Troy Edgar, one of two Republicans vying for the 72nd Assembly District this November, has been caught with his hand in the tax cookie jar again. This time an anonymous blogger at the OC Political blog revealed what Los Alamitos Council Member Edgar, who said too much while speaking at a Family Action PAC meeting, is up to. Here are a few excerpts from that post:
During lunch, Edgar got up and told the crowd that he was currently pushing a Measure to appear on the November ballot to “lower” the Utility Tax in his town.
What in fact Edgar is up to in his teenie town is quite the opposite.
Utility User Taxes are taxes imposed by cities on things ranging from water, gas, and electricity to home phones and cable tv. Most cities in Republican Orange County don’t even impose one at all. In fact, Los Alamitos is one of only 11 cities in Orange County to have a Utility User Tax.
Most of these taxes were passed and imposed a long time ago, prior to home internet access even being a figment of Al Gore’s imagination. But lately, more and more of the cities that do have one, have been updating their UUT’s to include new technologies, like the internet and cell phones.
This includes Los Alamitos, where Troy Edgar serves as Mayor. Seeing a pot of money that isn’t yet being tapped, Edgar did what any good tax raiser would do, and devised a scheme to get his hands on this extra money.
But knowing the political price he’d pay – he simultaneously tried to cover his tracks by reducing the current UUT by a measly 1%. He claims this will make the tax “revenue neutral,”. Any rational thinking person knows that broadly expanding the definition of a tax on services that are used almost universally, and claiming to off-set it by a reduction of the tax on services like home phones that are being used less and less, will no doubt make City coffers grow.
Oh my. How will Edgar spin this mess?
Let’s be clear here. There were two separate items.
The first is the need to modernize the TUT. In the late 90′s telephone usage was a fee for service PLUS time and distance. I know that my regular phone usage ran between $200-250/mo on average. On this I paid a 6% TUT.
Over time there have been a number of technology changes that have affected both telephone/communications usage AND the revenue models. One part of this included multiple changes to how voice communication was made. From increased cellular with lower costs to flat-rate phone plans for landlines, to VOIP, etc. In all these cases the costs for service dropped, and in many of these cases the service providers didn’t collect or pay TUT.
So, what used to cost me $200-250/mo is now split between a flat rate $26.00 VOIP and $150 Cell. And both, one or neither may be collecting and/or paying the 6% TUT.
The first goal is to change the TUT to ensure that all forms of communication by voice for which I am charged are all paying the TUT. This required a change in the TUT. Not a “new tax”, but an update to ensure that all people are being taxed equally no mater what service they are using for their voice communications. That means that the data portion of my cell plan should NOT be taxed, but basic connectivity and voice usage should be taxed at 6%. This is NOT a new tax, but the proper re-write to ensure that the old tax is applied fairly.
Will this increase taxes for some unknown percentage of people? It will insure that the taxes that should be collected by the service provider are being paid. If that service provider decides to increase the cost of service in order to cover the taxes that they should have been paying and now are clearly required by law to pay, then it is that service provider that was “beating the system” before and may now have to pass their cost on to the consumer.
Now on to the second part.
Edgar made it clear that his interest in dropping the 1% from the TUT was in order to “sell” the first thing. He and the council in their statement have pointed out that they have lowered operational costs by 13% Yet this proposal will actually reduce income by 18%. His claim that this won’t happen and is revenue neutral is 100% bogus. There is no proof that there will be an increase in collections from the companies, and there is no way to know that the companies will collect and report more TUT. We do know that all the ones currently collecting and reporting, on the other hand, will collect and pay LESS.
So, with no assurance that collections will increase, and an assurance that current collections will decrease Edgar pushed through a cut to the City income greater than the savings currently made to balance the budget.
At the time it was pointed out that by retaining the 6% TUT while making the necessary changes to the law the city could, at any time after the law was in place, if there was an increase in revenue, drop or lower the tax rate to ensure that it was revenue neutral without going back to the people for a vote. But, if there was a loss of income based on the change to the TUT -AND- the lower tax rate, the only way to recover the rate from 5% to 6% was to put it back on the ballot and vote for it to increase (ask Stanton how that worked out for them).
Edgar was quite clear that his intent was to lower the rate to 5% to ensure that the TUT changes would pass. In other words he was bribing the voters to do the right thing by giving them a 1% cut in the tax rate. He was buying their vote.
Now I guess that must seem like the way to do politics for Edgar. You buy votes. When the trashman pays for your campaign, then you give the trashman an exclusive contract even when it will cost business 100% more than the lowest responsible bidder. That’s how things are done in Edgar-world. So it makes sense that Edgar would think that rather than educating the voters on why the TUT should be updated (for the basic fairness of ensuring that all people in the city pay the same tax and tax rate for voice communications) it would make more sense to buy their votes off. It’s how Edgar does politics. Don’t sell the idea on it’s merits, buy the vote instead.
And that is the real story here. Not that Edgar is selling his bullcrap about being a “tax fighter”. We all know he isn’t because every business pays the trash company that contributed to his campaigns 100% more than they would have had to pay had the lowest responsible bidder been awarded the contract. He has created a massive tax on them, one the city only collects a fraction on while his campaign contributor gets to keep most of it.
No, Edgar is showing his true colours in that he believes the way to win is to pay off for the vote. Maybe he is doing that because if you want his vote, you have to pay him off to get it.
Especially revealing was a comment left on this post by Warren Kusumoto, Edgar’s fellow Councilmember:
Los Alamitos Council Member Warren Kusumoto said
July 19, 2012 at 9:28 PM
It is disappointing that Mayor Edgar decided to take personal credit for the entire City Council’s effort to MODERNIZE our Telephone User Tax (TUT) to protect the City from potential litigation and to fairly spread the TUT equitably among ALL subscribers. Which means that some users will see a TAX INCREASE while some others user will see a slight tax decrease.
It was our intention and desire is to make the aggregate of TUT monies collected “revenue neutral” as an income line item in our year-by-year budget. Unfortunately, due to the lack of concrete, specific data from the Telephone companies, it is impossible to calculate and estimate how much revenue will be remitted to the City once (or if) the modernized TUT is passed by the voters in Los Al. Based on the data we’ve reviewed from other cities that have already modernized their TUT’s, it would not be a surprise to me to see MORE TAX REVENUE when compared to prior years. That, in my opinion, would be a tax increase.
It seems oxymoronic to me that Mayor Edgar would use the phrase “revenue neutral” and “lower taxes” in the same speech. How can taxes be lower if it is revenue neutral?
Anyone who would like to discuss this can contact me at wkusumoto@ci.los-alamitos.ca.us