Assemblyman Darrell Steinberg, at Mayor Heather Fargo's urging, has contrived a scheme to develop a mechanism to help the City of Sacramento get to a pot of business money to help build the downtown arena for the Kings. He sponsored Assembly Bill AB 944, modifying the Parking and Business Improvement District Law of 1994, which authorizes cities to form property and business improvement districts which may levy assessments in a business improvement area for the purpose of improvements and promoting activities of benefit to the properties within the district. The Law was essentially amended to replace the word property with the word business, or to add the words or business after the word property. The modification appears simple, but is actuality deceptive and potentially dangerous to all City taxpayers.

When you boil down pages of the Law's technical gobble-de-gook, what Steinberg did was to change the Law to set up a condition wherein the City, as organizer of an assessment district (which is what really could be formed) can float up to 30 year bonds on the strength of quasi-agreements of businesses who agree to make up the district, and who offer to repay the bonds and interest over the years. Sounds great, until you recognize that an assessment district made up of property owners, who indirectly pledge the value of their property (which can have a lien placed, or be seized if payments are not made) differs greatly from non-property owning business owners who simply agree to pay. The change ignores the vagaries of business ventures, and has crafted a situation wherein the City, which is the responsible party to see the bonds are retired, depends, not on the value of participant's real property to back the bonds, but on the City's General Fund which is taxpayer's money. In the real world, to get a loan (bond) with the lowest interest possible, the City has to demonstrate it has a secure source of money for repayment, and that, folks, is the taxpayer money in the General Fund. And now AB 944, passed during the closing days of the budget debacle, is in the hands of Governor Davis for approval. Under the conditions Davis is under with respect to the recall, he will sign anything he thinks will help keep him on the job. Oh! By the way. The Sacramento Kings owners donated $100,000 to Governor Davis' anti-recall campaign the last full week in September. Anyone else want to pay-to-play?

THE DOWNTOWN ARENA - MAYOR FARGO'S PLAN

According to Terri Hardy of The Bee, Mayor Fargo has announced that she "will ask the public to weigh in on whether the city should push for a downtown sports arena, with an advisory vote to come as early as March." The study on ways to finance the arena, and a downtown entertainment center, is expected to be released this month. Estimates of the redevelopment costs range from $300 to $500 million depending on amenities such as parking and roads.

Nonbinding advisory votes on a ballot are tricky, as they depend greatly on what is being asked, and the criteria connected with the question. For example, in this year's League Questionnaire to Members on local issues the question asked was "Should the City of Sacramento commit public funds to build a basketball arena downtown in conjunction with the Sacramento Kings management?" League member's response was 93% opposed. Had the question been "Should the City of Sacramento plan to sell the Kings a portion of downtown to the Kings' management to build a Basketball arena?" the response would probably been 93% in favor!

SACRAMENTO KINGS DEBT AT ARCO ARENA

The history of the City of Sacramento's financing of Arco Arena bears close examination as the Mayor and City Council consider building a new downtown arena. According to the first Analysis of A New Downtown Sports & Entertainment District at the UP Rail yards (Sacramento), in 1986 those, who at that time owned the Sacramento Kings, privately financed the ARCO arena through bank loans. However, playing in a small market, and supporting the entire debt burden, the financial position eroded as the private debt carried high interest rates and onerous cash flow problems. After 10 years, the Kings approached the City for help, and in 1997 the City and Kings restructured the Arena debt. The City refinanced by issuing $73.7 million of Lease Revenue 30-year Bonds, backed by the City's General Fund, and loaned the money to the Kings to refinance part of their debt. The Kings agreed to pay the debt service via rent from ARCO Arena operations and a ticket surcharge.

The Kings are not paying the full yearly interest on the $73.7 million loan, and the unpaid balance on the loan is accumulating. The agreement in 1997 included an additional $8.5 million in Deferred Capital Notes due in 2005, allowing the balance to accumulate to a maximum of $85.5 million by 2005.

Whether the 1997 ARCO loan is to be paid off, or becomes some sort of a public subsidy, before financing of a new arena is considered, can become a substantial cost issue for taxpayers. Close examination and analysis of the financial planning in the soon to be released "Report" is absolutely necessary to assure that taxpayer's money does not become the principal source of new arena funding.

SACRAMENTO CITY COUNCIL APPROVES USING PUBLIC MONEY FOR THEIR CAMPAIGNS

On September 9th, the City Council approved use of public money to partially fund their political campaigns; not to submit the use to a public vote; and to set aside $150,000 of General Fund money to be ready for the March 2004 Primary election. The League has opposed the use of public money for political campaigns, and has repeatedly recommended that should the City Council foster the use of public money, it should submit such use to a vote of City residents. In May 2000 City staff also recommended against public financing, and in April 2002 the City's selected Campaign Finance Committee recommended it be put to a vote on the November ballot, and that the money come from a source other than the General Fund.

