Dateline Cerritos — The Cerritos City Council today will consider placing a measure on next March’s ballot that would ask residents for approval of a half-cent sales tax increase.
If approved and passed, the measure is expected to generate $15 million in additional revenue.
The funds would be used in part to pay for sheriff and public safety services and to facilitate much-needed infrastructure maintenance projects.
City Manager Art Gallucci cited numerous reasons for a sales tax increase. Dissolution of municipal Redevelopment Agencies was at the top of the list.
This alone is costing the city $4 million annually in assumed redevelopment employee costs and $800,000 annually to operate the Magnolia Power Plant.
The city has made over $26 million in payments to state since the dissolution of the redevelopment agency.
In addition, sheriff’s and public safety services have increased $2 million since 2008-’09.
In light of the cost increases, Cerritos has taken significant steps to reduce its operating budget. The proposed 2016-2017 budget lower than the 2008-’09 pre-recession budget.
As part of that cost-saving effort, Cerritos has not filled 18 management and 40 non-management positions vacated through attrition resulting in an annual savings of $6.4 million. In the past four years, city staff has received a miniscule 2 percent wage increase.
Despite the cost-cutting efforts, Cerritos has been forced to take $22 million from its reserve funds with current level at $58 million, compared to $80 million in 2009.
It only will worsen. The current 2016-17 budget is projected to have a deficit of $5.5 million.
In a no/low property tax city, Cerritos could consider a property tax or a user/utility tax increase. But that would, “significantly impact Cerritos residents.”
A property tax increase to generate $15 million would cost every Cerritos resident $645 per year; a user/utility tax that would generate $8.7 million would cost $545 per year.
The likelihood of the increased property tax or user utility tax measure passing would be slim given the recent defeat of Measure AA for the ABCUSD which would have cost only $160 per year for each resident.
A half-cent increase in sales tax would “add 50 cents to each $100 purchase,” according to Mr. Gallucci’s report, “and have a minimal impact on the residents of Cerritos.”
To place the measure on the ballot, the City Council must give Cerritos staff permission to move forward with consideration at the October 10, 2016 meeting.
Cerritos will then conduct a public information/education program that is estimated to cost $15,000.
If the measure is approved by Cerritos residents, the city will submit final documentation of the state Board of Equalization. The tax would be implemented about three months after receiving voter approval.
Mr. Hews may be contacted at loscerritosnews.net