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Nicholson vows to once again fight city utility tax
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Malma Nicholson — the Manteca resident who set in motion events that prompted the City Council in 2001 to drop the $2.35 a month municipal utility tax on residential users of garbage, sewer and water services — is vowing to fight any plan to resurrect the tax.

Nicholson called pursuing such a tax “a horrible mistake.” She told the Manteca City Council Tuesday night that it would be devastating to people on fixed incomes.

City Manager Steve Pinkerton raised the possibility of the council seeking voter approval of a utility tax on municipal services during a council retreat earlier this month.

The city is facing a projected $11.3 million deficit to start accumulating next fiscal year starting July 1 unless revenue and spending trends examined in December are changed. Since then, Pinkerton said cost savings moves have been implemented or are being explored that could bridge at least half of that budget gap. That doesn’t factor in a possible utility tax.

Pinkerton noted no set tax percentage has been explored to ask voters to consider or even if it will advance to that stage. The council also hasn’t provided any direction to the staff on the utility tax proposal.

Mayor Willie Weatherford indicated he believed voters should be given a choice to decide what level of services they want inferring that’s such a tax could help keep various municipal services at or near the levels that are at today should such a measure pass.

Nicholson seven years ago presented a detailed argument that the tax was illegal based on California Attorney General opinions. The council concurred there were legitimate questions about the validity of the tax placed by a previous council in 1989 but wanted to wait until the city obtained a legal opinion. The council eventually went ahead and abolished the tax without asking Manteca voters to pass judgment on the $2.35 monthly tax.

The utility users tax was adopted on Nov. 20, 1989 as a way to fund storm drainage system improvements and maintenance to alleviate street flooding, particularly in the downtown district.

The issue centered around whether current court rulings involving Propositions 62 and 218 rendered the utility fees invalid since they had never been put to a vote of the electorate.

The city incurred a $2,231,933 debt for what was known as the Storm Drain 5/Shasta Park Capital Improvement Project. The work involved installing larger storm pipes and to convert a large chunk of the originally flat 9.6-acre Shasta Park into deep, twin storm run-off retention basins. A previous City Council bought into the idea of a utility users tax in municipal billings for sewer, water and garbage service. The council made it clear their intent was to commit the taxes raised to the storm system maintenance and operation but there was nothing that legally prevented the money from being used for other purposes.

The original debt is paid off this year.

Section 37100.5 of the Government Code for General Law Cities in California allowed Manteca’s leaders at the time to impose a maximum fee of $2.35 per month for residential utility users and 10 percent of water, sewer and refuse bills for commercial accounts.

The California Attorney General’s office viewed it as legal in 1989 even though Proposition 62 passed in 1986 to close loopholes in Proposition 13 originally passed in 1978 was aimed at the imposing of such a general tax without a vote of the people impacted.

The adoption of Proposition 218 in the early 1990s further re-enforced the language of Proposition 62 and set the stage for court fights that prompted Nicholson to question the legality of the tax.

The users tax adopted in 1989 generated more than $300,000 the first year. That was enough to pay off the annual debt payment that is $226,400 annually including $139,150 in principal, $84,750 in interest and $2,500 in administration fees for the financial institution handling the debt service.

The utility tax in 2001 was the fourth largest source of general fund revenue at $690,000 a year.

The general fund pays for basic government operations such as recreation, parks, streets, administration plus police and fire protection.

New storm system improvements to accommodate growth are paid for upfront by development fees while the general fund pays for the upkeep and improvements to the existing system.