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Unlike the City of Berkeley powers that be, the Democratic presidential candidate John Kerry understands the financial plight of the middle class and is seeking to reduce its tax burden. 

Real property taxes in Berkeley are regressive and unfair and are a direct attack on the financial well-being of Berkeley’s middle class homeowners. Most Berkeley homeowners, unlike City of Berkeley employees, live in high-tax Berkeley and in a real world of uncertain employment, increased health care costs, and no guaranteed retirement system. Their home is usually their major asset in general and their primary asset for retirement. Many older Berkeley homeowners live on dwindling fixed incomes, and, by increasing the already-high local tax burden, the city is substantially impairing homeowner and community well-being. Younger Berkeley homeowners pay a high price for their homes and a large part of their income—often close to 50 percent—for housing, not because they are rich but simply because housing is expensive in Berkeley and in California. These younger homeowners are often hard-pressed to meet normal living expenses and are certainly unable to accumulate much in the way of retirement assets. Home ownership in Berkeley is simply not a proxy for wealth, high income, or substantial assets.  

We propose that before contemplating increased taxation as preferable to balancing the city budget through labor contract renegotiation, the city undertake an income/asset analysis of the typical Berkeley homeowner as compared to the typical city employee non-resident homeowner. For the income part of this study, one would need to factor in a monetary value for the 40 percent or so of total city employee compensation that is attributable to the fully-paid-by-employer benefits. For the asset side, one would need to include an asset value for the city’s retirement plan that accounts for an extended life span, employer-paid retiree health care, and an annual CPI adjustment in retiree income. 

With the help of accounting experts we have run the retirement asset numbers for a hypothetical 60 year old city employee who retired today at 75 percent of salary and whose life expectancy is another 25 years. We have assumed an additional $6,000 annual cost for health insurance, a five percent rate of return, and an annual CPI of 2.5 percent. Over the 25 year period, if this employee retires at $74,000 annually, the current asset value of this person’s retirement package is almost $1,500,000. So a Berkeley homeowner who is retiring today, for comparable retirement security would have to have about $1,500,000 invested (which, unlike the city employee pension, is not guaranteed by the full faith and credit of any government). A 35-year-old Berkeley homeowner would need to be setting aside, on average, about $70,000 annually for the next 25 years, and have an investment account at year 25 of about $2,300,000 to achieve this level of retirement security. 

So fellow Berkeley voter, if you are neither rich nor poor but instead a member of the vanishing middle class, you may want to think seriously about rejecting all of the November tax increases being pushed by the political establishment and also think about un-electing and un-appointing all city officials who are not following John Kerry’s lead and taking your plight seriously.  

Barbara Gilbert and Viki Tamaradze are co-chairs of the Berkeley Budget Oversight Committee.›