SMARTMoraga recommends NO on stormwater tax

Overview, FAQs and Reasons NO.

Tax Punishes Schools, Churches and Small Businesses for $150,000/year


Nearly 20% of the total tax burden ($160,000+/year) will fall onto schools, churches and small businesses, the three groups least able to afford it. Public schools will be taxed $37,000 forever. St. Mary’s College will be taxed $40,000. The town’s churches will be taxed as much as $10,000. The town’s perennially struggling small businesses will be punished for another $75,000, each at a rate almost 10 times the typical household. Although the town and proponents of the tax state "the town has no choice," the reality is that schools and churches would not be taxed if the town used a traditional ballot approach. The town made a concious choice to select a process that entraps the schools and churches. The town hasn't been forthcoming about this, either ignoring it entirely or downplaying it when it comes up in public meetings.




We Already Pay For This: Town Ignoring or Misusing Existing Funding Sources


Residents Taxed Already; Money Not Spent As Intended Residents already are taxed $250,000/year for "clean water programs" but in 2016, the town spent only $30,000 for that purpose, transferring the rest to the General Fund. Most every clean water activity doesn't apply in Moraga or is handled at no cost by the County. Federal Monies The Town is near-silent on federal reimbursements for the sinkhole and Canyon bridge, which will cover almost 90% of the repair costs (and even left them out of the town's financials, violating generally accepted accounting principles). Approximately $1.25MM is expected in March 2018, and written staff reports indicate the balance is expected next year. Nonetheless, the town and proponents of the tax continue to say "we don't know when or if the funds will arrive." Palos Colorados Approximately $11,000,000 is still due from Palos Colorados as a result of a $17,000,000 settlement agreement, with approximately $1.25MM expected in March 2018. The terms of the agreement indicate that the settlement is for developer impact fees, town exactions, compliance with the General Plan, and recreation. The town hasn't spent any of the $6,000,000 already received nor does it plan to allocate any of the $11,000,000 expected on infrastructure. Interestingly, the interest alone could fund much or all of the $800,000/year of the new taxes sought from residents.




Ordinance Does Not Match Promises or Marketing


The proposed, legal ordinance on which we are voting doesn't match what we’ve been told.

The town has stated that it will be using the tax revenue for “high priority” stormdrain projects, but the ordinance itself allows spending on any stormdrain-related activities whatsoever, including additional staff to “manage” them.




Process Has Been Manipulative


The entire storm drain tax process has been manipulative:

  • The town's consultant recommended the "community priorities survey," which was specifically designed to zero in on a "palatable" amount residents would pay and to test marketing messages.
  • The town's consultant recommended the ballot be timed specifically as a special off-cycle exercise to avoid competition with other tax/bond measures on regular June/November ballots, and with November elections.
  • The town hasn't been forthcoming with information regarding taxes on schools (until residents raised the issue). Similarly so for churches and small businesses. Those three groups will pay $150,000/year, shouldering 20% of the tax burden.
  • The town assembled a hand picked, pro-tax advocacy group (SOS) before even voting to proceed with the storm drain tax ballot.
  • The tax measure is against a backdrop of a declared fiscal emergency the town hasn't addressed, while it ignores federal reimbursements, violates accounting standards, and pretends developer fees don't exist.




Town's Hand-Picked Advocates Posing as Independent Group


Mayor Trotter and Councilmember Wykle assembled a pro-tax advocacy group - before the town council even voted on proceeding with the proposed tax - to specifically "support" and act as "ambassadors" for "winning a successful ballot." The group known as "SOS" is the Mayor's "independent" group.




Tax Contains Over 50% Padding, Double Taxation


As a result of the rush-to-ballot, over half of the proposed tax is padding and fluff:

  • Contingencies represent 30%-40% of the tax alone, easily twice the standard practice. The town's engineering consultant conceded the 30%-40% contingencies are "hefty" and won't ultimately be needed when the town gets "its budgets correct."
  • The town seeks $1.1MM in new tax money for a specific project for the Hacienda, but doesn't mention it already has squirreled away $400,000 in grant money. Residents should not be taxed when the money isn't needed.
  • The town already collects $230,000-$250,000 annually for EPA clean water compliance, and wants another $155,000/year, but spends virtually nothing on clean water programs and instead deposits existing tax money into the general fund for salaries.

