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Source of income may be secured by promise
Governor pledges to protect cities' vehicle licensing fees
By GEORGE MOORE
Cupertino can loosen its budget's belt a notch after a promise by Gov. Gray Davis, and could see further relief if and when the utility tax initiative passes during a special municipal election March 5.
City government officials from all across the state attended the League of California Cities annual conference in Sacramento Dec. 18 to 20. Gov. Davis promised to protect cities' share of vehicle license fees, which can be an essential source to many city general fund revenues. During Davis' keynote speech Dec. 19, he vowed not to balance the budget on the backs of local government.
Mayor Richard Lowenthal said the loss of these funds would have a significant impact on city projects such as the new library and sports center. He said revenue from the license fees pay for law enforcement, fire and other essential services, and if reduced, Cupertino could lose almost $3 million.
Rick Kitson, public information officer for Cupertino, said there was already an existing state pledge to protect the funds.
"As long as [Davis] keeps this pledge, we should be in relatively good shape," Kitson said.
In 1999, California reduced the licensing fee paid by motorists, but promised local governments that it would use state funds to make up the difference, Kitson said. Until that time, Kitson said, vehicle license fees went exclusively to cities and counties to fund local programs. But local officials have been worried that the pledge would be broken because of current deficit projections for California.
A municipal election on March 5 will determine whether the existing utility tax should be extended another 15 years. The initiative is scheduled to be retired in 2015, and if passed, would extend it to 2030.
Cupertino voters approved the enactment of the ordinance Nov. 6, 1990, which meant residents would pay a 2.4 percent excise tax for electricity, gas and telephone services, according to records from the city clerk's office. The purpose of the tax was to enable the city, through its general fund, to provide services and finance project developments.
"If the utility tax extension does not pass, it will not only affect projects like the new library, but also our general fund," Kitson said.
An impartial analysis from the city clerk's office stated the measure would not increase the current utility user's tax, and the senior citizen exemption would be maintained. The analysis also stated that the general fund would be unable to finance many of the new projects the public supports without additional sources of revenue.
David Knapp, city manager of Cupertino, said the utility tax represents a substantial amount of revenue, which provides the city a lot of flexibility to do things for its citizens. Knapp said the extension would reflect the original ordinance in 1990, which means its revenue would have no connection with any specific project and would be slated for general use. He said because the revenue created would not be project-specific, it only requires 50 percent of the vote; otherwise two-thirds of the vote would be needed.
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Cupertino, California Since 1947
