Tonia Reyes Uranga
BY NICK DIAMANTIDES
Staff Writer
Several years ago, the residents of Long Beach voted to reduce the city’s utility tax by 50 percent. Now, after several years of declining city revenues and budget shortfalls, two Long Beach City Councilwomen said it may be time for the voters to reconsider their decision and vote to bring the utility tax back to its original level.
Seventh District Councilwoman Tonia Reyes Uranga and Eighth District Councilwoman Rae Gabelich made their comments at a town hall meeting at the now vacant Expo Furniture Building in Bixby Knolls last Saturday. About 35 people attended the event. Lori Ann Farrell, the city’s director of financial management, and Suzanne Frick, assistant city manager, made presentations that took up most of the two-hour meeting.
Farrell noted that the city actually has a $3.04-billion budget, but most of it is taken by special funds that can only be used for specific purposes. According to Farrell, the Port of Long Beach and the Long Beach Redevelopment Agency have funds that take a combined total of about $1.2 billion from the city’s total budget. The other special funds have federal, state, or county constraints that allow them to be spent only for special programs and purposes.
“The part of the budget that we are most familiar with is the General Fund,” Farrell said. “It’s the only fund money that you can spend on anything.”
She explained that the city’s General Fund currently has approximately $404 million, which is about 13 percent of the total budget. “General Fund revenues come from property taxes, the utility users tax, sales tax, oil revenues, user fees and more than 150 other sources,” Farrell said. “Only 21.7 cents of every dollar of property tax paid by Long Beach residents in non-Redevelopment Agency areas goes to the General Fund.” She added that only one cent of the new sales tax rate of 9.25 cents per dollar spent to purchase something in Long Beach will go to the city’s General Fund.
Farrell explained that General Funds are very vulnerable to economic recessions but also how cities pay for the services most residents consider to be most important. She noted Long Beach’s General Fund is divided as follows: $193 million (48 percent) for the police department; $73 million (18 percent) for the fire department; $31 million (eight percent) for the public works department; $26 million (6 percent) for parks, recreation and marine; $13 million (three percent) for library services; $22 million (5 percent) for elected and appointed departments; and $46 million (12 percent) for all other departments.
She also told the audience that the current recession has resulted in declining sales tax, property tax and oil tax revenues. Those declines are primarily responsible for that city’s ongoing budget problems, she insisted.
She also described another reason for declining revenues. “You may recall that in 2000, there was a voter-approved initiative that cut our utility users tax from 10 percent to five percent,” she said. “That removed $40 million from our General Fund.” Farrell stressed that since then the city has had $40 million less to spend on streets, sidewalks, parks & recreation, and libraries. She added that projected ongoing revenue shortfalls will likely result in more cutbacks to all city departments and programs for at least the next two years.
After the presentations, the meeting opened up to questions from the audience. In response to a question, Gabelich discussed the voter-approved reduction in the utility users tax. “That took $40 million from the General Fund every year,” she said. “If we hadn’t made those drastic cuts, we would not be (in this budget crisis) today.” She acknowledged that at the time of the initiative most voters thought the city was very wasteful with its money, but now many people are very unhappy with the cutbacks necessitated by the budget shortfalls. “I have a question for you,” she said. “If we gave the public an opportunity to vote on an increase in the utility users tax, would you support that or not support that?” She added that the increase could be designed to expire after several years.
John Royce, president of the California Heights Neighborhood Association, responded to Gabelich’s question by strongly supporting an increase in the tax. He stressed that it would be a miniscule increase to monthly utility bills, but the money was desperately needed to pay for vital city services.
Later, Gabelich and Uranga were asked if they would have the courage to make a motion at a city council meeting to put a utility users tax increase on an upcoming ballot. Both said they would if they felt the public would support such a measure. “I have been talking about the utility users tax for years,” Gabelich said, adding that with five council seats coming up for election next year, it would be hard to get a majority of the council to vote to put the measure on the ballot. “But that should not stop us,” she said. “The point should be what can we do to make our city the best that it can be.”
Uranga agreed. “The key is whether it is supported by the community,” she said. “I think it is something we should look at.”