The town shouldn't be collecting money it won't need and should get its budgets correct before seeking new taxes.




Town's Sole Focus Is New Taxes; No Effort to Use Existing Taxes or Prioritize Spending


The town has adopted the philosophy that storm drain money must be from new taxes while ignoring millions of existing taxes and sources of revenue (e.g. clean water taxes, Measure K sales tax that collects 2x expectations, developer impact fees, federal reimbursements, Palos Colorados and general taxes) and how they are spent.

There has been no attempt or effort to look to these existing sources of revenue or to prioritize spending to favor necessities rather than discretionary items.




Town is Selective With Information and "Facts" - Repeatedly Fails Fact Checks


The town and its advocacy group are quite selective with the information they provide, often omitting key facts or misrepresenting others. Our "fact check" series scores the town 0-for-7 on fact checks we've conducted. The Fact Check Series is here.




The Tax Is Forever With 3% Increases


The Town wants a no-sunset, "forever tax" although the items for which it seeks the money will be repaired well before "forever".

The reasons are twofold:

  • The lack of a financing plan requires to Town to hedge its bets, while it figures out what to do later.

  • The Town doesn't want residents to revisit or re-vote on the tax. Ever.

Annual increases are capped at 3%, but any unused increases in one year are "rolled over" to subsequent years, just like rollover minutes on a cellphone plan.




Millions in Developer Fees Not Being Used for Infrastructure


$17,000,000 in unrestricted developer money from Palos Colorados is intended for development impact fees, permit fees, town exactions and recreation. $6MM of this money already has been received and $3.5MM more is due this year. Other recent developments have paid impact fees, a significant portion of which is supposedly for storm drain infrastructure, yet none of those fees have been used for their intended purpose. The town has spent none of it on infrastruture, nor does it intend to.




Responsible Spending Eludes Town Hall


The town has squandered or ignored existing taxes and funding that should have and still could be used for storm drains, and is ignoring what should and could be done with almost $17,000,000 million in incoming federal reimbursements and Palos Colorados funds and road/stormdrain sales taxes that are double what was anticipated. Those funds should be used for critical infrastructure spending rather than discretionary activities.

Despite the current and still-active declaration of fiscal emergency (which appears to really be a pretext to launch an off-cycle initiative), the town hasn't reduced expenses, hired third parties to review, or attempted to reorganize operations to take advantage of savings opportunities that several residents have identified for them.




Tax Duplicates Existing Taxes and Revenue Sources


The Town has not been forthcoming with its receipt or use of existing taxes or other sources of revenue. In particular:

  • Existing clean water taxes of as much as $250,000/year are not used for their intended purpose
  • The town failed to properly account for $5,500,0000 in Federal reimbursements for the sinkhole and bridge projects
  • The town continues to ignore past/existing ($6,000,000) and future ($11,000,000) Palos Colorados funds that should and could be used for infrastructure, which it instead has spent on everything but (including pensions)
  • Measure K (which increased sales taxes by 1% and was promised as a solution for roads and stormdrains) has collected 2x what was anticipated ($1,700,000/year), but roads still aren’t fixed and storm drains have remained untouched.

The town has not answered any resident questions about why these existing taxes and sources of funding have not been budgeted toward infrastructure, as a self-proclaimed “minimal government philosophy” would seemingly do.




Town Has No Financial Plan


The town has no plan for how to address the issue financially. It will collect $800,000/year, but has barely begun to understand and assess funding mechanisms (whether to “pay as you go” or float a bond). What’s more, they’ve failed to realize that with half of the money earmarked for “maintenance”, there won’t be enough left over to actually service any debt/bonds.

The amount sought has no basis in what is actually needed based on financial realities, but was reverse-engineered in the fall 2017 “community priorities survey” which was designed entirely to seek the amount palatable to residents and to test marketing and messaging strategies for the tax.

