According to Long Beach elected officials, additional revenue is needed to address several current and future needs, including beefing up the number of police officers and firefighters and addressing what city staff claims is $2.8 billion in unfunded infrastructure repairs and renovation – from streets and sidewalks to community buildings and fire stations.
Their answer is to possibly propose a tax measure to be placed on the June or November 2016 ballot.
During a special meeting of the city council, held January 26, the city’s financial management staff, at the request of councilmembers, outlined nearly a dozen tax measure proposals for consideration. Some of the proposals would increase existing taxes while others would be new taxes.
New taxes would include a parcel tax, a property tax based on a fee per parcel rather than property valuation; a parking tax, levied on public and private parking lots; an oil severance tax, based on a percentage of actual sale price of oil or on a rate from a published price index; and an admissions tax, levied as a gross receipts tax charged for entry to specific entertainment, sporting, recreational, and/or amusement activities.
Ballot measure proposals that would increase existing taxes include the utility users tax (UUT), based on consumption of utility services; a local sales and use tax; a business license tax; an oil barrel tax; a transient occupancy tax (TOT), also known as a hotel bed tax based on occupancy of hotel rooms; and a real property transfer tax, a charge applied to the transfer of ownership of real property. The city also has the option of proposing general obligation bonds.
According to city officials, a general tax initiative in which revenues would be used for general purposes and could be transferred to the General Fund for all city departments would require a majority vote (five council members) to make it to the ballot. This would also require a majority vote (50 percent plus one) of the electorate to pass.
A special tax for specified purposes – such as all revenue raised from a tax would go toward hiring more police officers – would require a two-thirds vote of the electorate to pass.
City staff stated that the deadline has passed to put a ballot measure on the upcoming April 12 primary election. In order to meet filing requirements for the June 7 election, the city council will need to adopt a resolution prior to the March 11 filing date.
Another opportunity would be for the November 8 election, which would be considered a special election for the purposes of voting requirements. To meet the filing requirements for this election, the city council would need to adopt a resolution in July to meet the August 12 filing date, according to city staff.
City staff noted that if the city were to expand the June 7 election to all nine council districts, the estimated cost would be $900,000, assuming the city conducts the election. In addition, a special election called for any date that is not regularly scheduled would cost $1.6 million. However, city staff indicated that these options would bring no benefit to the city.
Another option would be for the city to request that the county conduct the election by consolidating it onto either the June 7 statewide primary or the November 8 statewide general election. The estimated cost would be $565,000 for the June election and $433,000 for the November election.
Mayor Robert Garcia expressed the importance of investing in the city’s infrastructure, calling it the city’s “largest challenge.”
“There’s no question, no matter how much we invest in our systems, our infrastructure continues to get worse because we just don’t invest enough,” he said. “We’d have to substantially increase that investment and obviously the city can’t afford to do that.”
Garcia added that the city has been prudent in its budget management in recent years by making government more efficient, eliminating 700 positions, including police officer and firefighter jobs, and enacting pension reform that is estimated to save the city $250 million over the next 10 years.
The mayor and councilmembers, however, stressed that the city has no more room to cut, particularly with regard to police and fire departments, adding that voters will decide where the potential new revenue may be spent.
Garcia added that the city hasn’t increased taxes in nearly 25 years and hasn’t passed a general obligation bond since the 1960s.
Furthermore, the mayor said he wouldn’t support a tax measure that doesn’t sunset or end and suggested that the city also strengthen reserves going forward.
Several councilmembers indicated they want to hear from the community before considering placing a measure on an upcoming ballot.
Business Journal Publisher George Economides said it will be “interesting” to see how the mayor and city council proceed on convincing residents and businesses to increase their taxes and if taxpayers are going to be presented a complete picture. “We still have a fragile economy, and we have a high number of residents at the poverty level, the council just passed an ordinance forcing businesses to pay a minimum wage that is higher than the state’s, and now they want to add more revenue through taxes. It’s going to be a tough sell,” he said.
Economides said that, during the council meeting, it was interesting that elected officials did not ask the fire chief or police chief to address, publicly, what their needs are for their departments. He added that no one brought up that the city is currently in negotiation with seven of its nine unions on new contracts, and that the contracts of the other two unions – police and fire – expire September 30. “I doubt employees will pass on pay increases so the city can address all of its needs,” he said. “So, an argument could be made that the city needs a tax increase to cover pay increases (and, thus, pension costs), and that won’t sit well with voters, most of whom do not have a salary – or benefits – close to what city employees make.”
He also said, elected officials who discussed raising the utility users tax (UUT) are asking for trouble. In November 2000, voters passed a measure – with 70 percent of the vote – to reduce the then 10 percent UUT to five percent over a five-year period. “At that time,” Economides said, “the city’s UUT was three times higher than the average in L.A. County and the 25 or so most populated cities in the state.” Even at the current five percent, it remains higher than the average of all cities, he said.
“If councilmembers go for a general tax that places additional tax revenue into the general fund, they are in essence telling voters ‘trust us’ in spending your money. That may prove to be their toughest challenge of all.”