THE BEST INSURANCE POLICY A TAXPAYER CAN BUY

During discussions covering Membership recruitment by Taxpayers League Membership Chairman Bill Kassis, various recruitment methods used over the years were discussed, and recommendations made for encouraging individuals and enterprises to join our organization. And note that we always capitalize Members as they are the most important element in our organization. Without our Members we could not have sustained our constant vigilance over the obtaining and use of taxpayers' and ratepayers' dollars.

One of the most poignant comments was made by Vice President Bob Creedon. He said, "The best insurance policy a taxpayer in the county can buy is Membership in the Sacramento County Taxpayers League." And reflecting back, he is absolutely right. The Taxpayers League has been protecting taxpayers' and ratepayers' money for over 45 years, and during that time has faced many interesting and very challenging attempts by elected officials to unnecessarily create or raise taxes and rates, and to squander the money, once in hand. In looking back, two major things that will trigger us into action and opposition are violation of laws regarding the creation or increasing of taxes, or trying to give a tax a different name, like fee or levy. The most recent example is the plan to increase the sales tax for an arena for the Kings as a general tax, instead of the special tax it would be, to circumvent the need of a two-thirds majority vote to pass, instead of a simple majority. This violates Proposition 218.

So Members, keep your taxpayer's insurance in force, and you other readers of the Perspective, consider joining our Taxpayers League to help us continue looking out for everybody's welfare. Membership in the League is the best insurance "policy" a taxpayer can buy.

TAXPAYERS LEAGUE INVITED TO GOVERNOR'S TAXPAYERS' CIRCLE

The League was invited by Governor Schwarzenegger to an April 17th meeting of local and state-wide taxpayer organizations at the State Capitol. He and his staff explained the need for the state-wide bond issues he was to propose, and some of the difficulties he anticipated with the Legislature in getting them approved for the June ballot. He was seeking input and suggestions from the taxpayers organizations, and answered questions regarding the Measures. The principal local taxpayers organizations were represented by Joe Sullivan of the League, Jon Coupal of the Howard Jarvis Taxpayers Association, Ted Costa of the People's Advocate, Lew Uhler of the National Tax Limitation Committee, and Larry McCarthy of the California Taxpayers Association.

On May 12th the Governor's staff set up a morning teleconference among taxpayers organizations to make all cognisant of the content of the budget the Governor was about to release and discuss that afternoon. Once again participants were encouraged to ask questions of the staff to assure the participants had the details of major expenditures the Governor was about to propose.

Joe's comment on the meeting with the Governor was that he was very affable, relaxed, and easy to talk to, unlike many of the self-important, pompous elected officials he has had to deal with over his many years as a seniors' and taxpayers' advocate.

SMUD ANNEXATION OF YOLO PG&E CUSTOMERS

PG&E presently pays to Yolo County and the involved cities. As a Public Agency, SMUD does not pay taxes, nor Having approved the SMUD's proposal to serve 70,000 PG&E customers in Yolo County, the Sacramento Local Agency Formation Commission (LAFCo) will put the proposal to Yolo voters in November. On its part, the SMUD Board of Directors has pledged to also put approval of the annexation to a vote by its existing customers on the November ballot. If the expansion is approved by both sets of voters, SMUD believes it could begin serving Yolo customers by October 2008. However, the schedule seems questionable, as there is little doubt a contentious eminent domain condemnation trial will precede any final action, coupled with a final court decision as to how much PG&E assets are worth. The League is particularly interested in how SMUD is going to replace the taxes can they create them, without a vote of the customers involved. With respect to replacing the taxes, SMUD alludes to a possible assessment of the Yolo customers. We believe that such an attempt would probably violate both Propositions 62 and 218. If a utility tax is to be created, it will have to go to the Yolo customers for approval. The events are going to be interesting to watch as they unfold.

