ELECTION OF THE YEAR 2003 BOARD OF DIRECTORS

The ballot slate for the 2003 Board of Directors presented as an Insert in the November Tax Fax was approved by the Membership. Next year's Board of Directors is virtually the same as the present Board, with three exceptions. Raley's Supermarkets replaced its Financial Officer Tori Ancona with Troy Dinin, its Senior Tax Manager, and Assemblyman Dave Cox's Alternate Ken Payne has been elected to the Board as a Director. Shiro Tokuno, a retired Agricultural Economist of the State Department of Water Resources, declined to run for the 2003 Board. Shiro has been a member of the Taxpayers League since 1969, became a Board Member in 1973 and, after serving 29 years as a Director, felt it was time to step down. The new Board, and the entire Membership will miss this remarkable man, whose counsel on economic issues examined over the years has been priceless. Such men are difficult to replace.

The Board's Officers will be elected at the first meeting of the new Board during the League's January 16, 2003 meeting.

MONEY DEFEATS MEASURE T

As described on the cover of the Tax Fax, the League sponsored Measure T, The Fair Utility Tax Act, was defeated on the November 5th ballot. Although about $394,000 was spent by Measure T opponents to defeat Measure T, allegedly more than double the amount ever spent on a City Measure in its history, the difference in votes opposing the utility tax reduction, as opposed to those in favor, was just under 8%. The final vote was 32,597 in favor of reducing the tax, and 38,144 wanting it continued. However, notwithstanding the loss of a tax reduction in utility taxes for all city taxpayers, it did result in a Resolution by the City Council, similar to the expanded rebate program that resulted in providing a utility tax rebate for all those in the City that pay the tax whose yearly income is less than $25,000.

VOTERS APPROVE MEASURES G AND H

Measures G, the County's two and one-half percent Utility Users Tax (UUT), and H, the County's two percent increase in the Transient Occupancy Tax (Hotel Tax) were placed on the November ballot by the Board of Supervisors as a result of the Howard Jarvis Taxpayers Association and the Leagues successful 4-year lawsuit charging that the County passed both illegally during the 1990s. Both taxes were passed without putting them before the voters for approval, as required by Proposition 62.

Neither the County's two and one-half percent utility tax, nor the Hotel Tax was specifically targeted by the League. We objected to their illegality, not their purpose. The League remained neutral with regard to the Measures, and actually used the County's UUT as the base level to which we wanted to reduce the City of Sacramento's seven and one-half percent UUT under Measure T. Without opposition from any quarter, voters overwhelmingly voted yes to legalize both taxes.

THE SACRAMENTO CITY MAYOR AND COUNCIL MEMBERS WIN THEIR PAY RAISE

On November 5th voters passed Measure S, the pay raise that the Sacramento City Mayor and City Council placed on the ballot to raise their salaries, and to make the Mayor's position full time. The League voted to oppose this Measure, basically because the change in the pay status of the Mayoral position carried with it no change in the duties of the Mayor with respect to control of the Council, nor of the City Manager. The City continues the premise that provides for a strong City Manager, rather than a strong Mayor. The Mayor and the Council set policies, but the City Manager hires and fires all City employees, controls all activities of the bureaucracy, and proposes the annual budget.

Measure S establishes a five-member citizen's Commission, selected by the Mayor and Council, to establish the Mayor's salary, a part-time salary for Council Members, and to review pay for voluntary citizen's boards. The Commissioners will serve for four years. Within a week after the election, applications for the Commission were sought. Within a month, Mayor Fargo nominated former Federal Judge Raul Ramirez to lead the Commission, to include former Superior Court Judge Rudolph Loncke, former City Manager Bill Edgar, Virginia Moose, and Deborah Yue. Virginia Moose is a member of the League of Women Voters, and is on the Board of the Sacramento Area Flood Control Agency. Deborah Yue is a services manager for the Department of Alcohol Beverage Control.

