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Chula Vista's Illegitimate Tax

Chula Vista's Illegitimate Tax
Could the defeat of Proposition H force Chula Vista to cut city services? We'll discuss the strange afterlife of the failed ballot measure.

It's amazing how confusing government finances can become. Case in point - the recently defeated Proposition H in Chula Vista. The defeat of the measure has had some profound consequences on city services but, the tax that Proposition H asked residents to approve has not only been collected for years, it's still being collected.



Will Carless, is a reporter for and author of the blog, Pounding The Pavement.

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This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

CAVANAUGH: I'm Maureen Cavanaugh, you're listening to These Days on KPBS. It's amazing how confusing government finances can become. Case in point, the recently defeated Proposition H in Chula Vista. The defeat of the measure has had some profound consequences on city services. But the tax that Proposition H asked residents to approve has not only been collected for years, it's still being collected. Joining us to talk about the intricacies of the Proposition H defeat is my guest Will Carless, he's a reporter, blogger with the, his blog is called pounding the pavement. Morning, Will.

CARLESS: Good morning, Maureen, nice to see you again.


CAVANAUGH: Will, why is a failed proposition, Prop H, it was voted down in November. Why is a failed bill in Chula Vista still relevant?

CARLESS: Well, it's the main reason that the city's leaders have given to make these big cut backs in Chula Vista. And you've seen almost $6 million in layoffs, in cutbacks to vital -- what a lot of people see as vital city services like rec centers and senior centers. I mean almost a hundred people have had laid off in Chula Vista, and the primary reason that's been given is we no longer have this income that we can use, this $6 million that for years and years we've depended on.

CAVANAUGH: Now, for years and years they've depended on, they were collecting it already. And basically they just sort of wanted to get an okay from the voters to continue what they have been doing, and yet they didn't get that okay.

CARLESS: That's right. This is all based on something called a utility user tax, which is very common. It's in something like a hundred and 46 cities in California. And what it is is basically a very, very small tax, a very, very small proportional tax that you pay on things like electricity, gas, [CHECK AUDIO] long distance calls. And the bit that's in dispute was that for years they have been charging it on cellphone calls, on long distance cellphone calls. And there's some dispute starting about 2006 whether they're actually allowed to do that. And I won't go too into it, but basically the definition in Chula Vista's tax law says this definition comes from what the IRS, excuse me, is allowed to charge federal excise duties on, in 2006 there was a Supreme Court decision where the IRS was told you can no longer charge that tax on cellphones. Of and that put not only Chula Vista's utilities tax into dispute but dozens if not hundreds of these across -- or dozens of these across the state.

CAVANAUGH: That's amazing because what happened from your blog on the subject it seems is that this question got all caught up with the idea of an extra tax in a time of recession, and the idea that it had already been collected for years sort of got lost in the sauce, as we say. And the kicker is that Chula Vista is still collecting this tax.

CARLESS: Well, that's what makes this so interesting is that the city's basically -- it's said, it's used as its justification for laying these people off, we can no longer rely on that tax money. But the companies are still collecting that tax for the city. The money is still rolling in. The city's point, and you know, depending on who you talk to, it's a good one, is we're being prudent here. Somebody might come along at any moment and say, hey, all that money that we've collected for you, there might be a class action lawsuit from the people who are paying it, and their cellphone bills. People might come along and say, hey, all that cash we've been giving you? We want it back. So what the city's doing is being, it says very prudent, it's putting that money away, it's putting it in a separate account until it's billed up reserves of a year's worth of this money, which is around and about five and a half, $6 million. Once it's got that money in reserve, any sort of additional taxes it starts to collect, it'll keep -- it'll be able to spend again. So they're basically saying we tighten our belts for a year, we collect this money, then we got a cushion if anybody else comes after us for it.

CAVANAUGH: And then, however, though, in the interim, as you say, that this is really having a big impact on the budget picture in Chula Vista.

