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Commentary: Why I voted alone against the ‘dock tax’

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I am the sole Newport Beach council vote against what is colloquially referred to as the “dock tax.”

The new charge increases government/regulation, creates a new source of revenue and redistributes more of the hard-earned money of the people who are motivated to make the economy work.

The solution to investing in our harbor infrastructure lays in prudent management of existing tidelands revenues, not creating new fiscal and regulatory burdens for residents.

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Bigger government

The dock tax will be levied on a square-foot basis. If you disagree with the city on the measured area, you may appeal to a hearing officer.

Once government gets hold of an activity, the bureaucracy metastasizes. More government will monitor docks for rental activity. The city will bill residential rentals the same rate as a small marina.

Through the passage of the dock tax, the city has carved out an area (“dock area”) separate from the residence. When a homeowner violates the permit connected to the area, the city can move to confiscate the dock.

The public boardwalk and public beach abutting the docks on Balboa Island provide access for future dock rentals available from the city.

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Current inspection fee

Existing law grants in trust to the city all tidelands in Newport Beach. The city administers local revenues and expenses and is responsible for the maintenance of harbor infrastructure. Examples of revenue sources are parking and the city’s lease with Ruby’s Diner.

In the 1980s, city officials inquired with State Lands Commission (SLC) about charging a rent or tax for residential docks. SLC determined the city could not charge a tax or rent where an upland residential property abuts the dock. Indeed, the state needed a new law (Senate Bill 152, passed in 2011) to charge the docks it directly manages.

SLC agreed to have the city inspect the docks as they could catch fire or be obtrusive. The $100 annual inspection covers this service.

The dock tax is a new charge adopted by council and unrelated to the inspection fee. Some residents charge the dock tax is double taxation.

According to market data provided by local Realtors, a dock adds value to a bay front property. On an assessment of $500,000, the levy is $5,000 of which the city receives $850. The city receives 17% of the basic 1 % levy. All property tax revenues are deposited in the General Fund.

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New revenue

When government can’t live within its means, it creates new sources of revenue. Then-state Sen. Ross Johnson sponsored an amendment to the Beacon Bay Bill in 1997. It states that 80% of tidelands revenues shall go to capital infrastructure. This speaks to the intent of how local tidelands revenues ought to be spent.

How is the city spending its tidelands revenues? Less than 30% is being used for bay projects. Considerable sums are being used for employee salaries and benefits.

Since 1997 about around $100 million in tidelands revenues that could have been used for bay projects were used for other purposes. When it came time for the city to fund bay projects, the city scrambled for money. The city manager and I made several trips to Washington, D.C., and general fund dollars were used for several bay projects.

Part of the solution to maintaining tidelands is to dedicate 100% of all tidelands revenues for bay projects, not just the increment from the dock tax. The city must end the practice of drawing employee compensation from the Tidelands Fund.

The city rejects this solution as it would disrupt its expense structure. So, government creates a new source of revenue for bay projects: the dock tax.

There is one constant in federal, state and local government, as revenues grow, government grows and employee compensation increases. Watch what happens as Proposition 30 and the coming changes to the federal tax load take hold.

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Threat of Sacramento

SLC needed legislation (SB 152, passed in 2011) to charge fair market rent at its more than 3,000 lakes and rivers.

Once the city attorney stated unequivocally that SB 152 does not apply to Newport Beach, the argument “we must do this because it’s a legislative mandate” collapsed.

Pro-tax dock advocates threaten the bureaucratic hammer. If the city doesn’t make a preemptive move to levy the dock tax, the state bureaucracy (SLC) may act to impose a heavier burden on residential dock owners.

There is a commonality of thinking among contemporary bureaucracies they can take the money and control the behavior of the legislator’s constituency. Regulation has become so broad and complex that legislators do not have the ability to fully comprehend the breadth of latitude that is available under any particular regulation.

Individuals I know who have many years of experience with the federal to the local levels tell me this is caused by the fact that so few elected officials have the capacity to craft legislation and rely on bureaucratic staff members who create legislation that is so broad or is written in such a fashion that it enables the bureaucratic agenda.

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Conclusion

I like and respect my colleagues on the council (who have otherwise done so much to get the city’s fiscal house in order) but on this issue, I’ve had to part company.

The dock tax grows government/regulation, imposes an additional layer of taxation to create a new source of revenue, and takes more of the wealth from those motivated to grow the economy and redistributes it to government. Regulation defines the “dock area” for levy and confiscation.

The solution to maintaining the tidelands isn’t developing new sources of revenue and growing government but ending the practice of diverting existing tidelands revenues for employee compensation. The Beacon Bay Bill is a sterling example of how the city should manage tidelands revenues.

LESLIE DAIGLE is a Newport Beach city councilwoman.

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