A single vote goes a long way in Vernon, where a mere 41 residents can determine the outcome of an election.
That’s what happened last week during the city’s all mail-in election, when 41 of the city’s 86 registered voters blocked a measure to raise Vernon’s utility user tax and reelected a council woman to a five-year term.
While Vernon has 1,800 businesses that employ more than 50,000 people, only about 200 people actually call the city home. The decisions those voters make can have a huge impact on businesses whose bottom lines have long relied on the city being business friendly.
City Council Makes History
Voters reelected Melissa Ybarra, who ran unopposed in the April 11 election and received 32 of the 41 votes canvassed. Ybarra was first elected to office to serve out the remaining term of her father Michael A. Ybarra, who died September 2014. This will mark her first official five-year term.
On Tuesday, Ybarra made history when she was selected by her colleagues to serve as Vernon’s first woman mayor.
Yvette Woodruff-Perez will continue to serve as mayor pro tem, marking the first time both the mayor and mayor pro tem are women.
“Never before have you had a female majority or female leadership on the City Council, and I believe that this is more proof that the City of Vernon is breaking down barriers and becoming a model of change for the Southeast Los Angeles area,” Ybarra told EGP.
Measure Q Rejected
It took only 23 votes to defeat Measure Q – which would have raised the utility user tax from 1 percent to 6 percent for residents and businesses, generating an estimated $11 million to support city services.
It was an attempt by city officials to end the longstanding practice of using millions of dollars from Vernon’s profitable Gas & Electric Utility fund to subsidize the city’s budget shortfall. Although not illegal, the State discourages such transactions, viewing them as a hidden tax. The practice prompted credit rating company Moody’s Investor Service last year to downgrade the Vernon’s rating to a negative outlook.
Residents didn’t buy into the city’s claim that the impact to ratepayers would be minimal, and business owners previously questioned whether an offer of a 5 percent bill credit to cover the tax increase would be ongoing under the measure. Measure Q received only 14 yes votes.
The results are a sharp contrast to 2013 when voters approved a 1 percent utility user tax 34 to 7.
The election results were certified during Tuesday’s city council meeting.
Vernon will now have no choice but to continue its existing practice of transferring utility revenues to the general fund, City Administrator Carlos Fandino told EGP in an email.
Fandino had previously called Measure Q a way to fulfill one of the recommendations made to improve good governance practices in Vernon.
The results of last week’s election, however, do point to an evolution in voting patterns in a city state officials once sought to disincorporate because they believed the city had too few residents and that they were too closely tied to city officials to keep them honest. At the time, Vernon had 112 residents and nearly all of them lived in city-owned housing. Of the city’s 62 registered voters, 5 were councilmembers, 8 were related to a council member, 5 were city employees, and 7 were related to a city employee or contractor. Incumbents – who routinely and without question approved staff recommendations–usually ran unopposed; voters willingly passed measures put before them.
“The argument goes that this has led to self aggrandizement and favoritism to the elected and appointed city officials and their friends and relatives,” wrote the late John Van De Kamp in his first report as Vernon Independent Reform Monitor in 2011.
To avoid disincorporation, Vernon agreed to good governance reforms, including increasing the size of the city’s electorate. The Vernon Village apartment complex opened in 2014, doubling the number of residents and adding 29 new registered voters in the city.
Woodruff-Perez credits the doubling of the city’s housing stock and a new city council that is willing to go out and engage constituents, for giving both residents and businesses a voice.
“Looking forward, we have opportunities to build on this by increasing voter education and community engagement to become a leader not just in the Los Angeles area but the entire state,” Woodruff-Perez told EGP.
By 2015, a turnaround appeared to be taking hold, making incumbents less assured of reelection. Last year, a write-in candidate successfully replaced a longtime city official. Rejection of Measure Q further demonstrates the willingness of voters to oppose city leaders.
Fandino told EGP he is encouraged by the increased participation seen from the community.
“Along with the 170 reforms the city has made, this is another sign that the City of Vernon is a changed city.”
Vernon residents and businesses could soon see an increase in their utility bills under a proposed tax measure that could go before voters in April.
Business owners filled city hall chambers Tuesday to hear more about Measure Q, which if passed would increase the Utility User Tax (UUT) from 1 percent to 6 percent. The city council is expected to call for the measure to be placed on the April 11, 2017 election ballot during the January 10 council meeting.
“Business owners don’t have a vote but it’s important to educate them because they will be the ones affected by it,” explained City Administrator Carlos Fandino, quickly claiming the measure is not a revenue-generating measure but rather a good governance decision.
For years, Vernon has sought to shore up its budget deficits by transferring funds from the city’s profitable Gas and Electric Department to its general fund, an amount that reached $9 million in each of the last two years.
The practice recently prompted the credit rating company Moody’s Investor Service to downgrade the city’s rating to a negative outlook, Fandino said. The State of California discourages such transactions because it is viewed as a hidden tax.
To offset the increase, the city is prepared to offer electric utility customers a 5 percent bill credit equivalent to the utility tax increase, which would be covered by the elimination of the operating transfer.
All other utility customers, however, including water, gas, fiber optics and phone, will still see their bills go up by 6 percent.
Under the proposed rate increase, a moderate sized business should expect their water bills to go up $550. Residents on the other hand will see less than a $2 hike in fees.
If passed, Measure Q is expected to generate a net gain of $1 million, says Fandino, who says the city is simply “moving dollars from one bucket to the other.”
“It is still an increase,” says Peter Corselli, vice president of U.S. Growers Cold Storage, one of the city’s largest businesses.
“The cost of doing business in the city goes up,” added Henry Haskell, chief executive officer and president of Square-H Brands, Inc. “This is an increase on the backs of industry.”
Corselli told EGP his large business would see one of the highest jumps in the city, explaining that at $3 million a year, utility costs are his business’ second largest operating expense.
With just 300 residents in a city with over 1,800 businesses, Vernon prides itself for being business-friendly, often boasting that its utility rates are lower than those of neighboring utility companies.
The city has not raised gas prices since the city’s inception, according to Fandino.
Dave Gardena of Baker Commodities, however, told EGP rates have been going up for years and he does not understand why the city would increase electric rates only to credit it back.
“The revenue is still coming from utilities,” he said “It’s just a horse with a different color.”
When asked how long the 5 percent bill credit would be offered, Fandino said that answer would be determined by the results of the city’s yearly rate analysis.
Why does the city always look to increase utility rates when it needs to fill in the budget, one business owner asked? City Finance Director Bill Fox responded that Vernon is unique and its small population prevents it from generating revenue from other sources, such as taxes or local government returns that are calculated based on the size of a city’s residential population.
“When you have 300 residents you don’t get much of a share,” he said.
After the presentation, Haskell told EGP he’s now convinced that the increase is needed.
“I feel good about it,” he said. “I don’t see it as an increase; the reasons he talked about were reasonable.”
According to the city, business owners and residents will have the opportunity to file arguments for or against the measure next year, and a public examination period will be held before it goes before the voters.