By Mark Gutglueck
Moving on close to two years after Upland’s so-called fiscal task force offered levying some form of tax as a possible way to enhance that city’s revenue picture, the city council this week at staff’s request considered placing a one-half cent tax on the ballot in the November 2016 election. Ultimately, however, four of the council’s members rejected the concept.
Over the last two years, the city of Upland has made a modicum of progress toward righting its listing financial ship, based primarily upon an influx of one-time revenues and a recovering national, state and local economy. But as before, a future financial crisis looms, given that a decade ago, elected city officials granted staff increases in salaries and benefits, in particular generous pension allotments that are on a schedule to result in the city having just under a $9.2 million annual pension liability by fiscal year 2020-21. Already the city is putting out $7.1 million per year to cover the pension costs of its current retirees, reducing the amount of money available in the remainder of the city’s current $39.9 million general fund for the provision of municipal services and, equipment acquisition, and maintenance and renewal of its aging infrastructure.
After a staff presentation by finance director Scott Williams and deputy city manager Jeannette Vagnozzi in which the preferability of the sales tax option over utility, business and transient occupancy [hotel] taxes were elucidated and in which Vagnozzi discussed doing a survey of voters to see if they would support the proposal, the council weighed in with its perspective.
Councilman Gino Filippi offered comments which seemed to commit him neither way on the issue. The table was then set for the eventual rejection of the tax proposal by councilman Glen Bozar, who immediately questioned the wisdom of conducting another survey after the city conducted such a sampling of voter sentiment in April 2014. Bozar said he saw a “problem” with such informal polling, saying the last go-round had been a “push-poll,” meaning that the survey takers had not done a straightforward sampling of voter sentiment but had sought to “push” those surveyed into indicating they would support the tax. By the most optimistic interpretation of that data, some 57 percent of the city voters polled were favorably disposed to a taxing scheme. Bozar said he had inquired at the time to see what kind of questions were being asked of the voters sampled, but that the “former city manager would not give them to me. He said, ‘We can’t talk about that until after the survey is done.’ Where is the transparency here?”
Bozar then turned to the wisdom of imposing the tax within the city, given the potential impact it would have on local businesses, in particular driving prospective customers who might be contemplating purchasing big ticket items from merchants in Upland to spend their money elsewhere or shop over the internet, where they might avoid paying sales tax altogether. “It impacts consumer behavior,” Bozar said. “Internet commerce is hurting Macy’s, is hurting Nordstrom’s, is hurting all the big box retailers. They are struggling.” He said he believed layering further taxes into the equation in Upland would further discourage people from shopping in the city.
Moreover, Bozar said, it would be unprincipled to impose a higher tax burden on the city’s residents when the revenue would ultimately end up paying for the too-generous salaries of current employees and bank-breaking pensions of current and future retirees. Saying that the money being used for “salary increases is not going to fly,” Bozar asserted the city should not misrepresent to the voters that the tax would be used for delivering enhanced services when the money would inevitably be consumed by increasing pension costs. Noting that the California Public Employees Retirement System had recently acknowledged that its investment portfolio was not going to reach its target 7.5 percent return on investments and was therefore demanding that municipal and other governmental agencies make up the difference by contributing more money directly into the retirement fund to ensure governmental retirees would receive their full pension allotments, Bozar said “We owe it to the public” to tell them the truth that the tax “revenue is going to be gone in three or four years,” consumed by increased payments into the California Public Employees Retirement System. He said claiming that the city would use the tax revenue for enhancing municipal services would be “absolutely phony.” He said that previous representations from the former city manager that if he was provided with the revenue from an enhanced “sales tax“ he “would pave the city’s streets with gold” were a canard. “Where is this going to take us?” Bozar asked. “I would not spend another dime on a survey. If you do another survey, I want the citizens to know “how fast it [i.e., the tax revenue] is going to evaporate.” He said that if the city were to seek a vote on the tax, it should simply put the measure on the ballot and not preview it with a survey that would be more expensive than the election itself. Predicting that the city’s voters would reject any new tax, Bozar said the city should avoid spending a lot of money toward an effort that had little prospect of succeeding. Referencing the $25,000 it would cost to put the proposal on the ballot, Bozar said that if the council should elect to go ahead with seeking the supplemental sales tax authority, it should do so at the lowest possible cost. “See if you do any better than with the utility tax that was defeated,” he said, but warned against wasting any more money on the gamble than is necessary. “I am telling you the reality of his thing. If the council is going to cry poor, don’t throw $100,000 [the cost of a survey] into it.”
Conversely, councilwoman Carol Timm said she was in favor of the tax for “fiscal reasons. I do not see it as an enormous tax. If I spend fifty dollars to go out to dinner, it’s going to cost me 25 cents,” which she said she would not mind paying if it was for a cause that helped the city. “People who are going to buy a $30,000 car will pay another $150. That’s not going to stop them from buying a car,” she said. “It would be advantageous for Upland to have this added tax,” she reasoned, in that it would give Upland residents an incentive to shop in town rather than elsewhere because it would provide them with the opportunity “to go and spend money” in such a way that will “help the city. We have big chuckholes in our roads. We have to improve our roads. I don’t think businesses would go berserk over this amount. This is more of a nominal amount. This isn’t a detrimental thing. Not every tax in life is a horrible thing. I would not want it spent on salaries. I would not want it spent on CalPERS [the California Public Employees Retirement System].”
Timm agreed that the city should bypass doing a survey and simply put the issue on the ballot. “I don’t think we should spend $100,000 to see if people want to vote for it or not.”
The most dramatic moment of the discussion came during councilwoman Debbie Stone’s remarks, as the eventual outcome of the proposal appeared to pivot on the direction she took.
“This is a tough call,” she said. “Not having this tax is going to make already difficult decisions even more difficult.” But Stone said the council and city had to show “fiscal responsibility. We need to clean our own house first,” meaning that existing wasteful and inefficient spending at City Hall had to be redressed before going to the taxpayers for more revenue.
The coup de grace came when Mayor Ray Musser said, “I agree with Debbie. We haven’t done our homework. We need to get our own house in order. We need to clean it up and run it right.”
The vote against proceeding with having staff prepare a sales tax measure for the ballot in November 2016 passed 4 to 1 with Timm dissenting.
By Mark Gutglueck