ADELANTO — (June 5) With Adelanto’s residents having soundly rejected a proposal to tax themselves to alleviate the financial problems their cash-strapped city faces, increasingly desperate city officials are now contemplating putting a measure on the November ballot that would impose a one percent tax on Adelanto-based businesses that sell goods or services outside the city limits.
Though its monetary problems have not plumbed to depth of those in the city of San Bernardino, which declared bankruptcy in 2012 and is now struggling to make an exit from that status, Adelanto is certainly among the most fiscally challenged local governments in San Bernardino County.
As a municipal entity, Adelanto has been in serious decline for a decade or more, with dwindling revenues having created a situation in which the cost of delivering services to residents in the 33,084 population city in the High Desert has consistently outrun the city’s income for the last several budgetary cycles.
In 2013, the city council as it was then composed, at the urging of then-city manager Jim Hart, declared the city was in a state of fiscal emergency. The city’s residents, however, refused to consent to impose on themselves a tax that city officials insisted was needed to stave off bankruptcy. Hart’s only other alternative was to seek out development projects that offered the prospect of fee or tax generation, but his performance in that regard was lackluster at best. In February, he resigned as city manager and the city continues to teeter on a precipice overlooking an abyss of bankruptcy.
In November 2014, all three members of the city council up for reelection, Charles Valvo and Steve Baisden along with mayor Cari Thomas, were defeated, ousted respectively in favor of Charley Glasper, who was formerly on the council, John Woodard and the new mayor, Rich Kerr.
In recent months, with a majority of the five-member council freshly installed in December, city leaders have been casting about for a way to plug up the city’s financial black hole. In the last fortnight, Glasper has picked up on an earlier suggestion by councilman Jermaine Wright that calls for tapping city businesses for more money than they are paying in annual business licensing fees.
At issue, according to Glasper, is that Adelanto is failing to reap any revenue from sales made by the city’s businesses when they carry out business out of town. The state of California imposes a 7.5 percent sales tax, with one cent of the seven-and-a-half cents collected on each dollar transacted between merchants/service providers and their customers/clients being provided to the city in which those goods are sold or services provided. But when a vendor or service provider based in Adelanto ventures to another city to deliver those goods or provide those services, the point of sale is deemed by the state to be the city where the customer is located and Adelanto does not receive any sales tax revenue on such sales.
Glasper, inspired by Wright’s observation that Adelanto is missing out on a portion of the sales tax revenue generated by Adelanto-based merchants, is seeking to remedy this circumstance by having Adelanto’s businesses pay the city a tax of one percent of annual gross sales.
Glasper floated the idea at the May 13 council meeting and has followed that up with the assertion that Adelanto-based businesses are getting off too lightly under the city’s current business license fee structure, which consists of a too low in-his-opinion fee of $50 annually.
Glasper pointed out that the city is far behind the neighboring city of Victorville, which has a retail base roughly 24 times that of Adelanto and a population approaching four times that of Adelanto. Some of the companies based in Adelanto are making millions of dollars while using the city’s infrastructure, Glasper pointed out. He said those business operations that are prospering could well afford to share their wealth with the city that hosts them.
There are those, however, who disagree with Glasper, and believe increasing taxes rather than attracting more businesses to the city would prove counterproductive.
Businessman Aaron Korn, who previously ran for city council in neighboring Victorville, indicated the city would do better to bring in more quality businesses. Imposing a new tax that does not now exist would likely dissuade new businesses from locating in Adelanto and could result in ones already there leaving, Korn asserted. The closure of the city’s higher-functioning business operations, Korn said, would then have a negative impact on the city’s marginal businesses, such as fast food restaurants and gas stations. Korn advocated against the blanket tax concept.
Glasper was adamant, however, insisting that the more successful businesses operating in the city represented a burden on the city, its facilities, infrastructure and its residents and taxpayers. He cited the damage done to city streets by trucking companies and businesses transporting their goods to distant locations. Imposing the one percent tax on those companies to recoup the cost of maintaining the city’s roads alone would justify the tax, Glasper said.