November 1, 2008

Two measures actually reduce taxes

By Mayor Chuck Reed and Councilmembers
Judy Chirco and Pierluigi Oliverio
Special to the Times

Wouldn’t you love to have a tax reduction in these tough economic times? That’s what Measures J and K will do.

San Jose voters have an opportunity to cut tax rates when you vote on Nov. 4. Measures J and K reduce by 10 percent the rates you pay for two existing levies — the 911 fee and the telephone user’s tax.

These two charges have been on the books in San Jose for years, and they provide an important funding source for vital city services that we very much need to maintain, like police, fire, parks and libraries.

So why are they on the ballot? Because legal challenges in other cities around the state have raised questions about whether or not they need voter approval. Rather than wait and see how things work out, and hope that final court decisions are favorable, the City Council decided to be cautious and ask the voters in advance. If we wait for the courts to decide, we might have a long delay before the next election to get voter approval. That long delay would put a big hole in our general fund and cause cuts in basic city services.

Because times are tough, we thought a modest 10-percent tax reduction would be appreciated by the taxpayers and help improve the prospects for approval.

These tax reduction measures have received the support of San Jose fire fighters and police officers as well as the bi-partisan support of both the Republican and Democratic parties.

Measures J and K have also received the support of the League of Women Voters San Jose/Santa Clara.

Measure J would eliminate the emergency communications fee of $1.75 per telephone line per month and replace it with a voter-approved tax of $1.57 per line per month. This represents a 10 percent rate reduction, and there would be a corresponding reduction for commercial-type trunk lines. Residents exempt from the current fee, including low-income seniors and people with disabilities who receive lifeline telephone service, would continue to be exempt.

The current fee is set to expire in July 2009, although it could be extended by the city council if the courts allow it. There have been legal challenges raised about such a fee in other jurisdictions. If the proposed tax reduction is not approved and the fee is not extended by the city council, the city would lose an estimated $24 million annually in revenues that are used to support city services. If the reduced rate tax is approved, it would generate slightly less revenues, an estimated $22.6 million annually.

Measure K would reduce the telecommunications users tax rate from 5 percent to 4.5 percent (which is a 10-percent rate reduction). This tax was introduced in 1970 and currently generates approximately $26 million annually for city services including parks and libraries, police, fire and street maintenance. If the reduced tax rate is approved, it would generate slightly less, an estimated $23 million annually.

As with similar utility tax ordinances throughout the state, San Jose’s ordinance was written before new telecommunications technologies were introduced and before several changes were made to federal law. As a result, legal issues have been raised in other jurisdictions. This tax reduction measure would update San Jose’s ordinance to avoid potential legal issues and apply the tax equally regardless of the technology used. Existing exemptions would continue to apply, but everyone would enjoy a reduced tax rate.

Currently, these two existing levies combined generate about $50 million to pay for police, fire, libraries, parks and street maintenance. To put these revenues in perspective, $50 million is more than the entire budget for all of our libraries.

Please vote yes on Measures J and K. Reduce your taxes now while helping preserve vital city services.

For more information www.lowersjtaxrates.org or e-mail us at info@lowersanjosetaxrates.org.