By Mark Gutglueck
Rejecting Councilman Chris Venable’s previous call to first examine a strategy of reducing city staff salaries to overcome Yucaipa’s growing institutional budget deficit, the Yucaipa City Council voted on Monday June 24 to instead ask the voters in the 55,008 population city to consider a one-cent sales tax override in November to redress the disparity between the municipalities revenues and expenditures.
In May, Yucaipa Finance Director Phil White, in previewing the city’s 2024-25 budget, which covers income and outgo from July 1, 2024 through June 30, 2025, said he anticipated that there would be a total of $40.1 million expended from the city’s general fund in the upcoming year and that approximately $35.7 million in revenue would come into the city from all sources. That immediately apparent $4.4 million deficit would be compounded by the consideration that within the general fund’s public safety subfund, the city would suffer a $2.9 million shortfall in covering its $7.4 contract for the provision of fire protection and paramedic operations with the California Division of Forestry and Fire Protection, known by its acronym CalFire, which serves as the city’s contract fire department. The city will have just $4.5 million in its fire fund for 2024-25. To cover the $2.9 million needed to shore up safety operations and the $4.4 million to fill the gap with regard to basic municipal operations, the city will, White said, utilize $7.3 million from its reserves, which were accumulated over the course of the city’s 35-year history since its 1989 founding. In addition, according to White, the city engaged in $2 million of deficit spending during the now nearly completed 2023-24 fiscal year.
“We are at a financial crossroads as it relates to the services we provide,” White said at the May 13 meeting. “It’s no surprise that we are in a deficit budget position. While that’s okay for us right now, it’s not sustainable to operate into perpetuity at a deficit position.”
At the May 13 meeting, White floated the concept of raising or increasing existing taxes in the 27.89-square mile city as an alternative to undertaking a reduction of municipal services provided to Yucaipa residents. The only other option he mentioned was continuing with the pattern of deficit spending while he pointedly avoided mention of seeking substantial salary reductions from the city’s 84 full-time or lesser pay reductions from the city’s 182 part-time employees as a means of balancing the city’s budget.
At the June 10 Yucaipa City Council meeting, the council was scheduled to consider and did indeed vote upon and pass the city budget, the anticipated revenue reception and spending plan as formulated by both City Manager Chris Mann and white with the input of the city’s various department heads and assistant department heads as well as White’s and Mann’s senior assistants.
Before that vote took place however, in discussing the city’s financial situation and what could be done to map the city government out of its present mode of operation by which it is living beyond its means and spending more money on a daily, weekly, monthly or yearly basis than it is bringing in during a corresponding amount of time, Councilman Chris Venable sought to broaden the conversation to considering either reducing city employee salaries and benefits, which represent the major cost of running the city, or if not reducing those expenditures, holding them at current levels rather than increasing them through raises this year and into the future.
Venable is one of the city council’s three members who are employed in or function as self-employed members of the private sector, the other two being Councilman Bobby Duncan, who is a real estate agent, and Matt Garner, who runs a construction supply company. The two other members of the city council, Mayor Justin Beaver and Councilman Jon Thorp are public employees.
Venable’s effort did not fare well. Garner was not present at the meeting, thus reducing the public sector to private sector balance on the council that evening to an even 2-to-2. Venable’s suggestion that the city consider employee pay and benefit reductions were not warmly welcomed by Beaver, who is employed by the City of Azusa’s police department as a corporal, in which capacity he is provided with a total annual compensation of $230,267.26, including $115,654.58 in salary, $50,350 in overtime pay, $6,070 in perquisites and pay add-ons, $35,159 in non-retirement benefits and $23,033.68 in pension system-related benefits. As the wielder of the gavel, Mayor Beaver was able to exercise a degree of influence over the ebb and flow of debate and discussion. As a member of a public employee union, he was in no mood to allow a free-flowing dialogue to take place in which the subject of negotiating the pay of public employees downward to progress. By multiple verbal comments and efforts to direct the conversation, along with his body language, Beaver made clear he did not want the discussion to result in any move toward reducing employee salaries. Similarly, Thorp, a deputy with the San Bernardino County Sheriff’s Department and as such received in 2023 a total annual compensation of $253,290.86, which included $109,607 in salary, $18,841.12 in overtime pay, another $15,207.88 in pay add-ons and perquisites and $109,634.86 in benefits, did nothing to encourage the discussion Venable was seeking to carry out.
