like the YIMBY actions groups who've long claimed that PASZ was bigger and more formidable that the Chamber of Commerce -- one of the biggest lobbyists in PA and in the whole country.

Do we and the Weekly want such a divisive candidate who can't keep her facts straight? I think not. I hope not.


Joel
Registered user
Barron Park
on Oct 18, 2022 at 11:53 am
Joel, Barron Park
Registered user
on Oct 18, 2022 at 11:53 am

I have been against the process of transferring tax money from one unit to a general unit. Why doesn't the city just ask for a tax that they want to increase to the general fund? Let's just ask for more taxes for the libraries, Junior museum, etc. I vote no.


Larry
Registered user
Downtown North
on Oct 18, 2022 at 12:04 pm
Larry, Downtown North
Registered user
on Oct 18, 2022 at 12:04 pm

I am also strongly against measure L.

I believe that for the City to use its monopoly position to profit off an essential commodity like natural gas is morally reprehensible. Those profits would be best returned to the rate payers, particularly low income payers whose utility bills are a significant financial burden. Natural gas is the most affordable energy source for those who don't have the means to switch to high-end heat pumps. Profiting from those people is just wrong.

And of course I would never trust the City not to inch up those profits when they find themselves short of funding for one of their pet projects.

Besides, isn't the City trying to sunset natural gas use? Why would the City want to make itself reliant on a revenue stream that its own policies are actively trying to terminate?


staying home
Registered user
Crescent Park
on Oct 18, 2022 at 12:22 pm
staying home, Crescent Park
Registered user
on Oct 18, 2022 at 12:22 pm

Opposed to measure L. Disconnecting the source of the money (utility fees) to how they are used (general fund) is intentionally confusing to the utility customer. It enables misuse and funding of pet projects. City revenue and expenses need to be linked to ensure accountability. This is the intent of the Prop 26. If the library's need funding, we vote on bond measure to fund them. If the schools need money, we vote on property taxes to fund them.

Using utility revenue to pay for upgrading our energy distribution and grid is the right thing. Put that on the ballot.


cmarg
Registered user
Palo Alto High School
on Oct 18, 2022 at 3:25 pm
cmarg, Palo Alto High School
Registered user
on Oct 18, 2022 at 3:25 pm

I am strongly apposed to Measure L. Why not use the money for Climate Control related projects?


Consider Your Options.
Registered user
Another Palo Alto neighborhood
on Oct 18, 2022 at 3:29 pm
Consider Your Options. , Another Palo Alto neighborhood
Registered user
on Oct 18, 2022 at 3:29 pm

I'm voting YES on Measure L because I read the entire budget, and it is crystal clear to me that if we don't pass it, we will have to live with serious deep budget cuts that will impact every one of us. Measure L continues what I consider to be a thoughtful (formerly voter approved) practice. -- I'm gratefully still paying less than PG&E customers.


Annette
Registered user
College Terrace
on Oct 20, 2022 at 11:07 am
Annette, College Terrace
Registered user
on Oct 20, 2022 at 11:07 am

The lawsuit established that the transfer is a tax. How often are taxes repealed? I will have to re-read the measure to ascertain if there’s an end date, but I think that absent an expiry date, this transfer/tax will outlive many of us. Can the City assure that coveted services, like our library system, will be funded as long?


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