TAXPAYERS LEAGUE CHALLENGES ARENA TAX SCHEME

It was reported in May's Perspective that The Sacramento Bee revealed the Sacramento City and County officials are toying with the idea of raising the sales tax by a quarter of a penny for 10 years to build an arena for the Kings. Allegedly, they plan the tax as a "general" tax, requiring only a simple majority vote to pass, rather than a "special" tax requiring a two-thirds vote. In addition, they would add an "advisory vote" asking voters to agree to spend the money on the arena. According to the City's finance director this will raise about $60 million a year. Further, notwithstanding the requirements of Proposition 218, The Right to Vote on Taxes Act, that defines the difference between the two taxes, The Bee reported the County's council stated that the strategy is legally viable as the State Supreme Court upheld a sales tax increase using the same scheme in 1998 for transportation improvements.

The League disagrees with the obvious subterfuge of using a majority vote, rather than a two-thirds vote to pass the tax, and decided to challenge the plan now, rather than waiting and having to resort to litigation to block the manoeuvre later.

On May 25th a League letter was delivered to the Sacramento Board of Supervisors, City Mayor, and City Council advising of our concern and recommendation (copy enclosed as an insert), with copies to The Sacramento Bee and the Sacramento Business Journal. Within two days Terri Hardy of The Bee was on the story (also part of the insert), and her article gives a clear view of the storm ahead. Hardy had asked our Vice President Jon Coupal (also the President of the Howard Jarvis Taxpayers Association, and who had authored Proposition 218), about our letter, and Jon replied, "How can you describe this as anything but an arena tax? If this tax is intended to pay for an arena, it's a special tax requiring a two-thirds vote."

The text of Proposition 218 is clear with regard to taxes. In Articles XIII C and D, Section 1 TITLE it states: "This act shall be known and cited as the "Right to Vote on Taxes Act." Article XIII C (a) states: "General tax" means any tax imposed for general public purposes. XIII C (d) states: "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund. Section 2 (a) states All taxes imposed by any local government shall be deemed to be either general taxes or special taxes.

The League has been confronted with this type ploy by the City and the County three times, and the Coalitions we formed defeated all three. The last, the County's Measure M, was put on the ballot as a general sales tax increase, but it was obvious to all that it was to raise money for more sheriffs, police and firefighters. I managed the campaign for the League in opposition, as Measure M was obviously a subterfuge. The Measure was defeated by 62.8% of the vote.

But that's not the end of the story. During the campaign the Supervisors did not exercise much effort on behalf of the Measure, leaving the battle to then Sheriff Glen Craig. I met Sheriff Craig at a function the night of the election, and early returns made it obvious the Measure was going to be defeated. We discussed Measure M, and agreed that had it been advertised as a special tax from the outset, it would have passed as we needed the additional law enforcement and safety personnel. What we were fighting was the violation of law, not the need.

HIDDEN CREDIT AND DEBIT INTERCHANGE FEES

Valerie Spake of Valerie Spake & Associates contacted me and told me a story about hidden credit and debit interchange fees paid by retailers and customers whenever a customer uses a credit card for payment in any fashion. She offered to send me material she had gathered on the subject to determine whether the League would join in her cause to elevate the problem to the Congressional Judiciary Committee for hearings. Her passion is to bring the issue to the attention of the public at a national level. When I received the material, it blew me away. I was completely unaware of the nature of the problem, and the explanation I am presenting is based on her work.

Interchange fees are the fees merchants pay to the banks that issue credit cards. Banks issuing Visa and MasterCards in the United States fix the price of interchange fees at high levels outside any competitive venue. They do not compete for customers by lowering prices as competitors have to do in other industries. As a result, these fees have increased significantly over the past few years, even while interest rates were dropping, and transaction volumes were up. Since 1998, Visa has increased its credit card interchange fee 10 times, including four increases in the last 2 years. MasterCard rates have been almost identical. In most cases these rate increases exceed, and may even amount to two or three times the merchant's profit margin on a transaction. The United States has the highest credit card interchange fees in the industrial world. They are roughly double what merchants pay in the U.K. and E.U., and are three times the rates merchants pay in Australia. The difference is that these other countries do not permit collusion by banks issuing credit cards, and have taken action to regulate the rates that can be charged, or to restrict the allowable components of the fee.