At the June 10 meeting, Venable was further boxed in by the attitudes of both Mann, who as city manager, is currently provided with an annual salary of 207,840.17, perquisites and pay add-ons of roughly $23,000 and total benefits of $45,619.29 for a current total annual compensation of approximately $276,459.46, and White, whose
salary of $176,470.30 is augmented with around $20,000 yearly in perquisites and pay add-ons plus roughly $41,000 in total annual benefits for a total yearly compensation of around $237,470.30.
Ultimately on June 10, Venable relented and voted along with Beaver and Thorp to approve the 2024-25 budget with its $40.1 million in expenditures against $32.8 million in true revenue for a deficit of $7.3 million, with Councilman Duncan dissenting and Councilman Garner not participating.
Over the next two, the forces in control at City Hall, consisting of the two members of the city council who are themselves public employees and city staff, went to work on Venable in what he acknowledges at this point was an “educational” effort to convince him that reducing city employee paychecks is not a realistic solution to curing the city’s deficit. According to the municipal establishment, city government can maintain solvency through further citizen subsidies: in other words, increased taxation.
Getting down to brass tacks, Venable was reeducated in the facts of life, namely that money makes the world go round and Yucaipa municipal government doesn’t have enough of it. In San Bernardino County, as with the rest of California with the exception of Los Angeles County, the maximum amount of sales tax that can be imposed on shoppers in California is 9.25 percent. By special dispensation and legislation, in Los Angeles County the maximum is 10.25 percent. For starters, Venable was informed, in San Bernardino County there is a basic sales tax of 6 percent – six cents for every dollar – that is tacked onto the sale and which goes to the State of California. In return, the State of California returns one percent of that six percent to the city in which the sale takes place. If the sale takes place in an unincorporated county area, the one percent – a single penny of the six pennies the state has collected – is provided to the county. In addition, San Bernardino County imposes a 1.75 percent sales tax on all of its shoppers. Of that 1.75 percent, one-half penny per dollar consists of the tax overridepassed by voters with their approval of Measure I in 1989 and its extension by another vote in 2004. The Measure I tax is provided to the San Bernardino County Transportation Agency for road and traffic improvements throughout the 20,105-square mile county. The remaining 1.25 percent tax goes to the county as part of its revenue stream and for entertainment, recreation the running of special districts.
In this way, the minimum sales tax anywhere in San Bernardino County is 7.75 percent. In several San Bernardino County cities, however, shoppers pay even more in sales tax. In Ontario, Chino, Victorville, Barstow, Yucca Valley, Loma Linda and San Bernardino, shoppers are obliged to pay 8.75 percent sales tax, as they agreed in a vote to pass an extra one-percent sales tax in their jurisdictions.
