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OAK
Measure V
Utility User Tax
Ordinance
Extension of Alameda County Utility User Tax for Unincorporated Areas

Extends to 2033 the county’s current 6.5% utility user tax levied on residents of unincorporated areas.

Vote YES

Jump to SPUR’s Recommendation

What the Measure Would Do

Measure V would extend Alameda County’s current tax on utility services (covering electricity, telephone, natural gas and cable) for residents in unincorporated areas of the county (such as Castro Valley and Sunol). The current tax is 6.5% and is set to expire in June 2021; this measure would extend the current tax rate by 12 years, to June 2033.

The current utility tax exemptions would still apply; this includes exemptions for government agencies, life support systems and agricultural uses. The measure would also exempt those who qualify for low-income rate assistance programs from Pacific Gas & Electric (PG&E).1

Measure V is a general tax, and revenues collected would be deposited into the county’s General Fund. However, it has been the policy of the Alameda County Board of Supervisors to dedicate revenues toward services that benefit the unincorporated areas, including the sheriff’s office and the library department. It is estimated that the measure would raise $12 million per year.

The measure would not apply to incorporated cities of Alameda County, many of which have their own utility taxes. However, state law requires that all Alameda County residents vote on this measure.

The Backstory

Alameda County established a 5.5% utility tax on residents of unincorporated areas in 1992. Voters extended the tax twice, in 1996 and 2000, and raised it to 6.5% in 2008. The tax is collected from consumers by the utility service provider, which then passes on the revenue to the county.

Alameda is one of four counties in the state that levy a utility user tax, and nearly 160 cities rely on this tax for discretionary income. Many cities created utility user taxes in response to state cuts to revenues in the early 1990s. Cities and counties lost between 9% and 24% of property tax revenue, and many turned to raising existing taxes and creating new ones, including utility user taxes.2 Alameda County’s rate is somewhat higher than that of cities such as Newark (3.25%) and Emeryville (5.5%), though it’s less than the rates in Oakland, Berkeley and Piedmont (7.5% for each).

This measure was put on the ballot by a unanimous vote of the Alameda County Board of Supervisors. As a general tax, it requires a simple majority (50% plus one vote) to pass.

Equity Impacts

Utility user taxes are considered regressive because they levy the same rate on all consumers regardless of income, thereby taking a larger share of the earnings of low-income households. Some research suggests that many low-income residents of the inner East Bay are being displaced to unincorporated areas of Alameda County, which would make them subject to this particular tax. For example, from 2010 to 2015, Alameda County’s low-income Latino population grew by 47%, concentrated in Oakland’s Fruitvale neighborhood as well as unincorporated areas of Ashland and Cherryland. One single census tract in Ashland gained 450 low-income Latino households in those five years alone.3 Measure V would disproportionately impact low-income households that pay the tax in these areas.

However, Measure V would continue the county’s exemptions for households enrolled in PG&E’s low-income rate assistance program and those using gas or electricity for life-support systems. PG&E offers discounted energy bills to households earning less than 200% of the federal poverty level. About 89% of eligible households receive the discount.4

Pros

  • Measure V would continue existing exemptions for low-income households and those who rely on energy consumption for life-saving medical support.
  • Measure V would appropriately tax the use of electricity and gas, which contributes to greenhouse gas emissions and climate change.
  • This measure would raise needed funds in the unincorporated areas of the county, which would otherwise face cuts to services.  

Cons

  • Measure V misses an opportunity to make adjustments to the utility tax to levy higher rates for utilities that are most harmful to the environment (such as non-renewable electricity and natural gas) and lower rates for less harmful utilities like telephone and cable services.
  • Not all low-income households receive rate assistance or exemptions, and as a result not all would not be protected from the impacts of this tax.  
SPUR's Recommendation

Measure V would raise needed funds for county services in unincorporated areas. While SPUR would have liked to see the county adjust its utility tax to target the energy usage that’s most harmful to the environment, this measure does support climate goals by taxing the use of utilities that raise emissions. Furthermore, it would maintain important exemptions for low-income households, blunting the regressive impacts of this tax. We believe Measure V is worthy of support.

Vote YES on Measure V - Utility User Tax
Footnotes

1. PG&E’s California Alternate Rates for Energy Program (CARE) is a monthly discount of 20% or more on gas and electricity for qualifying low-income households. The Family Electric Rate Assistance Program (FERA) is a monthly discount of 18% on electricity only for qualifying families. See: https://www.pge.com/en_US/residential/save-energy-money/help-paying-your-bill/longer-term-assistance/care/care.page?WT.mc_id=Vanity_care

2. California City Finance, “Utility User Tax Facts,” 2017, http://www.californiacityfinance.com/UUTfacts17.pdf

3. Urban Displacement Project, UC Berkeley, Rising Housing Costs and Re-Segregation in Alameda County, 2016, https://www.urbandisplacement.org/sites/default/files/images/alameda_final.pdf

4. California Public Utilities Commission, Letter from Eric Randolph to PG&E, January 4, 2019, https://www.pge.com/tariffs/assets/pdf/adviceletter/GAS_3990-G-B.pdf