Oddly, in addition to the League, those that expressed opposition included the City's labor organizations, which argued against the use of public money for such a purpose in a tight budget year. Notwithstanding the prior recommendations, and the voiced opposition, the Council voted 6 to 3 to use public funds for their political campaigns.

LIVING WAGE

The "Living Wage", in the form of a proposed City of Sacramento Ordinance, which will establish a selective minimum wage increase, was approved by the City Council on September 30th. A final vote on the Ordinance will occur during the next two months. The Ordinance will deal with anything touched by city money or gratuities, and it requires those outside organizations employing both permanent and temporary employees be paid a minimum of $9 per hour if health benefits are provided, or $10.50 per hour if they are not. The Living Wage will become effective on January 1, 2004.

Living Wage involves contractors who receive more than $100,000 in City funds for services to the public and to the city government. In addition, the Living Wage covers licensees of city property that perform propriety interests of the city government, and those businesses and individuals that receive subsidies that enhance economic development. It also requires written agreements between an Employer and Labor Organization regarding representation of employees; dispute 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. City employees and union employees are exempt.

The living Wage is estimated to add $1.7 million a year to the cost of City contracts,

Dave Butler, of The Metro Chamber, had developed a program, Direct Contact, as a counter to Living Wage. Direct Contact would connect lower-income workers, via employers, with undersubscribed federal and state programs that support work and increase workers' net earnings. These programs include earned income tax credit, health insurance, transportation assistance, food assistance and job training. However, it seems the Metro Chamber modified its opposition to the Living Wage concept, and did not voice opposition in the public hearing.

The League has opposed the Living Wage concept from the outset, and still believes that if the City wants to foster a Living Wage Ordinance, with its additional costs in public funds, it should follow the lead of its author, Councilman Dave Jones, and submit the concept to the voters.

SACRAMENTO CITY HIDDEN UTILITY TAX

Most City residents know they pay a 7.5% utility tax, three times higher than anywhere else in the County and its Cities. The Sacramento County Taxpayers League ballot Measure T last November told them so, tried to reduce it to 2.5% over 5 years, and missed by just under 8% of the vote. But what City residents don't seem to know, or have forgotten, is the City has another bigger, hidden utility tax, 11% on City run utilities, which include water, sewage, garbage, and storm water drainage. Residents, along with commercial, public and private facilities, and offices in the City might not know the tax is assessed, because it doesn't appear on their utility bill. The story of how that happened needs telling.

The Taxpayers League opposes utility taxes because they are regressive. They tax necessities, taking a disproportionately higher percentage of low-income wage earners money than from those more fortunate in the community. State Legislatures, notwithstanding budget shortfalls over the years, rejected taxing utilities. They, as we do, reason utilities are necessities, consistent with exemption of food and medicine from the state sales tax. Yet the City implemented two distinctly different utility taxes. The oldest is the 1969 Utility Users Tax (UUT) on telephone, electricity, and natural gas, and now includes cable television. It was this tax we tried to reduce with Measure T.

The second utility tax was implemented in1998 when voters approved an Enterprise Funds/General Tax (EFT), on water, sewage, garbage disposal, and storm water runoff services provided by city, the hidden tax. The 11% EFT evolved from a challenge by the Howard Jarvis Taxpayers Association and the Taxpayers League, of an illegal 10% In-lieu Franchise Fee levied by the City on City utilities operated by their Department of Utilities, as though the Department was a private contractor. The City was challenged on the basis the fee was actually a tax, and we recommended the "utility tax" be put before the voters as required by law. The City did so, advertising it as a "revenue neutral tax", and as it was unopposed, it was approved by the voters. And the mistake is ours. We should have opposed this tax as strongly as possible. It is a bad tax.

After passage, the tax never appeared on City bills for each service. Instead, the City applied it as an 11% tax against the money collected in the Enterprise Fund from city operated utilities, and included part of the value of their capital infrastructure. In the Revenue Budget of 2001/02 it was listed as item 3122 on Schedule 6, under "Taxes" which covered all taxes going into the General Fund. In 1999-2000 the tax brought in $10,916,000.

The League has continued to watch and write about the EFT, and the City may have become sensitive to the exposure, as in the 2002/03 budget, line item 3122 disappeared from the Tax Table. It was renumbered as line item 3997 and put in the Other Resources Table, where it showed that in 2000-2001 it brought in $11,320,000, and in 2001-2002 it raised $12,059,00. It was budgeted at $12,360,000 for 2002-2003 and at $13,263,000 for 2003-2004. The increase over the four years could amount to an additional $1,943,000 for the General Fund.

Utility taxes again have become a matter of Board discussion and concern. The League Directors decided the 11% EFT is providing the same kind of regressive windfall tax as does the 7.5% UUT. They voted to begin a program aimed at elevating public awareness of this regressive tax, and to try to reduce it by negotiation with the City if possible, or by direct action if necessary.

