Ex­pense-rev­enue gap poses con­cern

Antelope Valley Press (Sunday) - - Front Page - By ALLISON GATLIN Val­ley Press Staff Writer

PALM­DALE — Faced with a fu­ture in which ex­penses are in­creas­ing faster than city rev­enues, city of­fi­cials are ex­plor­ing a va­ri­ety of means to ad­dress this gap.

This in­cludes look­ing at in­creas­ing rev­enues through steps such as a com­pre­hen­sive fee study to en­sure the city is re­coup­ing the costs of ser­vice where it can, eval­u­at­ing as­sess­ment dis­tricts and ex­plor­ing means of mon­e­tiz­ing the city’s fiber and street­light in­fra­struc­ture.

It also in­cludes look­ing at the vi­a­bil­ity of ask­ing vot­ers to ap­prove new taxes.

How­ever, for two City Coun­cil mem­bers, even the sugges­tion the city is con­tem­plat­ing ask­ing vot­ers to ap­prove a tax mea­sure is un­ac­cept­able.

Mayor Pro Tem Austin Bishop and Coun­cilmem­ber Richard Loa op­posed a move Tues­day to re­duce polling of res­i­dents re­gard­ing po­ten­tial tax mea­sures from two to one, polling the Coun­cil had unan­i­mously ap­proved in June as part of the 2019-2020 bud­get.

Nei­ther Bishop nor Loa wanted any kind of polling re­gard­ing po­ten­tial taxes un­der con­sid­er­a­tion.

“I can’t stand be­hind or sup­port ad­di­tional sales tax in our city,” Bishop said. “I sup­ported try­ing to find ad­di­tional rev­enue sources for our city, but I can’t get be­hind the idea of an ad­di­tional sales tax.”

As re­ported dur­ing bud­get dis­cus­sions in June, the city’s

Gen­eral Fund — which cov­ers the ma­jor­ity of its op­er­a­tions — has rev­enues grow­ing at a rate of about 3% an­nu­ally, while ex­penses are in­creas­ing at about 4.5%.

More than half the an­tic­i­pated ex­pense in­creases are be­yond con­trol of city staff, in­clud­ing the city’s law en­force­ment con­tract and state em­ployee pen­sion for­mula changes. This makes it dif­fi­cult to bal­ance bud­gets with spend­ing cuts alone.

In ap­prov­ing the 2019-2020 bud­get, the Coun­cil unan­i­mously adopted a frame­work for seek­ing var­i­ous means of in­creas­ing rev­enues to be con­sid­ered by the Coun­cil dur­ing the com­ing year. This in­cluded funds for polling on both a po­ten­tial par­cel tax to fund ex­panded li­brary and mu­seum op­er­a­tions and a po­ten­tial trans­ac­tions and use tax, a type of sales tax, for gen­eral ser­vices.

On Tues­day, city staff asked the Coun­cil to al­ter the plan, drop­ping the po­ten­tial par­cel tax from con­sid­er­a­tion and pro­ceed­ing with polling for the sales tax

only, with an eye to­ward a po­ten­tial spot on the Novem­ber 2020 bal­lot.

The Coun­cil voted 3-2 to di­rect staff to pro­ceed with polling on the sales tax only.

The city has al­ready been work­ing with a con­sul­tant, FM3 Re­search, on the mat­ter.

A sales tax of 0.75% would gen­er­ate an es­ti­mated $16 mil­lion an­nu­ally, while a 0.5% tax would yield an es­ti­mated $10.9 mil­lion per year, Di­rec­tor of Ad­min­is­tra­tive Ser­vices Anne Am­brose said.

These rev­enues would be un­der city con­trol, and would be used to cover gen­eral city ser­vices, in­clud­ing law en­force­ment, a cost that has been in­creas­ing $1.2 mil­lion an­nu­ally.

The polling is in­tended to de­ter­mine the com­mu­nity’s pri­or­i­ties and gauge sup­port for a po­ten­tial tax mea­sure, to pro­vide in­for­ma­tion for the City Coun­cil to de­ter­mine how to pro­ceed, Am­brose said.

“I like the idea of us be­ing able to tax it and keep it lo­cal in­stead of the county ini­ti­at­ing the sales tax and tak­ing the money again,” Coun­cilmem­ber Laura Bet­ten­court said.

Bishop said he felt it would de­ter shop­ping in Palm­dale and hurt lo­cal busi­nesses.

That fear has not be borne out where other cities have done it, Mayor Steve Hof­bauer said.

Ad­di­tion­ally, the trans­ac­tion and use tax un­der con­sid­er­a­tion would ap­ply to on­line and big-ticket items, such as cars, bought else­where, City At­tor­ney Matthew Ditz­hazy said.

Hof­bauer stressed that the item un­der ques­tion was not ap­prov­ing a tax, but polling the com­mu­nity about a po­ten­tial voter-ap­proved tax. Should the re­sults come back show­ing pub­lic sen­ti­ment over­whelm­ingly op­posed, the Coun­cil would likely drop the mat­ter, he said.

“I’m not say­ing I want to raise taxes. I’m say­ing I want to hear from the pub­lic about what they want to do here,” he said.

How­ever, Loa op­posed the polling, as it sends a mes­sage to res­i­dents that the Coun­cil de­sires a sales tax.

“I don’t want to go in that di­rec­tion. I think we do need to find other sources of rev­enues to match these shorts that are ap­par­ently com­ing our way,” he said.

“I look at it as a way of giv­ing the pub­lic a voice,” Bet­ten­court said. “I think this needs to go out to the pub­lic. I think we need to know what they think and how they feel.”

Hof­bauer ques­tioned Loa and Bishop how they would pro­pose clos­ing the loom­ing bud­get gap with­out con­sid­er­ing a tax mea­sure.

“We need to move for­ward with other ways that are not go­ing to tax our com­mu­nity any fur­ther,” Loa said. “Our city needs to find other means to raise rev­enue.”

“I think we need to find more cre­ative and dif­fer­ent ways” of bud­get­ing, Bishop said, sug­gest­ing a con­sul­tant could help in that area.

He also said they need to fight for more rev­enues com­ing back from Los An­ge­les County.

“This city should be flush with funds, but there’s been 10 to 20 years of mis­takes that got us to this point,” Bishop said.

City Man­ager Jim Pur­tee listed some of the many ways the city staff has al­ready found to bal­ance the bud­get over the past four years, but still face loom­ing gaps in the near fu­ture.

These in­clude re­fi­nanc­ing the city’s debt, ne­go­ti­at­ing a larger fran­chise fee from Waste Man­age­ment, steps to in­crease rev­enues by $60 mil­lion over the next 20 years and us­ing five-year pro­jec­tions in bud­get­ing to be able to fore­cast needs.

After cut­ting staff in half dur­ing the re­ces­sion, it has only grown by 12% in the past four years, while of­fer­ing more in ser­vices and events, he said.

“This staff has been in­cred­i­bly cre­ative in ad­dress­ing a lot of the is­sues,” Pur­tee said. “Staff is do­ing a mon­u­men­tal job with the amount of tax­payer dol­lars that are com­ing into the city, ver­sus the amount of ben­e­fit that the city’s get­ting for what you would see in any other city our size.”

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