More cities seek tax boosts
By Greg Mellen
In what has become an election year trend, Fullerton and Los Alamitos are the latest municipalities in Orange County to ask voters to approve a local sales tax increase to bolster lagging city finances.
Measure S in Fullerton and Measure Y in Los Alamitos would raise sales tax in those cities to 9 and 9.25%, respectively.
If the measures succeed, the cities will become the 10th and 11th in Orange County since 2008 to lift their sales tax above the 7.75% countywide rate.
The 1.5% proposed increase in Los Alamitos would tie the city of 11,500 with Santa Ana for the highest rate in the county.
Both measures say the local city taxes will preserve essential safety services such as 911 police response and fire protection, infrastructure and “quality of life” programs.
Fullerton’s measure specifically includes street repair in the name of its ordinance and also says it will use portions of the projected $25 million in annual revenue for clean-ups, including homeless encampments, and emergency health preparedness.
Los Al projects $4.1 million annually, a por-
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tion of which would also be used to maintain local jobs.
Supporters of the measures note that unlike property tax, county sales tax and gas and other taxes, 100% of the revenue from the increase goes to the city.
Opponents say the increases are just a cover for overspending, poor management and bad fiscal policies. And, because the money goes to cities’ general funds, the law does not require it to be designated to specific needs or purposes and it can largely be spent at the discretion of city councils.
Past arguments against sales taxes also say they disproportionately harm people with lower income, because those resident tend to spend more of their money on goods that are taxed. (Essentials such as most groceries and medications are not taxed.) Jennifer Fitzgerald, a selfdescribed conservative in her second stint as mayor of Fullerton and an eightyear City Council member, said the city is running out of options to maintain the services and infrastructure that residents demand.
“This is the first tax increase I’ve ever supported,” she said. “This is not a city that overspends.”
Fitzgerald said that after the state takes its cut of taxes, only 21 cents of every dollar return to the city, and to run the city on that is “simply getting more and more impossible.”
Bruce Whitaker, a fellow council member in Fullerton and former mayor, opposes the tax addition, although he agrees infrastructure improvements are needed, particularly for streets.
In a written response to Measure S, he says the measure is a bailout to cover chronic overspending and “if passed it would allow more of the same.”
Whitaker said taxpayers are already overburdened, and adding “an abusive sales tax of nearly double digits, meets my criteria for the definition of double taxation.”
To fix the streets, Fitzgerald said, Fullerton has already leveraged sewer and water taxes for repairs, sold surplus property and sought myriad grants, but it isn’t nearly enough.
“This is a problem that has been coming for decades,” she said.
Ever since 1994, when Fullerton’s mayor, city clerk and two council members were recalled over an unpopular 2% tax on utilities, Fitzgerald said, the City Council “hasn’t had the courage to tell the truth” about the need for added tax money to fix roads.
Measure S puts the decision to voters.
Whitaker said that during two of his mayoral terms, he advocated earmarking budget money for road repairs, without tax increases, but the rest of the council voted for salary increases and benefits over infrastructure.
He described it as “payroll, perks and pension over pavement.”
Fitzgerald disputes the notion, saying the city has made across-the-board cuts to pay and personnel, including in public safety. She added that the millions needed for Fullerton’s streets alone can’t be made by cutting “a position here and a pension there.”
Fullerton has an ordinance requiring about half of tax revenue over certain levels be prioritized for infrastructure.
The measure calls for funding to be independently audited and reviewed by a citizens oversight commission to be appointed.
Whitaker is doubtful. “No matter what they say, all that money is fungible,” he said.
The local tax request in Los Alamitos is “intended to prevent significant cuts to public safety and other general services,” according to an independent analysis. The analysis also notes the city has a structural budget deficit of $1.6 million that is projected to grow to $3.7 million by 2030.
Despite the stated aim of the funding to address public safety, according to the independent analysis, “the city would not be required to use the revenues raised for the measure for any special purpose.”
Use of the funds would be independently audited and the information would be available to the public, but no specific oversight is mentioned.
Unlike in Fullerton, where the council was divided on whether to put the measure on the ballot, the Los Alamitos City Council was unanimous in approving letting the measure go to a vote.
However, one council member, Dean Grose, would not say whether he approved of the tax, only that he was willing to let residents decide.
Phil Silverthorn, a resident and vice president of the Democratic Club of West Orange County, opposes the hike.
In a written response, he argued that deficits could be solved by replacing the Orange County Fire Authority, capping city employee salaries and eliminating lifetime pensions.
The sales tax solution
Increasing sales tax has become a popular method for cities to find funding.
Proposition 218, or the Right to Vote on Taxes Act, which passed in 1996, requires local governments to gain voter approval to raise certain “general” taxes. Proposition 13 requires a two-thirds majority to raise taxes for specific needs.
To get around this obstacle, cities have asked residents to approve increased sales taxes or other levies for general purposes, which requires only a simple majority.
Since 2011, nine Orange Counties have taken this route. Seven asked for 1 percent increases. La Habra, which passed its hike in 2011, approved a 0.5% hike. Santa Ana passed the largest increase at 1.5% in 2018.
In the March ballot in Los Angeles County this year, 22 cities put sales tax increases to the voters, with 14 passing. In 2018, 11 L.A. cities passed sales tax increases. L.A. county has 48 cities with sales taxes of 10% or more.
A dozen cities in San Bernardino, Riverside and eastern Los Angeles counties are seeking voter approval to raise sales taxes in November.