CARLESS: That's right. And there is some -- there is a lot of dispute about how real the threat of this sort of legal action is. If you look at it from -- it's not the cellphone companies that would come after the city for this money. And that's what the city's been telling me. Because the cellphone companies are essentially just tax collectors. They pass on the city's tax to their customers, and then they collect this sort of 2 or 3 bucks a month from people in their cellphone bills, and then give that money to the city. So the companies have got no skin in the game. They're not gonna come after the city. Now the -- it's conceivable that you could get together a group of people who would come after the city for the $2, $3 they have been putting out every month. But that's not typically how class action lawsuits work. I mean that -- those sorts of lawsuits typically come from people who've lost a lot of money, not a couple of bucks a month.

CAVANAUGH: Right. Let's move on, Will Carless, to another bizarre story. Steve pedia is former Chula Vista Port commissioner after a rather brief tenure. What happened?

CARLESS: Well, I don't know. All that can go on and what people have told me, and what I keep hearing again and again and again is that Steve Castañeda who was sworn in about a year -- sort of around, I think it was last January was very suddenly voted off the port commission on January -- in the middle of January this year. High vase, and other people say that it was pure as a result of political retribution, because Mr. Pedia used to be the mayor of Chula Vista, ran against both Cheryl Cox, the current mayor of Chula Vista, and Steve Castañeda who's the current city councilman, got pretty messy in those campaigns, and he claims that this was sort of a spite vote, that he was voted off by these two councilman, and then a third council member who kind of joined the fight. And yeah, I don't know how much -- I don't know how much truth there is to that, but certainly a lot of people have kind of come to me with that theory.

CAVANAUGH: And so explain about the Steve Pedia being fired.

CARLESS: Well, he wasn't so much -- he wasn't fired.

CAVANAUGH: He wasn't?

CARLESS: No, what happened was the really controversy here is that he had -- this all happened the same day, the very same day that he was appointed to be the vice chairman of the port commission. Now in lunchtime, he goes in, he's appointed to the vice chairman of the port commission. Now, at lunch time, he goes in, he's appointed to the chairmanship. Chula Vista's got a lot of stuff going on in it bay front. It's very important to the city how that develops over the next few years. And therefore the -- whoever is on the port commission is a very important, very powerful post in Chula Vista. So he's appointed to the vice chairmanship, arguably sort of boost his credibility and his say on the commission, and then suddenly that evening he's abruptly sort of given -- said thanks very much for your service, off you go, and this other lady, Anne Moore, who's an attorney, used to be the city attorney, is made the port commissioner.

CAVANAUGH: And we don't know why.

CARLESS: We don't know why. All we is we have this theory out there that keeps being told, that it's all about political retribution, and Cheryl Cox doesn't like Steve Pedia, nor does Steve Castañeda, and this is a good way of politically kicking him in the teeth. And it is odd. I mean, I should mention as well there has been a lawsuit or the threat of a lawsuit brought against the city council because of the way in which this was done. In previous years, and kudos to the Union Tribune who wrote about this, in previous years they have had lots of hearings, lots of public notice, loss of discussion over who the next port commission is. In this meeting it was just kind of like -- it was the very final item under mayor's comment, hey, wee gonna talk about who the next port commissioner is, and then, hey, presto, this new port commissioner is brought in, and the old one is kind of just told, off you go.

CAVANAUGH: Does this signal this there is some problem in Chula Vista governance?

CARLESS: I think from talking to the people who I've talked to on this beat, and I've been covering Chula Vista for a few weeks now, I wouldn't claim to be an expert. But I've been talked to a lot of people in the political world. And this idea of political retribution keeps coming up. [CHECK AUDIO] it's -- that it's still quite extraordinary to see these personal vendettas play out. I'm kind of working on collecting the string on that, to see if there's more to that, to see if that's something that needs to be written about. But it does come up a lot. She doesn't like him, he doesn't like her, that's why they're voting on this and that. There's all these kind of interlocking, long, drawn out stories where people don't like each other for various reasons.

CAVANAUGH: And as you say, though, there are major cities in the south bay, and lots of these stories people claim go under reported. Would you agree?