MAYOR FARGO RESUMES PUSH FOR A DOWNTOWN ARENA, WITHOUT ASKING VOTER APPROVAL

In August Tony Bizjak of the Bee wrote, "Earlier this month, Fargo made known that she was considering a November ballot measure asking voters for the go-ahead to negotiate with Union Pacific and the Kings on terms for an arena. This week, she said she did not want an arena measure to compete with the city's efforts to fight a ballot measure this fall that seeks to cut the city's utility users tax --." The arena is tentatively estimated to cost about $300 million.

A week after the election and defeat of the utility tax reduction for city taxpayers, the Mayor, flush with public money, forgetting about public input, gained approval from the City Council for a $654,000 study, funded by the city, the Kings and Union Pacific, to analyze cost and benefits of four downtown sites and the Arco Arena. The League can tell the Mayor what its Members think. Our August Questionnaire showed that 86% of our Members do not believe the City of Sacramento should issue bonds for a downtown stadium.

An analysis earlier this year determined a downtown arena would require some form of public subsidy. The Bee pointed out that "For nearly a decade, a long list of academic studies has made this much pretty clear: Downtown arenas do not boost the regional economy, and may not bring economic life directly to anything other than the neighborhoods around the new arena." The League, in the August Tax Fax, included an article "Tax Me Out to the Ball Game" which related that a Heritage Foundation study showed that "Publicly funded stadiums rarely deliver on their promise to bring economic stimulation to struggling cities." Other fearful comments were that "New stadiums and other costly entertainment facilities seem more closely associated with pervasive urban decline than the other way around." The Bee reinforced its position with an Editorial on November 24th titled "The mayor's moonshot", pointing out that, "Another study won't make arena realistic" The Editorial is Page 7 of this issue of the Tax Fax.

A SNEAKY WAY TO ACCELERATE TAXES

During development of the phony 2003 state budget, the Sacramento Business Journal reported a change to the method of collection and calculation of about $225 million in taxes on about 300,000 non-residential real estate sales, that people are already paying, that will become effective on January 1st. It requires that more money be paid, and sooner, before any of the tax expense can be incorporated into tax planning. Effectively, it lets the state borrow money for the 2003 budget by simply advancing it from 2004 budget revenue. The way it works will come as a surprise to small real estate investors.

Currently, sellers of investment property pay 3.33 percent tax on the net gain from the sale by April 15th of the following year. But beginning in January, the buyer withholds 3.33 percent of the gross sales price and sends it to the state within 23 days of close of escrow. As stated in the Business Journal, John Frisch, of Cornish & Carey Commercial/Oncor International said, "This is a fundamental change. No one has had to withhold 3.33 percent of the sales price. It's not a new tax, but the way it is being paid is going to be a drastic change." Then, the state refunds any overpayment (difference between gross and net) to the seller in the following year. Thus the state collects about $225 million in 2003 that it would not have collected until 2004. This is nothing more than replacing a delayed collection with an interest free loan from taxpayers to the state.

LIVING WAGE

The Bee reported that three City Council Members back a Living Wage Plan. It is important to understand what this portends for the City, and those that contract with it.

This information may be dated, as we have not seen the present proposal, but it does explain how it works.

The Employment Policies Institute writes that the idea behind this the Living Wage concept is that contractors who receive public funds as payment for services will be required to pay wages above the minimum. Ordinances that implement the Living Wage cover contracts to private firms that provide services to the public and to a city government. In addition they cover licensees of city property that perform propriety interests of the city government, and those businesses and individuals that receive subsidies that enhance economic development. In simple terms, anything touched by city money or gratuities. It proposes requirements that make both permanent and temporary employee's wage a minimum of $10.00 per hour if health benefits are provided, or $12.84 per hour if health benefits are not provided. It also introduces requirements that include written agreements between an Employer and a Labor Organization regarding representation of employees; disputes requiring binding arbitration, and a myriad of other things like contracting out city services that result in displacement of city employees, seniority rights when reducing employees, automatic retention rights for displaced employees, etc.

