Last Update: Wednesday, August 20, 2014

City Council to Consider Sales Tax Increase PDF Print E-mail
Written by Alex Garcia   
Thursday, 28 February 2013 07:46


Saddled with debt and a deficit of more than $4 million at the end of the Fiscal Year 2013 in June, and with no money in reserves, the San Fernando City Council is considering holding a special election where voters would have to decide on a half-cent sales tax increase, as early as June of this year.

"I am definitely for this measure. If we wait too long, we'll get deeper in the hole. We should act on it and let the voters decide," Mayor Antonio Lopez said at the end of a special city council meeting held Monday. Feb. 25.

Although the City Council won't vote on the proposal until their March 4 meeting, Monday's session was devoted to discussing this possibility.

San Fernando faces an evergrowing deficit that will reach over $4 million by June. The city has no cash reserves; it even owes $526,000 of unpaid bills to the Los Angeles Fire Department (LAFD) for two months of service in Fiscal Year 2011-2012 (which ended June 30 last year) Interim City Administrator Don Penman, during a presentation before the council, said the half-cent sales would bring an estimated $1.6 million a year to the depleted city coffers – about half of what the city currently generates.

The half-cent sales increase would mean the sales tax in the city would jump to 9.5 percent from the current 9 percent. It would not apply to food items.

The City of Los Angeles currently has a measure on the March 5 election ballot asking its voters to approve a similar jump in their sales tax.

In order to bring the measure to the voters, however, the council will first have to declare a fiscal emergency and approve a special election. Both have to be done unanimously and by March 8 (88 days before the election date), in order to schedule a special election by June 4. The other option is to schedule a special election on Nov. 5.

The difference in dates would only mean the city would begin collecting the extra revenue sooner rather than later. If the election takes places in June and voters approve the sales tax increase, it would go into effect in October. If it takes place in November, it would become effective in April 2014.

The special election would cost the city between $35,000 and $45,000.

The council will also have to decide whether this will be a general tax or a special tax. A general tax requires a 50 percent plus 1 approval (which they can use for just about anything), or a special tax that requires a two-thirds voter's approval and goes specifically for certain items.

A few residents present at the meeting expressed reservation about the tax, although they said they understand its need. "A sale tax is the most punitive type of taxation for the poor. It hurts low-income families the most," said Linda Campanella Jauron.

"We may not have any other direction to go," said Paul Luna. "Taxes are going to hurt everybody. I don't like it, but we have to buckle down and look at the reality of the situation." And that reality is not very encouraging.

The Fiscal Year 2012-13 Mid- Year Review presented on the Feb. 20 council meeting showed San Fernando would probably face a $1.2 million shortfall at the end of this fiscal year, which ends on June 30.

That's on top of the $1.2 million deficit the city already entered into this fiscal year. "From the get go, we knew we were in trouble. We never believed the numbers we got. We just didn't know how bad it was," said Councilmember Jesse Avila, who was elected during a special recall election last Nov. 6.

Avila said he supports the measure, as long as it has a "sunset clause," or end point, which would probably be between seven and 10 years.

Councilmembers Robert Gonzales and Sylvia Ballin favored the measure. So did Councilmember Joe Fajardo, albeit somewhat grudgingly, saying he would like some of the revenue raised by the tax to be used to offset the water fee increases approved by the city council last year. However, other council members told him that's not really possible.

Last Updated on Thursday, 28 February 2013 07:48