Portola Valley's Utility Users' Tax

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Voters continue rate reduction in 11/5/13 election.

 

On November 5, 2013, Portola Valley voters opted to continue the 1% reduction of the general purpose portion of the Utility User Tax rate through June 30, 2018 (click here to review 2013 ballot measure and impartial analysis).

Background:

The general purpose UUT of 5.5% was approved by the voters in 1993 and was temporarily decreased to 4.5% by a vote of the people first in 2006 and then again in 2009 (Measure P). This extension of the temporary reduction will sunset on June 30, 2018 unless a new measure is approved by the voters to extend the reduction another four years.

Unlike the 2009 ballot which had three ballot measures relating to the UUT (click here to review 2009 ballot measures), all of which were approved by a majority of citizens, the 2013 ballot had only one measure to extend the temporary reduction through June 30, 2018. In 2009, voters were also asked to approve ballot measures that allowed the Town to raise its appropriations limit (Measures Q and R). The appropriations limit places a cap on the amount of money that cities in California can spend to support operations in any one fiscal year and is intended to keep government spending in-line with inflation. Town staff is required to calculate the appropriations limit annually as part of the budget preparation process. Over the past several years the Town has been very close to its appropriations limit and a voter-approved override was necessary to ensure that the UUT did not cause the Town to exceed its appropriations limit.

Town staff projected the appropriations limit through June 30, 2019 and concluded that a renewal of the appropriations limit override would not be necessary. When coupled with continued raids on local coffers by the State, the appropriations limit has finally reached a level where its growth outpaces the growth of the Town’s revenues that are subject to the appropriations limit. The voter-approved overrides (Measures Q and R) from 2009 are in effect through June 30, 2014 even though the overrides were unnecessary beginning July 1, 2012.

Some voters may have believed that if a majority of voters cast a “No” vote on Measures Q and R in 2009 (the appropriation limit overrides) then the Town would have stopped collection of the UUT. A "no" vote on Measures Q and R would not have stopped collection of the UUT. As stated in the impartial analyses of Measures Q and R in 2009, if either measure did not “receive a favorable vote, the utility user’s tax may not be expended in an amount that would cause the Town to exceed its current appropriations limit.” If, in any two consecutive fiscal years, the town exceeded its appropriations limit then the town would be required to return the amount over the appropriations limit to the taxpayers unless a voter-approved appropriations limit override is in place. The appropriations limit for 2013-14 and projected through 2018-19 will exceed the revenue subject to the appropriations limit by no less than $100,000 each year. As detailed in the Town’s 2013-14 appropriations limit calculations, the revenues subject to the appropriations limit are $115,000 below the appropriations limit.

Why Portola Valley needs the UUT:

The UUT is a critical component of the Town's revenues and allows a number of enhanced services and programs to exist. These programs contribute to the quality of life of all residents and are part of what makes Portola Valley a desirable place to live. Originally implemented in 1985, the general purpose UUT provides approximately $550,000 per year (or 13%) of the Town’s General Fund revenue and supports a number of essential services including augmented law enforcement services and infrastructure improvements such as the annual street resurfacing project. The open space UUT provides approximately $245,000 per year towards a capital reserve fund to pay for the acquisition and preservation of open space in Portola Valley.

Flourish

2013 Ballot Measure

2009 Ballot Measures

  • Measure P - to continue the reduction of general purpose UUT from 5.5% to 4.5% through June 30, 2014 
  • Measure Q - to increase the appropriations limit for the general purpose UUT through June 30, 2014
  • Measure R - to increase the appropriations limit for the open space UUT through June 30, 2014