Such Ordinances do not cover city employees, which will immediately become an equity issue in labor negotiations. It will be interesting following the course of the local Living Wage effort.

FORMER INSURANCE COMMISSIONER CHUCK QUACKENBUSH EXONERATED

The Rio Linda Elverta News issue of November 7th related that in a Superior Court decision, Judge Victoria Chaney of the Los Angeles Superior Court found that Northridge earthquake settlements negotiated with several insurance companies by former Insurance Commissioner Chuck Quackenbush were completely legal and proper in all respects. The News reported that, "The settlements, subject of intense controversy and examination by the State Legislative committees in 2000, had been taken to court by the Attorney General's office in an effort to overturn them. The Attorney General asserted that the settlements did not fulfill the purposes of the Department of Insurance."

Judge Chaney questioned in the decision how the Attorney General could attack these creative settlements when the Attorney General had openly boasted on his own website of similar negotiated settlements he had reached with other companies. The News reported that, "The judge also noted approvingly that the terms of the Quackenbush settlements required companies to conduct internal audits of Northridge claims handling, do telephone surveys of earthquake damage claimants and reopen claims of dissatisfied customers. The decision rhetorically asked what more could possibly be done eight years after the Northridge earthquake to help the public with claims -"

In addition, a joint task force of federal, state and county investigators examining all the activities of the Department of Insurance announced they were disbanding as no evidence of illegal activity could be found, and there would be no charges filed against Quackenbush or anybody else from his administration.

The News stated, "After two years of controversy and legal wrangling, it appears that the issue is now at an end" and asked, "Since former Commissioner Quackenbush did nothing illegal or improper as validated by the courts, what was all the fuss about during those contentious hearings in 2000?" That indeed is a very good question, considering that the political turmoil cost him his position, and a possible shot at the Governorship.

ANOTHER PIONEER LOST

Milon Johnston, a hard-driving force behind the founding of the Sacramento County Taxpayers League, and its first President, passed away December 10th at age 90. Mr. Johnston was a fourth generation Californian, born January 31, 1912 on the family farm on Bruceville Road, as was his father before him. He graduated from Elk Grove High School and then attended Sacramento Community College.

The Johnston farm existed for 122 years, from 1878 until sold in 2000. The farm was one of the first pear orchards in the area, grew to 1000 acres, and held an 800 head Grade A dairy award-winning herd. In addition to farming, he worked as a county assessor, served on the board of trustees of Franklin Elementary School, the board of the Federal Land Bank Association and the board of the Elk Grove Irrigation District.

Just recently the Elk Grove Community Services District named a park after him on the former Johnston farm. The community thrives when such men as Milon Johnston exist. He will be missed by all.

CHARLES (CHUCK) ROSE BECOMES LEAGUE REPRESENTATIVE TO THE WATER FORUM'S SUCCESSOR EFFORT COMMITTEE

After 9-years and 2-months serving as the Taxpayers League representative to the Water Forum, Executive Director Joe Sullivan has asked to be replaced. The League's Board approved replacing Joe on the Water Forum Successor Effort Committee with Member Charles (Chuck) Rose. Mr. Rose is an eminently qualified replacement. Chuck, by vocation, is s Real Estate Broker who is also an elected Director of the Citrus Heights Water District, Past Chairman of the Sacramento Groundwater Authority, a member of the Regional Water Authority, and the San Juan Water District's Board of member agencies. Joe will continue to serve as the League's Executive Director, but will be limiting his attendance at all meetings including the Board of Supervisors and meetings of all Cities' Councils. Treasurer Carl Burton, among others, has volunteered to cover City and County Board meetings involving actions in which the League has an interest.

