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The million-dollar mixup

Submitted by on 1, October 21, 2008 – 10:00 amNo Comment

Yesterday we gave you the rundown on the city’s precarious economic situation. Well, would ya believe that there’s a new little wrinkle that could make things even worse?

The state Board of Equalization, which is in charge of collecting and handing out a whole mess of tax dollars to municipalities and special districts, recently told city officials they’d paid out more sales tax dollars to our fair Island that we were due. In August, they told city officials that Alameda needed to pay back $50,000. A month later, they came back and said they’d made another boo-boo. We actually owe $1.1 million.

“It was a surprise,” said the Island’s interim chief financial officer, Ann Marie Gallant.

So how did this happen? Apparently a company that had been based in Alameda, which was then called VanStar, moved to Livermore sometime in 1999 or 2000 without telling the equalization board. As a result, the board said it paid us sales taxes from that company that we apparently weren’t due.

Livermore’s outside tax auditor had looked at the books and put their dibs on the tax money with the state board, which needed a while – a few years, in fact – to check it out because the company has since moved, changed its name, gone bankrupt and merged with Hewlett-Packard. (Apparently, this auditing business is a common practice for cities, per Gallant.)

Alameda’s appealing this decision, though Gallant said it is unlikely the state board is wrong. Unless the board changes its mind or the city decides to sue, we’ll have to start paying up post-haste. And that means a $550,000 hit to the budget for each of the next two years.

We asked Gallant where that money is going to come from. She said the council will be talking about that as part of its budget discussion tonight.

Stay tuned.

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