Montebello Voters Face Decision on Sales Tax Hike

October 19, 2017 by · 1 Comment 

Unregistered Montebello residents have until Oct. 23 to register for the city’s special election on Nov. 7, an election that could result in an increase in the city sales tax.

After first unanimously declaring a financial emergency, the Montebello City Council in May voted to hold the special election and ask voters to approve an increase the city’s sales tax rate as a way to bring new revenue to the cash-strapped city.

Under Proposition 218, passed by voters in 1996, city governments are prohibited from placing new tax measures on the ballot in General Election years unless councilmembers first unanimously declare a fiscal emergency — a statement that the issue can’t wait until the city’s next regularly scheduled election.WEb-Feature MTB sales tax

The city wanted to raise the sales tax by one percent but had to lower its ask to .75 percent to comply with the state’s 10.25 percent sales tax cap. County voters approved a quarter-cent sales tax hike in March to pay for services for the homeless that went into effect on Oct. 1, pushing Montebello’s proposed one percent hike over the state cap.

City officials had projected $9 million in annual new revenue if Measure S passes, but that forecast has now been lowered to $6.75 million, still a hefty sum for the financially flailing city, which despite instituting a hiring freeze, years of no pay raises for employees and other budget-tightening measures, still faces a $3.2 million deficit.

A 47-page staff report presented last November to the council puts the cost for Montebello’s long-term and immediate needs at $212 million, including $178 million in deferred maintenance costs.

Montebello’s projected revenues fall far short of the amount needed and the city has run out of one-time options such as selling off city-owned assets to shore up the impending financial crisis, according to the city council.

The selling-off of cell tower sites and other city land was used in the last two fiscal year budget cycles to balance city coffers, but not before raising public outrage. Other efforts to raise revenue have failed amid voter mistrust of how the council and city staff spend revenue and award city contracts.

While council members did show some reluctance to holding the special election and asking voters to raise the sales tax, they ultimately decided it was the best path to stave off a future financial crisis, which could worsen if the city waited until its next regularly scheduled election in November 2018 to ask voters to approve new revenue raising taxes.

The city says the added revenue will help pay for things like street repairs and filling pot holes, park programs and maintenance, senior services and public safety programs.

Montebello resident Sylvia Solis supports raising the sales tax as a way to increase the size of the city’s police department and improve response times, telling EGP it’s ridiculous how long residents have to wait for the police to provide assistance.

“I wait 40 minutes, sometimes an hour,” the 25-year resident of Montebello said. “I’ve called to report suspicious activity, what if it’s a real emergency,” she complained.

According to the staff report, more revenue is needed for the city’s police and fire departments. The police department needs $5.3 million to pay for 11 additional police officers and four part-time community service officers, and to make needed improvements to the police headquarters, while the fire department requires more than double that amount, according to the report.

The fire department is running $13.1 million short of what it needs to fully staff the department and adequately upgrade infrastructure, states the report, which cites the need to hire a deputy fire chief and deputy fire marshal, build a new fire station, and to purchase a new fire engine and aerial ladder truck.

The report also calls for more hiring and improvement of facilities in nearly every department in the city.

Lopez agrees there is a need for more revenue, but says she worries the added revenue will not be spent wisely.

Yvette Fimbres, a member of the watchdog group Montebello Activists To Clean House, or MATCH90640, also wants to see the city prosper, but opposes a sales tax increase as the way to get there. Like Lopez, she fears the council and city staff can’t be trusted to spend the revenue as intended.

The burden of fixing the council’s mismanagement of city revenue should not be placed on residents and visitors to Montebello, Fimbres told EGP.

She described the council’s spending as “fraudulent” and “questionable,” citing catered dinners at council meetings and travel to attend gatherings that do not benefit the city as unnecessary and wasteful.

Council members did not respond to EGP’s requests for comment, however, Councilman Jack Hadjinian defended the city’s effort to increase the sales tax to the Whittier Daily News, saying the staff report shows every department in the city is lacking in some area due to the city’s tight budget. He rejected another revenue raising option in the report, an increase in the utility user tax, as too much of a burden on residents and city businesses. On the other hand, the sales tax hike that would apply to residents as well as visitors to city, including at one of the city’s top sales tax generators, the Montebello Town Center.

Resident Linda Strong told EGP in an email that the council lacks integrity, pointing out the council’s vote to approve a settlement with developer Garfield Financial Corp. in January of this year.

Garfield Corp. had claimed that the city didn’t properly pay for street improvements for an affordable housing project contracted for through the city’s now defunct redevelopment agency.

Strong pointed out that city funds were used to defend Councilman Bill Molinari who was named along with the city in the developer’s claim, submitted multiple times over the years, but which the city said had no merit and the company never escalated to the level of a lawsuit.

“That vote was a gift of public funds,” contends Strong in her email. “It was a gift to a political supporter.”

Molinari, responding to this article, told EGP that just the opposite is true.

He said Garfield named him in their claim because he had repeatedly blocked their attempts to get money out of the city the developer was not owed. According to Molinari, Garfield Corp was hoping to force him to recuse himself from discussion of any potential settlement because he now had a conflict of interest.

“All the claims they made about me were unsubstantiated,” Molinari said, adding that credible, highly qualified legal experts investigated the developer’s allegations but found them without merit.

The company’s strategy did not work, he said, explaining he never recused himself.

Nonetheless, Fimbres says she does not believe the city is being transparent about the sales tax hike. She accused Montebello City Attorney Arnold Alvarez-Glasman of failing to provide an impartial analysis of the measure being pushed by the council and city staff. She also accused him of publishing misinformation on the projected tax increase and incoming revenues to the city.

“If this measure is passed, the city is in store for a lawsuit challenging the validity of this measure.” Fimbres said. “It’ll probably cost the city more money to defend themselves in court.”

“The city needs revenue, but we cannot trust the present council to do the right thing,” Fimbres said.

Alvarez-Glasman denies the ballot information is inaccurate, telling The Whittier Daily News that

“The law is crafted saying that (the increase) could be up to 1 percent.” Saying otherwise is “a fraud and incorrect,” he said.

Meanwhile, Montebello officials continue to defend the sales tax hike as necessary to meeting the city’s financial obligations and to providing public safety and other services in the city.

 

Updated 10/20/17 at 42 p.m.: Clarifies from earlier version that developer Garfield Corp. filed claims, not a lawsuit against Montebello and Councilman Bill Molinari.  Adds Molinari’s response to accusation that he had done something wrong and benefited from “a gift of public funds” to defend himself against those allegations;  adds response from city attorney to allegation that he is misleading the public about the sales tax hike.

 

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