Jacqueline Carr has lived in Montebello for 50 years and is angry that state and county taxing agencies are keeping money she says rightfully belongs to city workers.
“Why should this money go to the state to give to the county…this money belongs to the city of Montebello,” she said about the decision to keep funds from a voter-approved tax assessment to pay for city pensions.
“This is unjust,” said Carr, waving her property tax statement during a special meeting last week of the city’s Successor Agency Oversight Board.
After hearing from several passionate speakers like Carr, Montebello’s oversight board — made up of representatives from the county, city and Montebello Unified School District— voted to bill the county for $3 million in voter-driven property tax funds they believe were wrongly taken from the city.
The tax reimbursement issue is the result of ongoing confusion resulting from the state’s dissolution of redevelopment agencies across California. Like many other cities and municipalities, Montebello’s special voter-tax tax assessments are collected along with their property taxes.
In 1946, Montebello residents voted to increase their property tax in order to fund city employee pensions through participation in the State Employees’ Retirement Systems. In 1976 residents voted to again increase the tax rate that now stands at nearly 20 cents for every $100 of the resident’s assessed property value.
Prior to the state shut down of redevelopment agencies, the entire “tax increment” generated was returned to the levying entity, in this case the city of Montebello, which would use the revenue to fund employee retirement benefits. Since the shut down, however, there has been “uncertainty” about how the tax should be treated, according to a city staff report, which also noted the County Auditor-Controller has “waivered on the issue,” initially allocating the tax revenue to the city but now deciding to “recapture” the funds and place them in the State’s Redevelopment Property Tax Trust Fund (RPTTF), making the money available to entities outside the city.
“The County Auditor-Controller’s position is to ensure that we distribute the funds in accordance with State statutes. It’s our understanding that there currently is pending legislation (SB 921) to address this matter,” Susan Linschoten, from the Department of Auditor Controller, told EGP in an email.
That raises the ire of residents like Carr, who says she has paid $97.57 for the retirement tax this year alone and that the money belongs to city employees, police officers and firefighters in particular.
City officials say the voter approved Retirement Property Tax Override is a Recognized Enforceable Obligations (ROPS) that must be paid, much like bonds and other financial commitments. They hope sending the bill, along with several lawsuits pertaining to this and similar issues, will force the State Department of Finance to rule in their favor.
Scott Howard with the Montebello Police Association said the city’s financial challenges in recent years have led to cuts in the police department. He emphasized that some officers have left the city for other agencies that offer better compensation packages.
He fears that more officers may be cut if the city’s financial state worsens and if the intentions of voters regarding the property tax assessment are ignored.
“If the [state] department of finance decides to seize the retirement tax override revenues the financial burden would fall to the city’s financial sector,” Howard said. “The voters have made it clear where they want their money to go.”
“I don’t understand why we’re here, we voted for this,” echoed Linda Nicklas. “What gives you the right to take our money,” she said, referring to the county.
Nicklas said she attended the meeting to convince the city’s oversight board to approve the ROP to force the department of finance to decide whether the city is right in demanding withheld taxes be returned.
“I feel safe in my city,” Nicklas said. “When I dial 9-1-1 somebody is there to help me, I don’t get a busy tone like L.A. County,” she said, referring to the importance of local control over the revenue.
But that could all change, according to a Montebello Fire Association representative who reminded the board it was not too long ago that cuts to fire department staff and the closing down of a fire station forced the city to rely so heavily on help from Monterey Park that the neighboring city said it would have to start billing Montebello for fire protection.
Police Capt. Luis Lopez said the loss of retirement benefit funds would also be “catastrophic” to the police department. He said he became a police officer to make a difference, despite having to spend a lot a time away from his family. “Our residents make the financial sacrifice each year, placing a premium on having their own public safety services,” he said, encouraging the city to move aggressively to recover its tax revenue.
“The citizens voted this to be the law and now the citizens may be told that their vote means nothing,” Lopez said passionately. “They voted for it, they agreed to fund it and they expect that it’s going to be used for public safety.”
“Leave our tax dollars alone,” echoed longtime resident and city employee Delia Delgado. She said taking the funds amounts to a “double tax” by the state. Like Carr, she too waved her property tax bill at the board, but said her bill was “a lot more” than Carr’s.
“But I’m proud to say I continue to pay this tax,” she said. “Unlike other cities, we voted for this.”
Nicolas emphasized that the city doesn’t have the money to pay for salary increases or to fund employee pensions without the revenue from the tax assessment.
“I’ve been paying for this,” Nicklas said. “They [police and firefighters] put their lives on the line for us, we should at least honor what we promised them.”