Manteca’s can kicking may be catching up with it.
For years city managers warned the city’s storm system — currently maintained by Manteca’s general fund — would eventually need a large infusion of money for deferred maintenance.
They would highlight the need in annual budget cover letters for years after the City Council in 2001 dropped a monthly $2.35 utility tax on every municipal sewer-water-solid waste account that generated $690,000 annually 16 years ago.
Referencing the storm drain system needs kept getting less and less attention. But during the midyear budget review last month, Finance Director Suzanne Mallory placed it on a list of long-term maintenance and improvement projects that are either not funded, have no funding source, or have substantial issues with not having enough money set aside to pay for them.
Besides the storm drain system it includes street maintenance, park irrigation well replacement, aging heating and air conditioning systems in city buildings, infrastructure needs for existing parks as well as the city share of park facility projects being financed partially with growth fees, and property/building maintenance.
That is in addition to ongoing vehicle and equipment replacement including fire trucks that cost $500,000 each to be replaced.
Those funding issues are in addition to ballooning retirement costs, whether the city can fund six firefighter positions covered by a federal grant through Dec. 31 and other needs.
Mallory noted that 70 percent of the city’s general fund receipts — property and sales taxes — are facing challenges. Sales tax is being hit by increased Internet sales while property tax gains are starting to slow down as reductions put in place under Proposition 13 rules when home values dropped have almost all been restored. That means new construction will become more critical to the general fund’s health.
Utility tax idea
floated in 2009
Back in 2009, then City Manager Steve Pinkerton floated the idea of a utility service tax to no avail.
Pinkerton noted at the time that dropping property tax assessments were putting money back into the pockets of homeowners. Pinkerton argued the city could to make a case to ask for some of that back in the form of a new tax that would keep service levels from deteriorating further
He noted eight years ago if Manteca proposed a 5 percent utility tax – which is the average for California cities that have such a tax in place – it would generate $4 million a year. That translates into $5 extra a month on a $100 municipal utility bill.
If such a tax was proposed, it would have to be approved by the voters.
Various tidbits about utility taxes offered by Pinkerton in 2009 were as follows:
uIt can be assessed on electricity, gas, water, sewer, telephones including long distance and cell service, garbage collection, and cable TV.
u46 percent of the state’s population is subjected to a utility use s tax.
uUtility user rates range from 1 to 11 percent with the most common being 5 percent.
uOn average, the utility users’ tax provides 15 percent of the general purpose revenues in cities that levy it.
uThe tax is levied by the city and collected by the utility as part of the billing procedure.
uIt can be established as a special tax requiring a two-third voter approval or a general tax that requires a majority approval.
The original utility tax was imposed by a City Council 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 city back in the late 1980s had 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 chuck of the originally flat 9.6-acre Shasta Park into deep, twin storm run-off retention basins. The utility tax helped pay off that debt in 2001.
The issue in 2001 centered around whether court rulings involving Propositions 62 and 218 rendered the utility fees invalid since they had never been put to a vote of the electorate.
Section 37100.5 of the Government Code for General Law Cities in California allowed Manteca’s leaders in 1989 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 the council to drop the tax in 2001.
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.
To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin