The City of Long Beach is facing an infrastructure funding deficit just shy of $3 billion over the next decade and in a matter of months, the residents of the city will vote on whether or not that funding gap will be narrowed by the raising of the city’s sales and use tax. The ballot initiative received unanimous support from the city council during last night’s meeting and will be placed on the June 2016 voter's ballot after final approval by the council, which could come as early as next week.
The item would increase the city’s current sales and use tax rate from nine percent to 10 percent for six years, then drop it to 9.5 percent over four years before the tax “sunsets” after a decade. It would give Long Beach the highest sales tax rate out of all the large cities in the state, outpacing Oakland’s 9.5 percent tax rate.
The maker of the motion, Eighth District Councilman Al Austin said that the 10-year tax hike would help the council tackle some of the most pressing issues facing the city, namely its crumbling infrastructure and dearth of public safety officers.
“This is a temporary measure that will end in 10 years that will allow us to make key investments in public safety and infrastructure,” Austin said. “I personally believe that our residents are looking to this council to make bold steps to address these pressing needs and that our residents should be given the opportunity to have a say in the future direction of our city.”
According to a presentation given to the council last month, during the projected 2016 fiscal year, sales tax revenue is about $58.5 million, with the added revenue from such a hike equaling about $48 million annually.
A friendly amendment proposed by Fifth District Councilwoman Stacy Mungo to include a five-person citizen committee that would provide oversight to the spending of the funds generated by the tax proposal was included in the motion before the final vote.
“While this council can provide oversight, if tax payers vote in this increase, it is with them that we also want to give access and oversight,” said Mungo, in stating that she could support the measure so long as it was voter approved, with future spending subject to voter scrutiny.
The city currently invests about $65 million annually in capital investments like road and sidewalk repairs, but that figure falls woefully short of the roughly $212 million needed to address annual needs, including a growing backlog of streets headed toward “failing” designation and years of systematic cuts to police and fire department staffing.
In a letter to the council last week, Mayor Robert Garcia called the potential for voter approval a “historic opportunity” to reinvest in the city by repairing its infrastructure. The letter was cosigned by former Mayors Bob Foster and Beverly O’Neill. Garcia’s letter also called for a new “rainy day” fund to be established that would divert one percent of any new revenue into the fund for future infrastructure needs.
Garcia echoed his penned comments again Tuesday night, adding that the vote was an important first step toward putting the future of Long Beach in the hands of the people who live here. First and foremost on Garcia’s agenda are the reestablishment of the closed firehouse in Belmont Shore and the resurrection of the police department’s South Division.
“This is going to really transform our city when it comes to construction and rebuilding our streets, sidewalks, alleys across the city and it’s going to be a very exciting time for our city if voters decide to support this,” Garcia said. “And really what will end up being to voters, the cost on a monthly basis, the cost of a Starbucks coffee.”
The increase—while polls show nearly two-thirds of the city supports a permanent increase to ten percent—was not received well by everyone in attendance.
Gary Shelton, a 67-year-old resident of Downtown, said the regressive tax would disproportionately affect senior citizens and the poor while asking the council to consider another option hat would could potentially lessen that economic impact. A regressive tax is defined as one that takes a larger percentage of income from low-income groups, like seniors on fixed incomes.
“I’m here speaking on behalf of people like myself who can’t afford a Starbucks coffee,” Shelton said. “You’re trying to balance the gap in this budget, not that you don’t need the public safety funding and street repair funding, but you’re trying to balance the need for that on the backs of the folks who can’t afford to pay it.”
The few public commenters that followed Shelton shared similar views, with one many characterizing the proposal as “all out war” on senior citizens and cautioned that higher sales tax could send those on tight budgets outside the city so to avoid the higher rates in Long Beach. Another man questioned how the city planned to replace the revenue after the sunset clause kicked in.
The idea that the council could enter into a whole different financial quandary with a tax increase and its subsequent hirings not being funded past the sunset was not relegated to the public. Seventh District Councilman Roberto Uranga, who lauded the idea of the proposal and its inclusion of a citizen oversight element, warned that the city should track spending so as not to over extend itself when the time comes to cut the new revenue source at the end of the decade.
“The challenge with the sunset is that if we start using some of this toward salaries or filling positions is that we might be putting ourselves in a hole, so to speak, in respect to ‘now that we have these additional employees, what are we going to do with them when the tax goes away?’” Uranga asked.
The mayor made a point of clarification that the sunset clause could only be rescinded by another vote from the public and without its approval, the tax increase would expire after 10 years as advertised. In closing, Garcia stressed the imperative of funding the city’s needs before they spiral any further out of control.
“Every single day that we don’t invest in our infrastructure it gets more expensive the following day,” Garcia said. “And the more we decide to put aside the important investments that we need to make in our public safety–officials, firefighters and police officers—the more dangerous our community could become.”
The finished version of the tax could return for the council’s approval as early as next Tuesday where it would need a minimum of six votes to be approved for the June ballot. If approved, the fate of the city’s streets could very well rest not only on how palatable a one cent tax is for the public, but also whether the public trusts the improvements will occur in the areas promised.