October 25, 2008

Vote NO on Measure "L" the Utility Users Tax: Tell the City Back to the Drawing Board

Measure "L" Utility Users Tax: The Tax Grab Broadens its Reach

This November 4 election will not only involve a new President but many state and local measures which are making a grab for your wallet. Clearly the Utility Users Tax (UUT) "increase" (or rather broadening in reach and scope) could not come at a worse time given the current economic "meltdown".

As it typical with Lakewood city government, the city is not telling voters the whole story on the UUT tax increase in Measure "L". (Lakewood kept LAAG's "No on L" argument off the November ballot while accepting the "Yes on L" argument) They claim Measure L is simply “updating” the existing tax ordinance but in reality it is a broadening of the ordinance in order to make the tax apply to more services and utilities likes calls made over the internet. That was the whole reason why this UUT in Measure L required another vote. The City does not want to do this again so they are broadening the ordinance to not only bring in more revenue (by taxing more types of services and utilities like VOIP phone service, and other future technology like femtocells etc.) but to make it easier in the future to tax "yet unknown" or unforseen sources of revenue ...without a further vote by the taxpayers. All while duping the taxpayer into not thinking they are getting a tax increase just because the tax "rate" is not increasing.

So for right now they are claiming that internet access, email and related content and services are not being taxed under Measure L but this is only due to the fact that Federal law prevents it at this time. But if that changes in the future then Lakewood could use Measure L to tax those new services, without asking for your permission or taxpayer approval via an election.

The city claims the 3% rate will not increase without a vote but nothing in Measure L prevents them from further broadening the application of the tax to other "services" or "utilities" without taxpayer approval.

Another very sneaky tactic is telling voters that the funds will be used for a certain service, project or activity when the proposed ordinance does not mandate such use. The reason the city has done this is it knows that voters are less likely to approve a “general slush fund” tax especially when the money can be funnelled to special interests (like those entities or their representatives who signed the ballot argument in favor of Measure "L"). Voters are more likely to approve a tax that is earmarked for “specific services”. However it takes a 2/3 majority vote in order to pass a “special tax”, whereas a “general tax” (such as this proposed UUT) only needs a simple majority to pass. Deceptively, the voter booklet voters are provided with tells voters:

"Shall an ordinance be adopted to ...fund law enforcement, gang and drug prevention programs, after-school activities, senior transportation, parks, street and traffic signal maintenance and other essential services, ... regardless of technology used, annual audits, public review of expenditures, no rate increases without voter approval, and local control of revenues?"

If you want to read the entire 15 page ordinance of Measure L please click here (PDF)

Again they city has attempted to enumerate those uses that they know will garner votes for the measure but fail to explain to voters that the tax revenues can be used for what ever the city council decides to use them for. That is there the sneaky phrase "and other essential services" above comes into play. What does that mean? Only the city council will decide. For example if the city council decided to use the revenues to redecorate their offices, there is NOTHING in Measure L that prevents that.

There is nothing in Measure L that governs the use of the taxes. That includes even restricting where this tax money cold be used. For example it could be used outside the city of Lakewood. This ordinance does not change anything with respect to existing law on such matters.

Another feature the city likes to tout in Measure L is the "public review of expenditures". Nowhere in Measure L is there any change to existing law with respect to the "transparency" that they city will allow or promoting the use of the internet to increase public awareness of the use of tax dollars like this. There is nothing in Measure L that increases public review or accountability or even visibility. Ask yourself this: if the city council is so transparent why have they never posted the full city budget on line or the audits and budget expenditures of all the prior $35 million (the city's figure) collected since 1992 under the existing UUT? Because they dont want to to know where the money goes and they dont want you to know what is going on with your tax dollars. The devil is in the details! Other city’s UUT ordinances specifically allow for citizen oversight on the utilization of the new funds. Not Measure L.

There are other problems with Measure L. Lets say you use a cell phone, a land phone and VOIP all together. You will be taxed on all three devices, so there is overlap in the tax. The tax is regressive in that it is a greater burden on low or fixed income residents and the more you use the phones and other services the more you will be taxed. However as we all know utilties are now mostly taxes and have very high minimum monthly fixed charges. This tax feeds off those minimum charges. Also if your neighbor only uses a land line and not other technologies he will only be taxed once. So the fairness of Measure L is not as big a selling point as the city makes it out to be.

Also do not assume that 3% is a "low" tax rate. Take a look at your utitlty bills with 10 or so different taxes on it and see which one is higher than 3%. Likely none. So why is 3% deemed reasonable? Especially when Measure L will now be covering more of your services and utlities. The problem of course is the cumulative effect of all these "low" taxes on your overall bill. That is why utility bills are always advertised without all the taxes, which can add as much as 15% to the total. And we have all seen how these taxes are wasted.

Lets not forget the other tax increases on the horizon either; the 0.5% county and 1% state sales tax increases that combined will increase LA County’s sales tax to 9.75%, the highest in the country. This is another tax grab when voters can least afford it.

Also voting NO on Measure L leaves the old tax in place. It does not eliminate the old tax or the revenue. If this were not a chance to get more revenue why would the city and the Sheriff's department be in favor of it?

Dont buy the City's deceptive tax grab. Tell the city to get this right by increasing oversight and accountability provisions to prevent abuse of your hard earned dollars. (Just like the Federal bailouts) VOTE NO on Measure "L"

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
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Unknown said...

Thanks for this review of Measure L. I've been planning to vote against L, just on principal, but this gives added rationale.

Lakewood is in a tough spot, with a limited commercial tax base compared to other cities, but that should encourage them to live within their means. We don't have to have all the fancy services and events, just do the basics well.

Anonymous said...

the city of lakewood is "just fine" steve croft's(our mayor) words oct 28...well guess what .lakewood is liquid ...a lot of their residents are NOT. NO on L ...save now tax later