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More ways to get taxes from us

Original post made by Diana Diamond, Palo Alto Online blogger, on Apr 16, 2008

My father-in-law used to say, "We don't have to worry about the government running out of money. It will always find a way to get more taxes from us."

And so it is in Palo Alto.

It's amazing how our city councils and city managers over the years have found so many creative ways to get money from us for the city's general fund, now a mere $139 million a year.

For example, those library fines we pay for overdue books? They don't go to the library — the library turns all of them over to the general fund. I asked a Los Altos librarian what that library does with overdue fines.

"We use the money to buy more books," she replied. Not in Palo Alto.

And the $30 parking fines we pay when we park more than two hours on downtown streets? They also go to the general fund. In fact, Palo Alto City Manager Frank Benest told the council recently that he is thinking of hiring another parking-enforcement officer who would "bring in $167,000 a year in net recovery."

I learned that the water division of our Utilities Department "transfers" money to the general fund each year, and the fixed amount it transfers goes up by 3 percent each year, every year. This year it amounted to $2.8 million; next year it will be 3 percent higher — $2.88 million.

"The transfer is fixed, and not related to profit, sales or any other metric," Dexter Dawes, a member of the city's Utilities Advisory Commission, explained. Dawes called this transfer the city's "dividend." I would say it's another hidden tax.

Need I point out that all this transfer money comes from us, in the bills we pay each month for water? Our water rates now are higher than any of our neighboring communities.

The city, as you know, is also charging rent to its own Utilities Department for the land it uses. For example, Stanford charges the city $1 a year for the 950 Hansen Ave. site; the city charges Utilities $153,669 a year in rent for the same parcel. Yet the way I look at it, the city's pays $1 to Stanford and charges153,000 percent more rent. And of course all these utility rental costs ($5.4 million a year) are paid by us in our monthly utility bills.

Benest and the council are now trying to find ways to come up with $5.2 million/year for the next 30 years or so to pay for a new $81 million public safety building (plus interest). Benest has found on paper all but $1 million of the payment, but he's having trouble.

"The difficult part is carving out the $1 million. ... This is very difficult, ... very difficult for an organization. ... We are going to be struggling," he told the council.

The $1 million represents .7 percent of the general fund.

Instead of going to the voters to approve a bond for the 50,000-square-foot public-safety building (current space is approximately 19,000 square feet), the council will issue "certificates of participation" to investors. It's almost the same as a bond, except voter approval is not required. The council knew that a survey found not enough voters wanted the new building. The 57 percent majority approval fell significantly short of the two-thirds support required by law, but that was when it was estimated at $61 million.

But now we — the residents and the businesses — will have to pay for it, or some of it. Among Benest's proposals to the council are:

* A business-license tax.

* A 50-50 cost sharing between property owners and the city for non-emergency sidewalk repairs, including curb cuts at corners.

* A "public-safety development impact fee" for new construction.

* Cost recovery for code enforcement — property owners with violations would pay a portion of the cost of the enforcement program.

* An increase in park field usage fees — from $5 a season to an hourly charge.

* A registry fee for landlords.

* A "basement fee" for new and remodeled homes.

* Eliminating leaf-blower- complaints.

* An increase in fees for emergency responses by paramedics.

Also under consideration is a monthly charge on telephone bills for 911 emergency calls, depending on whether the courts rule that such a fee is legal.

No council decision has been made yet on what fees will be adopted.

Some doubt is beginning to creep into council members' minds, which is good.

Pat Burt called for more efficient use of space and wondered if the police building really needed to have a 2,125-square-foot multipurpose room that would be used for training and sporadic community meetings. And Yahweh Yeh asked if the staff is looking at any cost savings, including revamping some of the design plans.

I think a police building that is two-and-a-half times bigger than the present facility is a big expansion, especially when no staff expansion is planned so far. Cutbacks could lead to more community acceptance, since apparently people agree the current building is crowded.

I also think it's time for the entire council to study the total budget in detail. The traditional practice is for the council's finance committee to hear from each department what is to be added and subtracted, but the bulk of the budget is not discussed. In fact Benest was asking the council if it even needed a separate study session for the upcoming year's budget, since he would be presenting a "status quo budget."

A thorough top-to-bottom analysis of the budget by the council has not occurred for decades. Maybe it's time for one.

