By Clarence Cromwell
The Pacific Legal Foundation is threatening to sue the city of Saratoga if the city doesn't stop collecting its general utility tax by Feb. 10 and let residents vote on whether to pay it.
City Attorney Michael Riback maintains that the tax requires no vote. But the City Council has not yet decided whether to put it on the ballot.
The utility-users' tax is a 3.5 percent tariff on residents' Pacific Gas & Electric Co. bills. It was first adopted in April 1985 and was scheduled to expire after five years. But the City Council approved five-year extensions in 1990 and 1995. It will expire on July 1, 2000, unless renewed.
In a Jan. 11 letter to the City Council, PLF attorney Deborah La Fetra argued that the tax requires a majority public vote, under Proposition 62. Proposition 62 requires a majority vote for general taxes and a two-thirds vote of the public for special taxes, those with a specified use. The proposition was passed in 1986 to sew up loopholes in Proposition 13, the law requiring a two-thirds majority vote to charge a new tax.
La Fetra gave the city 30 days to stop collecting the tax and put the issue on the ballot or face a lawsuit.
Riback said the city doesn't have to put the tax on the ballot because it was first levied before the passage of Proposition 62.
Anthony Caso, the foundation's director of litigation, disputed that interpretation of the law, saying the council should have given citizens a vote, rather than extending the utility tax itself.
"That would be the same as imposing a new tax," Caso said. "They had to take legislative action. When they did that, it was like a new tax."
He accused the council of going against voters' wishes in the matter.
"It's about allowing voters to have a voice," Caso said. "If they don't have the support of voters, they ought not to be doing it in the first place."
Caso said a case against the city of Saratoga would set an example for other cities.
"We hope to bring some cases against various cities so that other cities will take heed that it applies to them," Caso said.
Saratoga was the only city to receive a warning letter from the foundation. The city is first on the foundation's list, because officials previously have said they have no plans to put the tax to a vote, Caso said.
If voters scrap the utility-users' tax, the city could lose 18 percent of the city's budgeted funds next year, about $1.3 million, City Manager Harry Peacock stated in a Jan. 17 report to the council. Only $807,931 of that would come directly from the tax. The city expects to use part of the utility-tax money to acquire an additional $541,000 in matching federal funds for road maintenance.
Taking away the utility-tax revenue would also unbalance the budget.
PLF decided to take on the city after Saratogans Jeffrey Schwartz and Don Whetstone notified the foundation that the tax was collected but hadn't been voted on.
Saratoga resident Lou Thorpe, who asked the council last January to put the utility tax on the ballot, did so because he favors lower taxes. He said he still wants to see the issue on a ballot.
"I think this thing is pervasive," Thorpe said. "People are taxed to the hilt. When they establish an assessment district like that, it should be left up to the people as to whether it's instituted."
The California Supreme Court upheld Proposition 62 in a 1995 case: Santa Clara County Local Transportation Authority v. Guardino. The court ruled that the special tax charged by the county transportation district must be subject to a vote of the electorate and that Proposition 62 is constitutional.
This article appeared in the Saratoga News, January 31, 1996.
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