In the U.S. the majority of non-cash transactions are done electronically, with the number of card transactions surpassing checks during the past year. This has happened because banks are relentlessly driving customers to plastic cards by aggressive advertising, direct mail pieces, and reward programs. They have been so successful that banks are setting record profit levels with card related fees as their single most profitable source of income. And the interchange fees are passed on to the consumer as higher prices. Simply put, there is no competition in the system.

To try to get this issue before Congress Valerie arranged for she and I to meet with Congressman Dan Lungren. The meeting took place on May 30th, and Valerie presented the same information to Congressman Lungren that she had provided me. He was just as shocked as I had been, and we spent considerable time discussing the issue. He is assigning a staff member to work with Valerie to develop the information into a form he can present to the Judiciary Committee to determine whether Congress should look into the fee-setting process used by credit card companies. And the League will continue in support of this national endeavor.

AB 2987 - THE DIGITAL INFRASTRUCTURE AND VIDEO COMPETITION ACT OF 2006

Assembly Bill 2987 proposes to allow telecommunications companies to upgrade networks and move fiber optic service to existing and potential consumers to provide expanded high-speed and high-broadband service, including video. It is the next evolution in communications, providing consumers a capability to integrate multiple devices including PCs, television, PDAs, and wireless phones, many times faster than what is currently available. In addition to providing innovative new services, it should greatly increase competition. The current cable franchising process is cumbersome and needs streamlining. The benefits of the new program is supported by the League, who provided all local elected officials in the Legislature with letters encouraging them to support the Bill.
In the June 1st edition of The Bee it was announced that "The Assembly Oks cable franchises from state," and wrote the "Legislation hailed as a way to give Californians lower prices and more choice in cable television was approved overwhelmingly Wednesday night by the State Assembly. The measure attracted widespread bipartisan support Wednesday. The final tally was 70-0 with 10 lawmakers not casting votes." The bill now moves to the Senate.

This is a milestone, seeing Republicans and Democrats standing together to save State cable TV users money!

LETTERS TO THE LEAGUE

We seek “Letters to the League” from Members concerning projects and issues on which we are working, along with 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 telephone number is (916) 921-5991. Our fax number is (916) 567-1279. And our address is:
Sacramento County Taxpayers League
1804 Tribute Road, Suite 207
Sacramento, CA 95815.

EXECUTIVE DIRECTOR'S MESSAGE

In the April issue of the Perspective I told of the New Orleans Times Picayune "VICTIMS OF KATRINA - WHERE THEY WERE FOUND" map my daughter in Louisiana had sent me, that disturbed me as it showed the devastation created by the flood in downtown New Orleans. At the site of my former office in New Orleans, just off Canal Street, the city's main drag, about 45 bodies were found. I said I was going to obtain a photo copy from the Picayune and give it to water editorialist Tom Philp of The Bee as an example of a map I hope The Bee will never have to publish of a flooded City of Sacramento. I did so, meeting with Tom Philp at his office, and we discussed the problems with respect to flood control in the Sacramento Valley. I also had the opportunity to give a copy of the same map to the Governor's staff, for the same purpose, when I was invited to his briefing on the bond issues. However, the copy I left with the Governor's staff was the one I wanted to give to the Auburn Dam Council.

I have ordered another from the Times Picayune, and hope to have it available for the next Auburn Dam Council meeting. For them it's a must see, as it dramatically demonstrates what we should never permit to happen in our Capital City. The Auburn Dam is what we need to protect our valley, not the band aides we're presently considering.

Joe Sullivan

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