Comments (14)

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Posted by New to PA
a resident of Barron Park
on Apr 16, 2008 at 9:38 pm

At least some of these fees seem reasonable to me. I would be glad if there were a closer connection between the city's cost and the beneficiary of the services.

I have no problem with greater enforcement of parking, even if it does earn the city money.

Have you toured the police department? It is awful.

We have underinvested in myriad community resources. It is a national disgrace. PA should lead in this area. Particularly in schools, safety and the library.

Like this comment
Posted by Fireman
a resident of another community
on Apr 17, 2008 at 7:29 am

Then try and stop them? Do a little more than just write and talk about it.

Like this comment
Posted by a
a resident of Adobe-Meadow
on Apr 17, 2008 at 8:35 am

Good journalism here. This is something I didn't know about. If money isn't being used for what we think it's being used for, then where is the money going? What is the city spending money on?

Like this comment
Posted by Resident
a resident of Crescent Park
on Apr 17, 2008 at 10:11 am

We, as residents of Palo Alto, intuitively knew that the City was not providing us with the best prices in the case of city utilities. We just couldn't put our finger on why we knew this to be the case other than ridiculous monthly utility bills? Now we know. Thank you Dianna Diamond for the information and shame on City Council for engaging in this type of activity which is aimed at taking advantage of the residents of Palo Alto for necessary services - our utilities.

Remember this as the City Council comes to you and asks you to give them more money so that they can build a posh new police station. Don't fall for it again. Vote no on the "public safety building" bond. If the Council decides to forego the bond because of voter dislike of the project and instead goes forward with their tentative plan to go around the voters and subsequently squeeze money out of the residents by imposing more fees and taxes on us, simply show up at the council meetings and/or write emails/letters to City Council to let them know what you think about their actions. Demand more of this City Council.

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Posted by Bob
a resident of Crescent Park
on Apr 17, 2008 at 11:07 am

Maybe it is time for the aroused and angry peasants to march on the City Hall Bastille with pitchforks and demand justice or off with their heads - like a recall. The budget must be analyzed line item by line item from the bottom up by experts not connected with city hall. The way it is now, the department heads make up the budgets. That's like the foxes guarding the hen house. The city wants 'civic engagement'. What they want is nice little friendly discussions from happy residents who haven't a clue as to what is going. The rest will be considered hostile and ignored.

Thank you Diane. Keep up the good work. RUN FOR COUNCIL

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Posted by Parent
a resident of Another Palo Alto neighborhood
on Apr 17, 2008 at 5:19 pm

If the City ups the charge of renting Park fields from $5 to an hourly charge, does that mean we will get a rebate when they close the fields because of a rain out, particularly if the rain out was a sprinkle yesterday and today we have 80+ temps?

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Apr 17, 2008 at 6:53 pm

I believe that is the first time I have ever heard/seen a woman cite her father-in-law's wisdom. Put a little extra on her plate tonight, Mr. Diamond.

Like this comment
Posted by Adult
a resident of Triple El
on Apr 17, 2008 at 11:40 pm

Buy more books? No, what the libraries want is to do more children's entertainment programs. Adults are in second place.

Like this comment
Posted by Fireman
a resident of another community
on Apr 18, 2008 at 10:06 am


Please listen... The Ex fire Chief... Big screw up in So CAl. And the Union President teamed up to ram a program down the throats of the PARAMEDICS. The Chief ramming the Union President spreading the department open. HIDING THE PROGRAM WITH IN A MUCH SMALLER PROGRAM, of buying 2 Fire Engines.
Never took the time to get the program approved by the City Council,firefighters or citizens.
Took years to do this, spent millions on this program.
NEVER GETTING IT APPROVED OR FUNDED... TOOK the money from other areas.
Then this program FAILED, TOTALLY FAILED...
The EQUIPMENT that was custom built by the Fire chief and his followers{NOT leaders} at a huge cost was unsafe and unworkable. A million dollar waste.
The personnel/staffing for this program failed. This was a change of working conditions for us the Paramedics. The chief was just going to say tough, the union president who would do nothing for years, would then say sorry I can not do anything.
Troops railled. told union president get real. held his hand so he would not let the chief get his gift/payback.

Now how do they get away with this? They used all kinds of money/funding that the citizens knwew nothing about.
Failed, wasted millions and thousands of hour of employee work.. Then since no one knew {THE PUBLIC} about this ISSUE and NO one will do anything{COUNCIL/PUBLIC/]
NO one is acountable here in. Just scapegoats bred given an employee ID#... and sold down the road.
I too would like to ask?? How does this work???? HOW can they do that?

