MONTEBELLO – Declaring a fiscal emergency, the Montebello city council has voted to hold a special election in November to ask voters to approve a 1-cent hike in the local sales tax.
If approved, Montebello’s sale tax will climb to 9.75 percent, higher than the 9.25 rate in Commerce, but the same rate as in nearby Pico Rivera.
With a projected $5 million deficit for 2017-2018, the city estimates the increase would generate approximately $9.5 million annually for the financially troubled city.
Running out of time and options, city officials were forced to declare the fiscal emergency required to hold a special election in conjunction with Los Angeles County’s Nov. 7 election, or wait until next year.
Under the resolution approved May 10, the city will establish fiscal policies aimed at reducing waste during the emergency declaration. If approved, monies generated through the sales will be placed in a separate fund, with a new, special oversight committee – made up of Mayor Pro Tem Bill Molinari, Councilwoman Vanessa Delgado, the city manager, finance director, representatives from employee bargaining units and five members of the community — recommending to the city council how the funds should be spent.
The proposal to raise the sales tax was originally presented to the council in April, but failed to move forward when Molinari voted against it, citing issues he had with city spending.
Molinari’s concerns were partially addressed in the new resolution, which will impose a hiring freeze on all full-time city positions except for those related to public safety. It also requires contracts exceeding $20,000 to be approved by the council, regular updates on contracts approved by the city administrator, caps the city council’s annual travel budget to $3,600 each and prohibits city funds from being used for city council meals.
The city council hopes to avoid a repeat of last year’s Measure W, which would have approved the sale of the city’s water system but was defeated by voters distrustful of the city’s motives.
Last month, Montebello’s fiscal stimulus committee recommended the city consider studying its fee schedule to determine if they are in line with those in other cities, imposing a utility tax and/or increasing the sales tax.
City officials opted for the sales tax route, explaining a fee study would take too long to complete. Staff had noted the sales tax could generate more revenue than a utility user tax and would be paid by anyone conducting business in the city, not just residents.