The Utility Modernization Act combines two disparate issues: 1) Asking voters to ratify an annual transfer of money from city-owned Alameda Municipal Power to the general fund, to help stave-off a lawsuit, and 2) update the technologies, such as Voice-over-IP telephone service, that would be subject to the local Utility Users Tax (UUT).
Sarah Henry, public information officer for the City of Alameda, said the combined measure made sense, because, “Alameda began the UUT modernization process last summer. It was not until the city was served with a lawsuit in October [Ginsburg v. City of Alameda] that UUT modernization was combined with the Alameda Municipal Power transfer. There are a few reasons for combining them, 1) both the UUT and the AMP transfer support core city services that are funded from the city’s general fund, and 2) both are utility related and having two separate utility related measures on the ballot could be confusing to voters (especially considering how many other measures will be on the ballot).”
Zachary Ginsburg, of Alameda, in his suit, alleges that the transfer of surpluses from the city-owned utility to the general fund amount to an illegal special tax.
Alameda Mayor Trish Spencer told Action Alameda News earlier this week that she questioned combining the issues into a single ballot measure, but didn’t see support on council for separating them.
Spencer also questioned if the modernization of the utility tax, which is intended to broaden the tax base and return revenue from the tax back to 2007 levels, would boost the Balance Revenue Index, which is used to calculate salary increases for
some employees, including fire and police department personnel.
Salary increases translate to increased pension obligations for the city, Spencer said, because pensions are based on salary. Spencer is worried that boosting UUT revenue will aggravate a long-standing problem the city has had with regards to funding pension obligations.
According to the staff presentation to city council on Tuesday, “it is expected that additional UUT revenue will not escalate BRI [Balance Revenue Index] any more than currently anticipated based on the current revenue projection.”
Previously, city officials have estimated the revenue loss attributable to an out-of-date utility tax to be about $1.5 million annually.
Regardless, Spencer said, voters can decide in November if they want to support the tax.
Overall, city officials are billing the ballot measure as necessary preserve city services such as public safety, street maintenance, recreation and parks, libraries and streetlights.