Like this comment
Posted by Common Sense Mom
a resident of Another Palo Alto neighborhood
on Apr 18, 2008 at 3:37 pm

Silly me, I thought the purpose of fines is to discourage/promote certain kinds of behavior, e.g., not littering or loitering, parking only in legal places, returning books to the library on time so others can use them. When municipalities make fines a major source of revenue, there is too much temptation for abuse - ordinary people end up fined even when they have not or have tried not to break any rules. Even if the city is not purposefully going after people to shake them down for fines, it has no incentive to rectify unfairnesses because the fines are a source of revenue. The unrecognized cost is the ongoing bad will this engenders between citizens and the city.

We had so much trouble as a family using the PA libraries without running up huge fines, we gave up on PA libraries and go to the county library at Los Altos (and send our "friends" money there every year). The lending policies are so much friendlier, for example, there is a grace period on children's materials.

In PA, children's DVD's, for example can go out for only 1 week, and if someone reserves it, you have to make an unplanned trip to the library that week, sometimes within a day's time of notice. Los Altos lets families check out DVD's for 3 weeks, and there is a grace period even if someone reserves it, so you can return it without having to make a special trip.

When I suggested to the former library head, Paula Simpson, that PA libraries should have a friendlier lending policy like LA, she said PA couldn't do that, because the money from fines didn't go to the libraries, it went to the general fund. The city sees the fines as a source of revenue ($60k/year) and thus is loathe to change. So, rather than thinking about libraries in terms of community outreach and doing what is best for families/patrons, with fines structured so that the primary purpose of having patrons return books in a timely (and green) way is served, the incentive is for the city to maximize fines. The bad will this engenders is IMO not nearly offset by the money collected.

Welcome to Fine-opolis. I have found the same thinking in this town with parking fines, false alarm fines, etc. It's one of the most unpleasant aspects of living in Palo Alto. Because hidden fees and gotcha fines are the norm in so many industries these days, the city engenders even more bad will for these by association. Small wonder that our libraries and public safety buildings are crumbling. Asking the public for money is an iffy proposition under the best of circumstances, nevermind when the city's policies engender so much bad will on an ongoing basis for such a relatively small return. I don't think city officials really appreciate the true toll of the daily loss of good will from regular levying of overly heavy-handed fines.

There are ways to use the fines to discourage/promote the targeted behaviors AND preserve public goodwill, but generally that means less money will be collected overall. But it doesn't have to be so.

An example of how to do it right is the alarm permit fee. Those who have private alarm systems have to get a permit that costs $50 or $60/year. The money collected goes to offset the costs of additional manpower needed to answer false alarms (which are further discouraged by fines, though there are still too many), and if you look at the city's calculation, it does do that. All municipalities struggle with getting the word out to get compliance with alarm system permit fees, though. The solution here is a clever one: If an alarm goes off and the police respond, but the homeowner does not have a permit, the police leave a notice for a $250 fine for not having a permit - which is WAIVED if people get the (first time) permit within a specified, short period of time. Very clever way to increase compliance without engendering bad will. (I think the false alarm fine structure could do with some more of that same clever thinking - it currently doesn't do enough to reduce false alarms without engendering bad will among people who try to comply, but that's another post for another day.)

At any rate, I know of many families who also turned to the Los Altos library system for the same reasons - everyone of whom will think twice about approving a property tax to improve a library system they don't use. A system they don't feel WELCOME using in part because of heavy-handed fees and fines.

Engendering goodwill makes Palo Alto a nicer, more desirable place to live. Sure, we should enforce parking laws when it comes to the selfish scoff-laws among us. I'm not saying we shouldn't have library fines at all, hardly anyone would return the books. But we shouldn't encourage a lax attitude about, for example, poorly marked parking lots because the extra fines bring in revenue. The city shouldn't be looking at library fines as a source of revenue.

Again, the city counts the beans, while the loss of good will is an incalculable cost.

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Posted by Diane Jennings, Library Director
a resident of Old Palo Alto
on Apr 21, 2008 at 11:25 pm

The fact that fines on overdue library items go into the City’s general fund instead of directly into the budget of the Library Department should not cause concern. Quite the opposite - we should be troubled if library expenditures were heavily dependent on collecting overdue fines.