Yucaipa should get in on the bonanza as well, Mann told Venable, and here is why, he explained: Not only does Yucaipa need the money for its municipal operations, there is a danger that a combination of action by other public entities and votes by the city’s voters could preclude Yucaipa from being able to tap into ales tax revenue in the future. One of those factors is the 9.25 percent maximum sales tax that can be levied on San Bernardino County residents and thereby Yucaipa’s shoppers. The other factors consist of the need and will of other public institutions to tap into sales taxing authority. The San Bernardino County Transportation Agency, for example, could come to the conclusion that the half-cent sales tax in place because of Measure I is not enough. If it chose to do so, it could put a measure on the ballot to increase that tax to one-cent. If the county voters were to pass that measure, Yucaipa shoppers would find themselves saddled with a sales tax of 8.25 percent. Any of a number of other governmental authorities – the school board or the community college board or the water board could likewise place such a measure on the ballot. If voters feel generous, those measure might pass. At any time, a not yet existent entity dedicated to some publicly beneficial cause could form – such as a hospital foundation – which might sponsor an effort to put a measure on the ballot to collect sufficient funds to build a hospital through a sales tax override. If City Hall does not take action to cash on the potential generosity of Yucaipa’s voters before others do, Mann warned Venable, the 9.25 percent maximum sales tax imposition in Yucaipa will be eclipsed and the city will have missed out. Mann talked and Venable listened. In the end, Venable bought what Mann was selling.
Mann had to make the pitch under what might be considered inauspicious circumstances. A little more than three-and-a-half years ago, Yucaipa officials had sought approval for an even more modest one-half-percent sales tax in the city. Voters rejected that initiative – Measure E – convincingly, with 5,212 votes or 35.96 percent in favor and 9,281 or 64.04 percent opposed.
Time was of the essence because the San Bernardino County Registrar of Voters must set the ballot by August and a deadline looms next month to get requests for a measure on the ballot by next month. Mann was hoping that there might be a turnaround in the attitude of Yucaipa’s residents with regard to taxing themselves. He had been able – with the assistance of the disapproval that Venable’s council colleagues Beaver and Thorp had shown toward his idea of balancing the budget through staff pay and benefit reductions – to convince Venable to consider raising taxes.
Striking while the iron was hot, Mann had an item placed on the June 24 Yucaipa City Council meeting agenda calling for discussion of and possible action on placing either a one-cent or half-cent sales tax proposal on the ballot in November.
At the meeting on Monday, Mann sought to drum up support for the taxing proposal. Speaking partially in the third person, Mann said, “The deficit situation we are now facing was inherited by the majority of this city council and by this city manager. The numbers we are looking at, which clearly show the spending down of tens of millions of dollars of city reserves on the building of infrastructure projects over the past 15 years and the drastic cost increases related to our contracts for police and fire services across the board due to inflation are not my numbers or even the numbers of our current finance director, but are taken directly from the official audited financial reports from each year. These reports were prepared by previous administrations and auditors.”
Mann then played a four-year-old video from 2020 in which Mann’s predecessor as city manager, Ray Casey, made a pitch to the city’s voters, imploring them to support Measure E, the half-cent sales tax proposal on the March 3, 2020 California Primary ballot. On the video, Casey was heard saying, among other things, “The city’s paramedic program, which provides 9-1-1 emergency services to Yucaipa residents has been operating in the red for the past four years. In addition, based on recent contract changes with represented employees, the sheriff’s department costs are rising at a faster rate than the city’s revenues. During the last four years, the city has done everything in its power to avoid having to make cutbacks in these critical emergency services, thus keeping the present level of 9-1-1 services in place. During these four years, the city has been able to maintain the same level of service in our paramedic program by using the savings from previous years when the paramedic assessment revenues did exceed expenses and by drawing down the city’s structural fund balance as well as making some other cuts. Unfortunately, the time has come where this is no longer possible, to keep the same levels of service into the future without additional funding.”
Seeking to avoid sounding panicked, Mann nevertheless sought to impart to those listening a sense of urgency.
“We’re estimating by January the continuing trend will push the deficit to 8 million dollars,” he said, solemnly. He then gave his best matter-of-fact rendition of what dire prospects face the city.