LEAGUE REGISTERS AS LOBBYIST

The City of Sacramento has dreamed up a doozy. They adopted a new Ordinance on July 17th, effective October 1st, adding Chapter 2.15 to the City Code titled: "The City of Sacramento Lobbyist Registration and Reporting Code", which states: "The people of Sacramento have the need and right to know the identity of lobbyists who attempt to influence the decisions of City government and the means employed by them to advance their interests; and Full disclosure of lobbying activities of such persons and the identity of their employers will contribute to public confidence in the integrity of local government; and Full disclosure is also necessary to ensure that City Officials are kept informed about the identity of persons whose interests the lobbyists represent."

Further, each Lobbyist must file a quarterly report whether or not any lobbying activities have occurred. And the yearly cost to the lobbyist is $100 per year, paid to the City.

The League, defined as an "organization lobbyist", and certainly in the business of advocating to City Officials positions in defense of every taxpayer in the City, registered on September 30th, and was informed we were the first, and only, lobbyist registered. As this is the case, we expect that all other organizations and individuals that interface with the City on many different issues also be required to register. Such organizations as the Sacramento Metro Chamber of Commerce, all business organizations, Unions, City Citizen Neighborhood Organizations, Arts Groups, Environmental Organizations, Senior's Organizations, etc. should also be held accountable, and required to pay and submit quarterly reports as defined by the new law. We will monitor the progress of the required registrations to assure that we are not alone in this strange application of the U.S Constitution's Amendment 1, which prohibits abridgement of the right of citizens to petition the Government for a redress of grievances. We don't believe the Nation's founders really intended that redress be conditioned on payment of $100 per year for the privilege of interfacing with City Officials, and quarterly reporting of efforts. The legal aspects of failure to comply or enforce may be very interesting.

VOTED WITH THEIR FEET

In the August Tax Fax, President Joe Sullivan's Column described the decision made by his son Joe to move himself, his wife Suzi, and Joe's two grandchildren Kati and Joe to Tennessee. They now live in Knoxville.

Joe's son's decision resulted from the degradation of economic conditions that have befallen the State of California, and a desire to reduce his living costs in an area rated nationally as considerably more desirable than Sacramento. Coincidentally, Dateline NBC learned of Joe's son's move, and its reason. Tom Brokaw featured young Joe and his family's move on its Sunday, October 5th evening telecast. It was the lead-in feature as a prime example of Californians who have "Voted with their feet" on California's future, part of Brokaw's story of the Californian Recall.

MEMBERSHIP RECRUITMENT

Our Members constitute the League's strength, and traditionally new Members are recruited by our present Members to enlarge our base. Taxpayers are being assaulted as never before for additional money from every level of government in the form of fees, assessments, rates, and taxes. Locally, the Taxpayers League is the only recognized and organized defender of the County and its Cities' taxpayers capable of putting up a viable defense.

Over our 42 years, we have successfully defeated many attempts to raise taxes, rates, fees, and assessments in the County of Sacramento. Such battles are expensive. And those we are engaged in now, and new attacks to be faced, are frightful. Members must remember that the League is composed wholly of dedicated volunteers who battle not only on Member's behalf, but also on behalf of people who virtually cannot help themselves forestall the onslaught. To be successful we need more Members working to strengthen the League by recruiting friends and associates as League Members. We are repeating our request to all Members to recruit others to help the League. We added a repeat of the July Member Recruitment insert in this Tax Fax for use by all Members to provide names of those encouraged to join the Taxpayers League.

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 and fax number is (916) 921-5991; and our address is:

UPDATE ON SACRAMENTO TRANSPORTATION

These fundamental principles are the over-arching principles that were derived from the Community Interest group, a subgroup of the Sacramento Transportation and Air Quality Collaborative.

Quality of Life: Land Use and Transportation planning and implementation should improve the quality of life for the people who live in our communities, consistent with their visions for their communities. Connect people and places through an inter-connected transportation system that is safe, healthy, efficient, affordable, convenient, user-friendly, and compatible with the communities it serves.

Air Quality: Meet or exceed the state and federal air quality standards.

Unmet Transportation Needs: Priority should be given to the many unmet mobility & accessibility transportation needs in currently under-served segments of the public - the low income, seniors, youth, the disabled, and ethnic populations, including those people who choose not to drive or are unable to drive.

ADA: Implement the intent and spirit of the Americans with Disabilities Act with respect to transportation-related decisions.

Universal Design: Utilize Universal Design principles in planning all transportation-related facilities and systems.

Growth: Growth should benefit the community at large, provide an adequate balance and well distributed supply of affordable housing, and should not benefit one segment of population at the expense of another nor detrimentally impact the natural or social environment. "Key Land Uses" (e.g., job centers, affordable housing, shopping, parks and recreation, schools, medical and government services, transportation hubs, etc.) should be sited near activity centers and transit accessible central locations.

Partnership: Government is in partnership with the community. The governmental process must include community interests affected by transportation and air quality control planning decisions from the onset of the planning process and throughout the planning and implementation phases. To find out more information about Sacramento Transportation and Air Quality Collaborative, log onto their web site at http://www.sactaqc.org