MEMBERSHIP

Our Members constitute the League's strength and Members provide coverage on many issues we try to resolve. Over 120 taxing and rate based agencies in Sacramento County and its six Cities handle billions of taxpayers' dollars yearly. The League's constant surveillance of their activities has been our mission for 41 years. We have been successful in rooting out many illegal uses of taxpayers' money, and have defeated the last three attempts to raise sales taxes in the city and county of Sacramento. The last alone has kept $120 million in the pockets of taxpayers over the last four years. It is estimated that our work during the past year offset $15 million in rate costs alone for County and Cities services. We encourage all readers of the Tax Fax, who are not Members to join our League, and help us continue to serve the interests of the taxpayers of Sacramento County.

LETTERS TO THE LEAGUE

We seek "Letters to the League" from members on present projects and issues on which we are working, and recommendations on those we should look at. Letters may be edited and republished in any format, primarily in the interest of available space. Send letters, faxes, or e-mail to the Sacramento County Taxpayers League. Our e-mail is Sactaxleague@prodigy.net; our phone/fax number is (916) 921-5991, and our address is:

Sacramento County Taxpayers League
1832 Tribute Road, #210
Sacramento, CA 95815

FUTURE AIR FARES MAY INCREASE SUBSTANTIALLY

In a recent newspaper article I read consideration is being given to filling the vapor space of all fuel tanks in jet aircraft with nitrogen to preclude collection of possibly explosive jet fuel vapors. The proposal resulted from a finding by the National Transportation Safety Board (NTSB), responsible for evaluating the TWA 800 accident, that the center fuel tank exploded after a spark ignited volatile fuel vapors in the nearly empty tank. Dr. Bernard Loeb, NTSB Director of Aircraft Safety, theorized that static electricity could be the cause.

In 1960 two Air Force (AF) refueling trucks exploded while preparing to be filled with jet fuel pumped through truck fill stands. Both accidents were attributed to ignition of flammable jet fuel vapors in the tankers by discharges of static electricity. The AF asked the Army Corps of Engineers Research Laboratories at Fort Belvoir, VA to determine safety measures to prevent similar accidents. The job was assigned to me. I was a researcher in the Petroleum Equipment Division, and was the Corps Representative on the NATO Panel of Experts that standardized fuels and fuels handling equipment for NATO jet aircraft. We developed procedures to prevent it from happening again.

It was the era when the Corps was modifying aircraft fueling facilities all over the world to store and handle jet fuel, in place of high-octane aviation gasoline, as jets replaced piston driven aircraft. We learned there was a vast difference between aviation gasoline and jet fuel. With respect to static electricity in fuel, although causes of static build-up had been determined, little has been accomplished to develop methods of discharging static accumulations. Migration of the accumulated charge to the walls of the containing tank, where it will discharge, is slow.

When TWA 800 crashed on July 17, 1996, my immediate reaction was that a static electrical discharge in the vapor space in the nearly empty center fuel tank created the explosion. The conditions duplicated those existent in the tanks of the trucks that blew up in 1960. Normally, commercial jet fuel at temperatures below 110 degrees Fahrenheit is too lean to develop an explosive mixture in the vapor space above the liquid fuel in the tank, and that is one reason that static generated explosions in jet fuel are extremely uncommon.

I followed the investigation as it unfolded, and wrote to the FBI and the Safety Board describing what we learned about static discharges in jet fuel. The thing that bothered me was that the temperature of the fuel in TWA 800's tanks should have been at ground temperature before takeoff, and consequently any vapor in its tanks should have been too lean to explode, even in presence of a spark. Later I learned that the aircraft had been running heaters located directly under the center fuel tank. Evidently the temperature in the tank enriched the fuel vapor to the explosive range, needing only a spark of sufficient intensity to ignite it. And that's what I believe happened.

Adding nitrogen to tank vapor spaces will prevent reoccurrence of the TWA 800 tragedy. But it is going to be very expensive.

Joe Sullivan

<< Back to Index

Officers