“We have identified service level cuts of 8 million [dollars] citywide,” he said, which extended to closing one of the city’s three fire stations and eliminating five firefighter positions in the city’s contract with CalFire, those being those manning that station; reducing the cost of the contract with sheriff’s department by $2 million, eliminating between five and seven patrol deputy positions; closing the senior center, saving $300,000; closing the Seventh Street Pool, saving an estimated $300,000; reducing Yucaipa Performing Arts Center programming that does not achieve full cost recovery, thereby saving an estimated $250,000; reducing community center programming, saving an estimated $250,000; identifying additional cuts to community service programs, saving $900,000; reducing net costs from the city’s development services division, saving $1 million; identifying and implementing $1 million in cuts to the city’s support services; freezing vacant any vacant non critical positions; and having the city negotiate with the Yucaipa City Employees Association a combination of furloughs or layoffs with city employees.
In his role as city manager, Mann is essentially the master of ceremonies at city council meetings. He skillfully used his position of authority to narrow the discussion and lead it to the preordained conclusion he was pushing toward: taxing Yucaipa’s consumers. Mann’s rhetorical approach consisted of presuming throughout the presentation that no intelligent or rationale person could come to any other determination than that getting a sales tax in place was the way to go. The only question, his presentation acknowledged was exactly how much that tax should be.
To further the progression toward getting the tax proposal before Yucaipa’s voters, he introduced the polling consultant the city had hired, Dr. Richard Bernard of FM3 Research, to present the foregone case that despite the voters overwhelmingly rejecting a half-cent sales tax four years ago, they can be convinced to accept a tax of twice that amount later this year.
Bernard said he had conducted a resident survey between May 8 and May 15, which he somewhat contradictorily said was random but also targeted specifically at 405 individuals likely to vote who reflected the city’s precise demographics. He said 51 percent of the sampling was done on the phone and 49 percent was carried out on-line.
According to Bernard, 61 percent of those polled in this way said the city had at least some need for additional funds. Those polled were asked to consider two sales tax proposals, one of 1.5 percent, that is a cent-and-a-half and another of one cent.
The survey found, Bernard said, that 26 percent said they would definitely support the one-and-a-half cent sales tax proposal 14 percent said they would probably support it and five percent of those who were undecided said they were leaning toward supporting it. Simultaneously, the survey found 32 percent definitely opposed to the one-and-a-half-cent sales tax proposal with another 11 percent likely opposed and 4 percent of the undecided vote leaning against supporting it. Another 8 percent were undecided with no hint of which way they were leaning. Thus, according to Bernard, the one-and-one-half-cent tax proposal could only count, realistically, on getting 45 percent approval.
The survey found that close to 32 percent said they would definitely support the one cent sales tax proposal and another 15 percent or thereabouts said they would probably support it and five percent of those who were undecided said they were leaning toward supporting it. Simultaneously, the survey found 30 percent definitely opposed to the one cent sales tax proposal with another 8 percent likely opposed and 3 percent of the undecided vote leaning against supporting it. Another 7 percent were undecided with no hint of which way they were leaning. Thus, according to Bernard, the one cent tax proposal could conceivably achieve narrow passage with a 51 to 52 percent vote of approval.
At the June 24, Mayor Beaver was not present, while Garner who did not participate in the budget passage vote on June 10, was present. It was suggested by some that Beaver, whose current term is set to end in December and must run for reelection in November if he is to remain in office beyond that point, had deliberately not attended Monday’s meeting to avoid having to vote in support of placing a tax measure on the ballot.
While some perhaps thought that Venable, after having taken a stand and lost on June 10 with regard to progressively increasing staff salaries and the concept of reducing personnel costs as at least part of the formula for combating deficit spending, might prove the hardest sell with regard to utilizing increased taxes as the pathway out of the city’s financial doldrums, that was not the case. Instead, Venable turned out to be the one member of the council who seemed to enthusiastically embrace putting the sales tax proposal on the ballot. Indeed, at one point, he indicated he found the one-and-one-half cent sales tax override a preferable option to the once-cent version.
