Upland In A Last Minute Rush To Get Sales Tax Measure On The November 8 Ballot

The Upland City Council next Monday night, August 8, will approve making a request that the San Bernardino County Registrar of Voters place a one-cent sales tax override measure on the November 8 ballot corresponding with the California Gubernatorial General Election.
Evidence has surfaced to indicate that city officials were hoping that the measure might be slipped on the ballot at what turns out to be the last minute, such that no arguments in opposition to the tax and no rebuttal of the argument in favor of it would be included in the voter guide to be provided to the county’s voters in early October. The absolute latest that arguments for or against the measure can be submitted in August 19.
Eagle-eyes in the community, however, detected the effort of city officials to place the measure on the ballot, dooming the hopes of the advocates of the tax that the matter might be decided without any official opposition to the initiative surfacing.
The Sentinel has learned that former Upland Councilman Glenn Bozar and former Upland Treasurer Larry Kinley have come forward to write the opposition argument to the ballot measure and the rebuttal argument to the argument in favor of the ballot measure. It is a peculiarity of California law that tax initiatives approved by voters which devote the money collected to a specific purpose must be passed by a two-thirds majority. Under California law, initiatives that call for the levying of a tax to produce revenue for which no use is specified need to gain a simple majority approval to pass.
While Upland officials have stated that the money collected from the sales tax will very likely be used for funding public safety and public infrastructure, specifically the paving of streets and alleys, the city will not officially commit toward using the money in that fashion. This will allow the measure to be approved with as little as 50 percent plus a single vote.
While it should be easier to get a simple majority of residents to approve the measure than to get two-thirds of Upland’s citizens to support it, the lack of specificity about the purpose of the tax will leave those advocating on its behalf vulnerable to the assertion that the city will ultimately route some of the money to pay for municipal employee pensions rather than services for the city’s residents.
In the early 2000s, city management agreed to expand and enhance salaries, benefits and the retirement plans of city employees on the basis of a projected surplus in the California Public Employee Pension System that would sustain itself in perpetuity. With the economic downturn of 2007, however, that surplus vanished. For nearly a dozen years, the City of Upland needed to divert money out of its operating budget and away from services such as police patrols and street maintenance to pay unanticipated reimbursement money into the pension plan for city employees. All the while, the pension debt, referred to in municipal parlance as an “unfunded pension liability” has continued to grow.
As of last year, the city’s unfunded pension liability had grown to $130 million. Staying even with that debt – which entails paying retired employees who no longer work for the city – eats up at present roughly 20 percent of the city’s revenues. By 2032, unless the city’s income increases drastically, it is estimated that nearly 40 percent of the city’s budget will be devoted to covering the city’s pension debt.
By not specifying what the proceeds of the added one-cent sales tax will be used for, city officials will be at liberty to use the money to cover a portion of that pension debt. Many people employed in the private sector resent the hefty pensions public employees receive, and they do not support increasing taxes to ensure that those generous pensions continue.
According to a staff report from Upland City Manager Michael Blay generated to cover the basics and specifics relating to the council’s pending vote to approve putting the measure on the ballot, “For over three decades the City of Upland has taken many actions aimed at maintaining the general fund and the services for residents that it provides. While Upland residents enjoy the local quality of life our community provides, the city’s bedroom community status keeps it at a financial deficit compared with other neighboring cities [which] have more robust commercial development.”
According to Blay, the State of California’s reallocation of property tax revenue to the Educational Relief Augmentation Fund in the 1990s deprived Upland of $16 million. Blay also maintained that the statewide dissolving of redevelopment agencies cost Upland “millions of dollars in annual redevelopment funding.” By this, Blay implied that perhaps some infrastructure renewal or maintenance in the city suffered as a result, although he did not state this had a direct impact on the city’s general fund.