The town is saying “give us money now and we’ll figure out the rest later”.

The best approach is to send the town back to the drawing board until it develops a complete plan for residents to consider.




Plan Will Overtax Residents, Collecting More Than Needed


Our analysis indicates the town will collect far more than it needs. In addition to other available sources of funding, the proposed fees are almost 2x what is needed for their stated purpose: 30%-40% contingencies (the town’s consultant called them “hefty” and will “come down as you get your budget correct”); the redirected, existing $250k/year clean water tax; and duplicate taxes on property owners despite grants already secured for work.

There are so many unknowns to resolve, it’s impossible to make an absolute determination. If the amount sought is too much, residents are overtaxed; if too little, an unpleasant surprise seeking more money later awaits.




Ballot Process is Inherently Biased


The Prop 218 approach is highly unusual, used just a handful of times statewide and is costing residents $170k.

  • There is no impartial analysis by a legislative analyst

  • There are no pro/con arguments (only an advocacy piece designed by the town)

  • Residents must sign the ballot, and

  • The ballot is counted by the town rather than by county election officials.

The town’s consultant recommended this to avoid competing with other measures or candidates on June/November ballots, controlling timing and messaging to its advantage, and lending a false sense of urgency.




Appeals Process/Criteria Undefined and Limited


Property owner appeals will be decided solely by the town engineer and town manager (one of whom is relying on the taxes and the other whose primary mission upon her hiring is to see to the successful passage of the tax). There is no further recourse beyond these two town staffers.

The town attorney recommended this approach, specifically favoring the town’s convenience over fairness to residents.

Moreover, the town hasn’t developed any process or criteria, yet voters are being asked to decide now that that’s OK.




Structure Isn't Equitable, Favors Expediency Over Fairness


The tax structure and amounts are designed for expediency rather than fairness.

  • HOAs are receiving a somewhat arbitrary discount, equally applied (17%) irrespective of the actual extent and cost of their private storm drain systems. It’s an inaccurate, broad-brush approach.

  • Similarly, like-sized properties will pay the same amount in taxes irrespective of their geography/topography and actual use of the town's storm drains.

For example, homes in the Moraga Country Club, Sanders Ranch and in south Moraga send stormwater directly to privately-maintained creeks near the headwaters of the reservoir, in some cases using none of the town’s stormdrain infrastructure. Contrast this with homes near the Lafayette border that use miles of infrastructure and drains.

Two adjacent homes of the same size may have very different runoff characteristics based on topography and landscaping features, but both pay the same.




Engineers Say Condition of Storm Drain System Is "Very Good"; There Is No Real Emergency/Urgency


The town's own Master Storm Drain Study concluded the “overall condition of the storm drain system in Moraga is very good” and “the majority of pipes and structures inspected...were in excellent or good condition.”

No professional engineer has concluded the storm drain system is at risk of imminent failure or disaster.

The town is pretending there is an emergency because its consultant urged it “quickly to take advantage of the current high profile” of the sinkhole and a special ballot with timing and messaging controlled to avoid being “vulnerable to other measures and candidates sharing [regular elections].




Tax Enables Continued, Unchecked Spending by Relieving Pressure on General Fund


The proposed storm drain tax relieves pressure on the general fund by eliminating the need for thoughtful spending, budgeting or saving, thus allowing continued spending on "wants" vs "needs". The money the town already collects and should be spending on storm drains now will be covered by the new tax money in a new account, freeing up general fund money for other uses (e.g. discretionary spending and "wants" or "nice to haves". Federal reimbursements of almost $6MM for the sinkhole and Canyon bridge and $3.5MM in near-term Palos Colorados funds will be deposited directly into unrestricted funds for unrestricted spending, too. The tax allows "loosening the belt" at the very time the town has demonstrated it ought to be tightening it.





Our analysis results in a definitive  NO  recommendation on the storm drain fee. 

 

Below are some of the reasons why, from ignoring existing money available, to entrapping schools/churches/small businesses, to lack of financial plan.

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