The amount collected – around $130,000 per year – equates to only 2% of the Library’s budget. The City Council has never expected library fines to be a major source of revenue and years ago determined that the Library should not be a cost recovery operation. The Library’s fine structure would need to be increased significantly beyond the current 25 cents per day late charge if the policy was different.

While the small amount collected annually in library fines does help support library operations, the principal reason for overdue fines is to encourage people to return items so they are available for others to use. The Library offers several ways to ensure that fines are not levied in a “gotcha” fashion. Palo Alto was the first library in the county to establish the practice of sending email notices two days before items are due, so people can return or renew them to avoid getting a fine. Options to renew 24/7 either online or by telephone eliminate the need to come to a library to renew. If another person has placed a hold on the item, it seems fair to expect the current borrower to return it on time or pay the small fine for a late return.

Loan policies vary across library systems, and what works for one borrower may not be as important for another. While it is understandable why many families would appreciate Santa Clara County Library’s policy of not charging late fines on most children’s materials, other people may prefer Palo Alto’s 4 week loan period on books over the County system’s 3 week period. People who borrow a lot of feature DVDs probably prefer Palo Alto’s overdue charge of 25 cents per day over the County’s $1.00 per day.

Overall, Palo Alto City Library’s fine structure is in line with that of other libraries in our region.

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Posted by Knows Where to Start
a resident of Midtown
on Apr 22, 2008 at 10:47 am

Kudos again to Diana. I don't always, or even often, agree with her but boy she sure does get the community talking. Here's my two cents on this one:

What Palo Alto clearly needs is an OUTSIDE audit by a municipal efficiency expert or expert teams. It must be outside, and full and complete. The reason: just human nature. Our current city employees will not reform, let alone reveal, the areas of waste or outdated expenditure patterns. What's more, the defining characteristic of our Council in recent decades (Decades!) is that it is populated by people who want to be popular and not offend anyone. We've got at least four or five Council members who are angling to run for higher office (hence the competition to see who can be more associated with all things Green and environmental). Years ago we had a different type of Council -- some climbers, yes, but also people like Fred Eyerly (sp?) and John Bhears (sp?) and Mike Cobb and Anne Witherspoon and others who were not afraid to say something unpopular like "why should we pay for that?" We've lost those folks and they have not been replaced by anyone with that same determination to get the best value for our tax dollars. So we need outside eyes on this problem, not staff, not Council, but someone with expertise who can come in and benchmark the key issues, including managerial span of control, time and efficiency studies in delivering services and six sigma continuous improvement and cost reduction strategies. I hate to be so blunt, but pigs never push themselves away from the trough. Diana, keep it up (but please stop bashing the unions. unions are everywhere. the problem is with our leadership).

Like this comment
Posted by Connie
a resident of Old Palo Alto
on Apr 24, 2008 at 9:04 pm

We don't go to Palo Alto libraries, instead we go to Menlo Park or Los Altos for their good services. Unlike other cities link together in their library resouces within the Santa Clara County, our Palo Alto is on its own.
When we ask for a book which is not available in Menlo Park or Los Altos, their librarians will check on computer and request a transfer if that book is found in other libraries.
Why wouldn't Palo Alto participate in this joint efforts and why should we give money to libraries that we find very little use of?

Like this comment
Posted by Common Sense Mom
a resident of Another Palo Alto neighborhood
on Apr 28, 2008 at 3:08 am

Diane Jennings,
Back when Palo Alto was still sending out email notices AFTER the due date - for some incomprehensible justification, and believe me, there was a justification - I lobbied Paula Simpson pretty hard about sending out the notices BEFORE, because I was getting unreasonable fines ONLY at Palo Alto, not Mtn View, not Los Altos. Who knows whether the lobbying helped, but for awhile there, her brick-wall response was just like what you have offered there, reasons why the status quo is so much better and no feedback or change was needed.

I'm not, by the way, criticizing your work, only suggesting that PA still doesn't seem to be a place where the libraries (and...) listen very well... It's still Fine-opolis to this careful citizen. (And I otherwise like it here, and want to make it better.) Sometimes it seems like my input (for various reasons) to Mtn View schools, planning department, city counsel, libraries, etc., AS A PALO ALTO CITIZEN, have been more well-received than my input here at home. Not in all situations, but most.

Sorry, but further commenting on this topic has been closed.

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