By now, most of you have heard that Mayor Robert Garcia is proposing a measure for the June ballot that would raise Long Beach’s sales tax from the current 9 percent to 10 percent. We’ll get to the why in a moment.
What you may not have heard is that, on that same ballot, the Long Beach Community College District may be proposing a bond measure that could be as high as $800 million. The college district’s five-member board of trustees meets February 23 to discuss a recommendation from Superintendent and President Eloy Oakley.
The bond measure would be assessed on property taxes, thereby affecting property owners only. The sales tax would impact every resident and visitor. Twice in the past 15 years – 2002 and 2008 – local voters approved bond measures for the college. The latter measure was promised matching funds from the state. That did not occur.
There is no record on file of Long Beach voters ever approving a tax increase. And there’s a good reason why.
Prior to 1996, voters did not get a say on tax increases. Neither the state legislature or city councils needed voter approval to raise taxes. In fact, twice in the early 1990s the Long Beach City Council voted to increase the utility users tax (UUT), taking it from 5 percent to 7 percent, then to 10 percent. Voters had no say.
Both times the UUT was increased, councilmembers promised it would be “temporary.” Councilmembers did not keep their word, which led to voters taking matters into their own hands in 2000 by reducing the UUT back to 5 percent, where it stands today. By the way, the average UUT in the state is around 3.5 percent, so Long Beach remains higher than most cities.
In November 1996, California voters approved Proposition 218 – the “Right To Vote On Taxes Act.” Borrowing language from the California Tax Data organization, “This constitutional amendment protects taxpayers by limiting the methods by which local governments can create or increase taxes, fees and charges without taxpayer consent. Proposition 218 requires voter approval prior to imposition or increase of general taxes, assessments, and certain user fees.”
The question is, will voters support one, both or neither measure if they are placed on the June 7, 2016, ballot? Do the measures hurt their chances for passage by being on the same ballot? As “outsider” presidential candidates have proven, the electorate is angry. Is the anger shown by voters in Iowa and New Hampshire spreading to California? If so, both measures could fail.
Sales Tax Justification
Mayor Garcia’s argument – shared by many residents and business owners – is that Long Beach needs to fix its infrastructure now because the longer we wait, the more expensive it becomes. City staff has identified about $2.8 billion in infrastructure needs – from streets and sidewalks to alleys to community buildings and storm drain systems and more. City officials also claim that money is needed to hire more police to battle the recent rise in crime and “to restore fire staffing to maintain 911 paramedic response times at stations across the city.” These are all important issues, and the mayor is correct in putting them before the city council and the voters.
Many law enforcement officials blame the rise in crime throughout the state to the passage last year of Proposition 47, which changed some nonviolent felonies to misdemeanors. Thousands of inmates were let out of prison early or did not serve jail time. The hoped-for rehabilitation of these nonviolent criminals has, it appears, not materialized. Police officers are being tested physically, and overtime is considerable as the ranks have dwindled due to funding issues, retirements and a lack of academies.
If Mayor Garcia gets his way and the city council approves his 10-year sales tax measure – set at a 1 cent increase (10 percent sales tax) for the first six years and dropping to a half-cent increase (9.5 percent sales tax) for the final four years – for the June ballot, it would require a simple majority of city voters to approve it for passage. That means the additional money raised – estimated for the 1 cent increase to be $48 million a year at current prices – would go into the city’s general fund.
And there’s the rub.
General fund money can be spent pretty much however councilmembers wish, including on infrastructure repairs, hiring more law enforcement personnel and, of course, pay raises for city employees.
That takes us to the “trust” issue. Will councilmembers spend the “new” revenue on infrastructure and more police officers? Unlike the recent city college bond measures – where a citizens’ committee oversees how the money is spent and conducts public meetings – there is no independent oversight (no offense to city staff) of councilmember budget appropriations.
(The college’s citizens oversight committee, consisting of seven members, is constrained by bylaws and must produce annual reports, etc. For information, visit: www.lbcc.edu/bondprogram/COC.cfm.)
One of our concerns is, indeed, trusting city councilmembers to do the right thing. Since a majority of the council is union friendly – as illustrated by votes raising the minimum wage and establishing a project labor agreement – can we trust that the city council will not use new tax dollars for hefty pay increases for union employees? After all, the city’s nine unions are either in negotiations with the city or soon will be. It is a pretty safe bet that the unions will not forgo pay raises.
There are differing views on city employee salaries. Unions and their employees say they’re too low “compared to other cities,” while many residents feel they are too high compared to what the average household income is locally and statewide.
We’ve never bought into the “city comparison argument” since unions intentionally pit one city against another to achieve pay and benefit increases. We believe many city employees – especially at the lower end of the pay scale – probably deserve increases. However, our caveat is: can we afford it?
Voters have much to consider if one or both of these measures appear on the June ballot. They need to ask questions of the college trustees and of the mayor and councilmembers.
Our Recommendations – In The Name Of Transparency
The Business Journal generally supports all school bond measures, which require a threshold of 55 percent to pass. The maximum that can be asked of property owners is to pay $25 per $100,000 of assessed valuation. According to LBCC’s Oakley, once the need for new classrooms, renovations, etc. are accomplished through this proposed measure, the college will be set for 50 years. That’s a sound investment that we can all support.
The sales tax proposed by the mayor is the fairest of taxes since everyone contributes (we would have opposed an attempt to increase the UUT). We do not oppose this sales tax – but let’s be clear, that is different from supporting it.
We would like to see the mayor and councilmembers take several steps prior to asking voters to approve a sales tax increase:
Public Safety Command Staff – We believe the fire and police departments could eliminate a few command staff. There are currently (budgeted) 3 deputy police chiefs and 11 police commanders. The number of commanders should be reduced through retirement by one or two positions. The fire department has 3 deputy fire chiefs, 2 assistant fire chiefs and 12 battalion chiefs. The latter positions were created in 2000-2001 as a way to promote more people from captain and battalion chief, where some of them felt “stuck.” The assistant fire chief positions should be eliminated altogether. The savings from the above positions can translate into additional firefighters and patrol officers. We hope the police and fire chiefs embrace these suggestions in the spirit they’re intended.
Contracting out – The city council should show taxpayers it’s willing to look at cost-saving measures. One of the best methods is contracting out city services. There needs to be a citywide department effort to identify work that can be performed as well or better for less money by the private sector. Efficiencies – in both the public and private sectors – are always possible if one is willing to explore. We fully understand that several general fund departments have been squeezed, but let’s take another look. Reaching out to employees for cost-saving ideas should also be encouraged and rewarded. Every $1 million in savings could fund 7 police officers, so it’s worth making an effort.
City Council Office Budgets – We encourage councilmembers to lead by example. Specifically, take a look at your city council office budgets – which are the same for each council district – and trim 10 percent of your costs. That savings would allow for 3 more police officers on the street.
Oversight Committee – Finally, if councilmembers have nothing to hide, then they should be willing to form a citizens’ oversight committee to monitor how the new sales revenue is spent. We would suggest one representative from each of the nine city council districts, plus two mayoral appointees from the business community – preferably budget managers, CPAs or the like. Public meetings should be held at least quarterly. Elected officials are always talking about transparency. Here’s their chance to prove it.
Long Beach has tremendous economic and cultural assets, an enviable geographic location and tens of thousands of residents and business people who are willing to get involved so their city can move forward in a positive way. Public safety and infrastructure are two critical keys to Long Beach achieving its potential. We believe taxpayers are willing to support a sales tax increase if the mayor and councilmembers prove they support taxpayers – many of whom are struggling in a very fragile economy. Adopting the above four recommendations is a good place to start.