CARLESS: I would agree to -- you know, and I think that's kind of just part of the meaty landscape in general. Really, there's just not enough people out there doing the kind of jobs that, frankly, you and I do to cover all of this stuff. So what we did at voice of San Diego was -- aye just come in there, I've just sort of retaken my position there, and sat down with my editor, and he said, look, we need to take a look at south bay, we need to look at Chula Vista. There's some crazy stuff going on down there that's just unreported. Let's take a look at it, [CHECK AUDIO].

CAVANAUGH: I'm speaking with Will Carless, are ask let's take a little bit about your new blog, pounding the pavement. So aside from checking out what's going on in the under reported areas of the south bay, what other kinds of stories will you be pursuing. ?

CARLESS: Well, I was hired as first time investigative reporter, so that's really my beat. That's my job. I don't have a beat as such. So what I do is as and when stories come up, people come to me with ideas, my own research shes me that something needs to be investigated, needs to be looked at. Take that to my editor, and my editor will decide, right, let's go off in direction, let's go off in this direction. So I've only been there for about five week, and sort of just getting started. And one the first things we wanted to look at was all this stuff in Chula Vista. But in the future, expect to see the big investigative projects that Voice has made their name for. I've worked on some of the big stories in the past, some political corruption stories, big fraud stories issue the sort of stories that take months and months to put together. And then make a big slash hopefully when they come out.

CAVANAUGH: This is why there aren't investigative reporters teaming on newspapers and at KPBS, of course. We have Amita Sharma here is our investigative reporter. But these stories do take just months and months of work and work to try to develop, and you make phone calls, and you think you're onto something, then it just all sort of blows up in your face.

CARLESS: That's right. You're really hitting the nail on the immediate there. I was kind of Voice's de facto investigative journalist a couple of years ago when I was working there before before I kind of took a year and a half sabbatical. And you're absolutely right. It's quite frustrating because you'd work on something, you'd spend a couple of weeks researching it, and if you're a good diligent journalist, you're gonna go to your editor and say, look, I've looked at this, and I just don't think that it's gonna pan out. There's not a story there. I'm glad this we looked at it, but there's a lot of that goes on behind the scenes before anything goes into print. For every story that you come out with that's like a big slash investigation you've probably taken a look at 4 or 5 other issues that have gone nowhere.

CAVANAUGH: And yet bloggers have a certain responsibility to keep their blog up. So how are you gonna balance that idea.

EATON: Well, I'm sort of given a little bit more leeway on the blog side of things than some of the other reporters who are working on beats and working on daily story. However, the idea with my blog is that -- we did something very interesting with this Chula Vista series, which is rather than sit down and write know 1, 2, 3, stories I'm kind of just posting stuff that [CHECK AUDIO] so it's just this idea of rolling stuff out as it comes to you instead of having to wait until you've got something that is nicely packaged as the sort of typical who, what, where, when story. But the main idea for my blog is as I do investigations, if I roll out a big investigation, all the follow up stuff that comes after it, all the new information that comes in we can roll that out on the blog and keep people informed about big issues.

CAVANAUGH: We'll discover the stories at the same time you do, almost.

CARLESS: Pretty much. Well, I've gotta be careful with that, because I don't want to get scoops. If I'm working on something that's big and sort of secretive, then you're not gonna see that stuff on my blog. So -- but certainly after something's broken, then we can roll out all of the extra additional stuff that anyone who's interested can keep an eye on, because I think that that happens too much in journalism there's sort of a big slash, and then the story kind of dissolves and disappears off into the ether.

CAVANAUGH: No follow up.

CARLESS: And I think that's what's great about blogs is that you can keep it alive ask keep the discussion going.

CAVANAUGH: Well, welcome back to San Diego.

CARLESS: Thanks very much, nice to be back.

CAVANAUGH: I've been speaking with Will Carless, he's a reporter, and of course blogger at You can check out his blog, it's called pounding the pavement. And if you would like to comment on requesting you've heard here, you can go to Days. Stay with us for hour two coming up in just a few minutes right here on KPBS.