Opinion: Yes on K and L, both will benefit city residents

Opinion of the Daily Post

The Daily Post recommends a “yes” vote on Measure K, a narrowly focused business tax that’s the product of lengthy negotiations with the business community.

When the negotiations began, the city was asking for a tax that would yield $43.3 million a year. But over time, the two sides reached the compromise that appears on the ballot — a tax of only the largest businesses in town that will generate $9.6 million.

As a result of this compromise, the large businesses who will pay this tax agreed not to campaign against Measure K.

Significantly, this tax exempts small- and mid-size businesses (those with 10,000 square feet or less). It also exempts grocery stores and apartment complexes.

The money will go into three buckets — more police and firefighters, affordable housing, and “grade separations” (bridges to separate the streets from the Caltrain tracks to prevent traffic backups).

The promise that the money will go into those three categories isn’t binding. City Council could change the uses, but hopefully the public will pay attention and object to spending they feel is inappropriate.

Measure L

The Post is also recommending a “yes” vote on Measure L, which will allow the city of Palo Alto to take money it receives from customers paying their utility bills and use it for other city services, such as police or libraries.

Usually the money customers pay for utilities covers the cost of providing those services, but sometimes the amount is more than the city needs to cover its costs.

So the city has been transferring that “profit” or “surplus” into the general fund, which pays for streets, parks, libraries, police, fire and ambulance response. The city has been doing this for decades. In the case of the city’s natural gas utility, about $7 million is transferred each year to the general fund.

The Miriam Green lawsuit

But in 2016, Palo Alto resident Miriam Green sued the city, saying it was charging an illegal tax through its utility bills because it was collecting more than the cost to provide utility services.

The city would need voter approval to collect the additional funds, the lawsuit claimed.

A judge ordered the city to refund $12.6 million to natural gas customers. The refunds will probably go out next year as credits on utility bills. Former customers will get a check.

In addition, as a result of the lawsuit, the city agreed to put Measure L on the ballot to see whether voters approve of transferring funds from the natural gas utility to the general fund to pay for general city services. If L loses, the money stays in the utilities department.

The measure would authorize the city’s transfer to the general fund of up to 18% of its natural gas utility revenue, starting in 2023. This measure needs majority approval from voters to pass.

Palo Altans are fortunate that city residents a century ago set up the utility system that generally provides services at lower rates than PG&E, and produces a profit that can be used to provide city services.

Continuing this transfer, which supports such things as police and fire department funding, is a no-brainer. The commonsense choice is a “yes” vote on Measure L.