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Alameda Sales Tax Increase Proposal is a Rush to Folly

A letter from Action Alameda News publisher David Howard.

Alameda City Manager John Russo’s proposal to increase the sales tax rate in Alameda to 9.25 percent won’t solve the current general fund deficit problem, and is not likely to raise the money to pay for all his promises in a meaningful time frame. What’s worse, he’s rushed it to the City Council agenda this week with barely a week for the taxpayers and media to scrutinize it.

Deputy City Manager Alex Nguyen defended his boss’s rush to place the tax increase proposal before council with just one week’s notice, pointing to a March 9th deadline to file with the Registrar of Voters any council resolution to put the tax on the ballot in June, as Mr. Russo wants to do.

But that’s no excuse – Russo’s tax won’t alleviate the near-term general fund deficit, so why not allow residents and local businesses, who will feel the pain of a higher sale tax, have more time to review what he’s proposing? And in any event, the City has known since early last year that it has budget challenges. Mr. Russo has had several months to come up with a workable proposal and air it with council and Alameda residents.

Further, Russo bypassed the Alameda Sunshine Ordinance 12 day notice requirement for council agenda items by putting his tax proposal on a city council special meeting agenda, which requires only seven days notice. This from a man who preached “openness” when he was hired by a council majority that included members such as Lena Tam, who also preaches “openeness” and “sunshine.” In my exchanges with him, Alex Nguyen dismissed any concerns about Russo violating the spirit of the sunshine ordinance, if not the letter.

The short notice for this tax proposal is particularly troubling from another perspective, because the City of Alameda normally avails itself of the full ten days that state law allows it to respond to public records requests. I have asked the City of Alameda to provide supporting documentation for Russo’s tax proposal, but I don’t expect to see it, because I suspect it doesn’t exist, and, anyway, the special meeting will take place before the ten day window expires. By the time I receive whatever documentation the city can provide, council will have already considered the item. So much for openness.

And it’s no wonder that Russo doesn’t want to give the people time to look too closely at his proposal. He’s asking a tax expected to generate about $1.8 million per year to pay for an improbably long list of goodies, and except for the Carnegie Library renovation, he has not provided cost schedules or estimates of what it will cost for his promises. (Such estimates are the subject of my public records request to the city, unlikely to be fulfilled before the item is considered by council. Unlikely to be filled at all, for that matter, because I suspect the estimates do not exist.)

Mr. Russo’s Long List of Promises

Here’s the list of Mr. Russo’s promises, the majority of which are not backed by cost studies or estimates:

  • A new public safety Emergency Operations Center.
  • A new Fire Station #3 to replace the seismically unsafe station on Grand Street.
  • A standard public safety training facility for joint use by police and fire.
  • Upgrades to Fire Stations 1, 2 and 4.
  • A new fleet of police vehicles.
  • Replacement of antiquated fire engines, trucks, ambulances and tow vehicles.
  • Upgrades and renovations to the Carnegie Library.
  • A new 50 meter swimming pool and locker rooms to be located at an as-yet unidentified site in Alameda.

It’s a perfect smorgasbord designed to provide a little something for everyone, to get them to vote for his tax increase, so long as they don’t look too closely behind the curtains. Russo admits that the city can’t predict if or when the public-private partnership he wants to build the new swimming pool will ever materialize, and that the city can’t, “determine a specific location for such a swim center.” Yet, he somehow wants to set aside $5 million for his proposed tax revenue to build it, with no cost estimate, and no target date to start construction.

Long-time political watchers in Alameda have seen this game before, particularly with the Alameda Unified School District. Promise everything, more than can ever be paid for with the new tax, and then cherry pick which items get funded after pulling the wool over voters’ (or teachers’) eyes.

Russo proposes immediately issuing $15 million in bonds against future sales tax revenue to pay for the new Emergency Operations Center, Fire Station #3, the pool, the Carnegie Library renovations, and to replace the police department’s fleet of patrol vehicles, but does not provide cost estimates for anything but the Carnegie renovations. How can he, or the public, or the local businesses that may be hurt by the tax increase, know that $15 million is enough?

All the cost estimates that don’t yet exist need to be indexed for inflation as well, because not all projects can be completed concurrently, or adequately managed concurrently by city staff, and half of the proposed tax revenue would be available only starting 15 years from now, in the second half of the 30 year life of the tax.

One needs only to take a look at the photographs of Mr. Russo, before he became Alameda’s City Manager, whooping it up on election night 2010 with Councilmembers Lena Tam, Rob Bonta, Mayor Marie Gilmore, and representatives from the Alameda firefighters’ union. Which items do you think will get funded first by Mr. Russo with his new tax, and which do you think will continually be pushed to the outer years? (Hint: Don’t hold your breath for a new swimming pool.)

Target Shoppers Targeted

To cap it, Russo wants to “thank” Target for their recently-approved new store in Alameda by counting on its customers to “increase the yield from the tax.” The City of Alameda has long tried to justify developments in Alameda on the basis of a need for retail stores to shrink the “retail leakage.” That is, money spent by Alameda residents outside of Alameda due to lack of stores here.

With only San Leandro (9 percent) and Union City (9.25 percent) in Alameda County, per Mr. Russo’s report, having comparable sales tax rates, Mr. Russo’s proposal is likely to aggravate the leakage problem as people look to save money by shopping in Oakland or Emeryville, or just about anywhere else, rather than Alameda.

With the vast majority of Alameda residents working outside of Alameda, it should be easy for them to avoid shopping here. In any event, the debate over placing Target at the South Shore Shopping Center revealed that Target was counting largely on Oakland shoppers to visit the store. Why should Oakland shoppers come to the Alameda store when they could pay less tax at the Emeryville store?

Will the tax hurt the returns of the new Alameda Target store? Only time will tell. (Both Target and the Alameda Landing master developer Catellus, doubtless reluctant to publicly question city officials, declined to comment on Mr. Russo’s proposal.)

Proposal is Foul

I call “foul” on John Russo’s rush to have his personal tax agenda item rushed to Alameda City Council, and I call on Alameda City Council to defer consideration of the matter until the public and local businesses can learn more, and Mr. Russo can produce more documentation to support his promises.

I’ve also asked City Hall to provide whatever supporting documents they can by March 6th, with the rest to follow as they become available. I’m expecting very little.

5 comments to Alameda Sales Tax Increase Proposal is a Rush to Folly

  • Liz

    Unbelievable. And, no, not another penny until they can learn to manage the budget they have. They must think we are idiots. This stinks of payola and drips with the corruption for which Alameda is – deservedly- famous.

  • cg

    I usually never am asked to participate in these polls, but I did spend 25 minutes on the phone w/EMC when they called one Sunday afternoon. It seemed to me most if not all questions were: would I vote for different kinds of taxes to fix potholes. Don’t remember any mention of fire trucks, police cars, a pool, or the Carnegie! So how does the EMC survey have anything to do with the list above? If not, why didn’t Russo have EMC survey taxpayers ABOUT the items listed above, before proposing a new tax?

  • The City was reportedly polling residents about a new tax structure to close the general fund deficit. This sales tax increase is John Russo’s idea, separate from that. We may yet see another special tax to close the GF deficit.

  • Maria

    No, no, no! How can they think of subsidizing the Alameda Museum after privatizing the Animal Shelter?
    That is really unfair. The Alameda Museum has a massive warehouse full of donations which is collecting dust. They should hold a sale. The measure is like an ill-thought-out enchilada. More idiocy from our leaders.

  • Don’t worry Maria. I doubt they have any intention of actually funding the Library renovation, despite Jack Russo’s promises.