“Current challenges to the city budget include recent increased service costs due to impacts of COVID and inflationary pressures,” Blay wrote. “Those challenges combine with employee staffing and compensation issues, causing higher turnover of employees and the lost benefit of the institutional knowledge and training dollars that were invested in them. Beginning in the 1990s, the city council has proactively ‘kept its financial house in order’ by reducing spending to levels consistent with revenue projections. Many city services have been outsourced, major cuts have been made, and employee concessions have been repeatedly requested. While that methodology has allowed the city to maintain its current finances, it has not allowed Upland to make sufficient investments in the areas our residents have expressed a strong desire: Maintaining local streets and alleys and repairing potholes, providing quick responses to 9-1-1 emergencies, and addressing homelessness.”
According to Blay, “Additional sales tax revenue would have a substantial positive impact on the city’s ability to reduce crime; improve 9-1-1 response, enhance programs to reduce drug and gang activity; maintain streets and alleys; keep public areas safe and clean, and attract and retain local businesses and jobs.”
According to Blay, “A one cent transactions and use tax is estimated to produce approximately $16 million annually.”
The city council’s run-up to putting the tax on the ballot was done quietly and in a relatively obscure forum without any fanfare or advance publicity.
At the July 25, 2022 city council meeting, during a discussion of the recommendations of the city manager’s advisory panel, the mayor and council directed staff to bring forth a resolution placing a measure on the November 8, 2022 election ballot to levy a one-cent transactions and use tax, otherwise referred to as sales tax, within the city.
Three of the council’s five members – Second District Councilwoman Janice Elliott, Third District Councilman Carlos Garcia and Fourth District Councilman Rudy Zuniga – are due to run for reelection in November. As such, supporting a tax measure could have an impact on their prospects for being retained in office, particularly if the sentiment of the city’s residents runs strongly against the tax.
The one member of the council up for reelection who seemed willing to damn the torpedoes that might be fired at her by the city’s anti-tax crusaders was Janice Elliott. She said, “I have seen the council’s and staff’s effort to cut costs and I feel that if we continue to cut costs we will continue to erode the quality of city-provided services. Additionally, inflation has increased city costs and our recently adopted budget relies on a one-time revenue source, so it’s imperative that we raise revenues in order to cover our costs, particularly in the future. I propose that we vote to place a one percent tax increase on the November ballot to allow our resident voters an opportunity to choose to improve the future quality of our city services. Because our unfunded pension liability will be considerably reduced in 20 years, I propose that we set a twenty-year expiration date, called a sunset provision, on this increase.”
Ultimately, the entire council declined to put a sunset clause on the tax, such that if the voters approve it in November it will remain in place in perpetuity.
Garcia, while he voted to put the tax measure on the ballot, shied away from actually endorsing it. Speaking to the city’s residents directly, Garcia said, “I want folks to really listen to this: We are not pushing you guys for this additional sales tax. It’s going to be left in the voters’ hands. I want to make sure that’s clear because there’s been chatter out there about ‘Oh, the council’s going to push this one-percent on us.’ This comes down to the voters making that choice.”
Zuniga said “Could we use more policing? Absolutely, but sadly, the city doesn’t have that kind of revenue. So, hopefully things will change if you guys make a decision and we can have more policing, our roads in better condition and other things.”
The Sentinel this week wrote to all members of the council.
Referencing inflation standing at a 40-year high and interest rates being raised along with major corporations having initiated or announcing substantial contractions in their work forces and some economic prognosticators predicting a coming recession, the Sentinel asked if they considered the request that the city’s residents layer another tax on themselves at present to be well timed. The Sentinel also inquired as to whether each was willing to declare his or her support of the tax and offer a recommendation that the city’s voters vote in support of the measure.
Elliot alone responded.
“As a resident of Upland since 2001, I have seen the deterioration of our streets and the downtown area of Upland,” she said. “I have been concerned about the rise in crime and the decrease of police department staff. Back in 2014, before being elected to the city council, I requested that the city council place on the ballot a measure providing for a 1 percent sales tax increase and, as a resident, I would still like to see this measure pass.”
Yesterday, August 4, the Sentinel was invited to a Zoom meeting that was to feature Blay presenting information about the tax proposal and fielding questions with regard to it. Just prior to the meeting beginning, the Sentinel was uninvited to the electronic conference.
-Mark Gutglueck

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