Venable at one point gave away that he had been subject to intensive reeducation on the tax subject. When discussion with regard to the viability of the measure was ongoing, he referenced the concept of education. That issue is problematic, since state law prohibits a city or any governmental entity from using public funds to promote a ballot measure. What Venable seemed to suggest, while betraying that someone, in all likelihood Mann, had done a top notch job of persuading him, was that merely providing the city’s residents with the facts would be enough to get them to reverse the outcome of the 2020 defeat of Measure E.
As had been the case on May 13 and June 10, Mann assiduously avoided any discussion regarding staff pay and salary reductions, as if even acknowledging the concept existed would in some fashion legitimize it.
At the meeting Monday night, Mann did his level best to convey that good citizenship and both civic pride and duty are synonymous with a willingness to submit to higher taxes.
“The reason this is so important in staff’s eyes and in the eyes of the consultant is that the community really has a significant choice to make here and we don’t want to be vague about what the choice is,” he said. “We want the community to understand clearly on the front end what the choice is so there are no surprises on the back end. We can’t advocate but we can be clear about the facts and what the choices are, so in my mind it’s only fair to be clear on the front end what the intention is, what the choice is. It is in my mind not only what is fair but also a key component of our strategy of community outreach and education as well.”
Left out of the choice, Mann implied, was the prospect that he or any of the workers he oversees at City Hall see a reduction in their pay or benefits.
After Monday night’s vote to put the measure on the ballot, Mann huddled with the city’s spokesman, Joe Pradetto, to put city officials’ best foot forward in presenting the taxing proposal.
The first order of business was to give the initiative a name that would heighten its appeal to residents. Ultimately, they settled upon “The City of Yucaipa Public Safety/Essential Services Protection Measure.”
In heralding the measure, Mann and Pradetto wrote, “If approved by Yucaipa voters, the measure would enact a 1-cent local sales tax until ended by voters, providing a stable source of locally controlled funds to prevent millions of dollars in planned service cuts to police, fire, emergency response, and quality of life services.
The statement then quoted Mann directly as saying, “Because the city runs so lean, and the increased need for services has grown year over year, the city cannot cut more without impacting basic services, including public safety, which comprises 63% of our budget. The funding this measure would provide would allow the city to avoid deep cuts to 911 emergency medical response, fire and police personnel, prevent the city from closing a fire station, the senior center and the swimming pool, and maintain other basic local services that keep our city a great place to live, work, and raise a family.”
According to the statement, “The City of Yucaipa Public Safety/Essential Services Protection Measure was placed on the ballot following significant community engagement with local residents, who consistently showed a preference for not cutting police, fire, medical response, and youth/senior program funding. The city council adopted a concurrent resolution upon placing the measure on the ballot stating their intention to use the majority of the money to prevent cuts to public safety services.”
That point is a significant one with crucial implication. 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. It is both generally and specifically believed that Yucaipa’s voters would be far more likely to pass the upcoming sales tax measure if they are convinced that the money will be used for enhancing public safety, whether that is maintaining or improving fire safety service, emergency medical care or law enforcement efforts. To officially commit the money to be generated from the measure for those specific purposes, however, would trigger the requirement that it pass by a two-thirds vote. Thus, the measure to be voted upon in November by Yucaipa’s residents will allow city officials, if the measure passes, to utilize the money in any fashion they see fit, including for any municipal programs or projects, contracts or city departments. Similarly, the tax money could also be used to boost employee salaries or benefits. Thus, Mann and council will need to thread a very narrow needle eye, assuring voters they will use the money for public safety purposes without actually saying just that. If they do so and it can be documented that they made just such a commitment or promise, passage of the measure by less than two thirds of the vote could conceivably result in the tax being challenged in court.
Mann sought to ward off the impression that there was any sort of hanky-panky with regard to the measure.
“The City of Yucaipa Public Safety/Essential Services Protection Measure includes strict fiscal accountability provisions, including a citizen oversight committee, public disclosure of all spending and annual independent financial audits,” he and Pradetto wrote in the city’s official statement. “No measure funds can be taken by the county, state, or federal governments.”