A few stores seemed to draw a decent crowd for a weeknight. A manager at the local GameStop jokingly insisted he was working, not having fun, as he tested, for one family, a video game on the screen near the counter, even though the line of waiting customers was starting to grow.
The Signal Tribune talked to a few of the retail owners in that area about the proposal to increase the sales tax to 10 percent. None of them had any inkling that the city council at that time was about to take steps to request a measure on the June 7 ballot.
The proposal ultimately means that the sales tax will be temporarily raised to 10 percent for six years, and then after that time, it will be dropped to 9.5 percent for four years. It is a temporary tax, and there is a “sunset” clause that will require the additional tax to end after 10 years. Right now, LA County sales tax is at 9 percent. Just over the county line, Westminster’s sales tax rate is at 8 percent.
For Long Beach Mayor Robert Garcia, the new tax is a necessary step to make a dent in the estimated $2.8 billion-dollar cost of the city’s infrastructure over the next 10 years. In a phone interview last week, Garcia explained that the proposed sales tax will focus on certain priorities, including streets, sidewalks, storm-drain water conservation systems, restoration of a fire engine and protecting 911 emergency-response services.
“This measure will not solve our infrastructure challenge,” Garcia said, “but what it will allow us to do is to!focus on the critical systems that we need to replace and fix.”
[aesop_image imgwidth=”500px” img=”http://www.signaltribunenewspaper.com/wp-content/uploads/2016/02/Screen-Shot-2016-02-18-at-3.58.40-PM.png” align=”left” lightbox=”on” caption=”Waitress Alyssa Van De Vort, (at center in black), serves a group dining at Baba Ghanouj, a Lebanese-cuisine restaurant on Atlantic Avenue in Long Beach. If a measure for the city gets on the ballot and is passed by voters, the sales tax in Long Beach will effectively increase to 10 percent. Last Tuesday, the Long Beach City Council unanimously voted in favor of an ordinance that is needed to create that ballot measure in time for the June 7 election.” captionposition=”left”] The city council unanimously voted that Tuesday to begin the process of creating an ordinance to put the measure on the ballot this summer. Voters will ultimately decide whether the tax will be approved.
If so, the City anticipates that the new tax will bring in $48 million a year, according to a statement from Lea Eriksen, who serves as the assistant finance director for Long Beach.
Eriksen was also asked to calculate the sales tax’s impact to the city’s overall revenue.
“Using FY 16 figures,” Eriksen stated, “we have budgeted $58.5 million in sales tax revenue, which is 14.1 percent of total general-fund revenue. If $48 million in transaction and use tax was added to this existing sales tax amount, the total combined sales and use taxes would then represent 23 percent of the revised total general-fund revenue.”
The council and the mayor had repeatedly called the proposal a “sales tax.” John Gross, director of the Financial Management department for the City, acknowledged that the proposed tax is really called a “transaction and use tax,” not a “sales tax.” To the average retail customer, it will likely look the same on a receipt. The distinction makes a world of difference in the sale of automobiles.
“The Council item was using terms for clarity so that what was being requested was easily understandable,” Gross said in a statement to the Signal Tribune. He went on to explain the difference. “Technically, under California law, a sales-tax increase for cities must be in the technical form of a ‘transaction and use tax.’ It operates in a manner almost— but not quite— identical to a sales tax. The typical consumer will probably not see a difference, and the invoice that stores provide probably will just show a single sales-tax rate; that’s our expectation.
“There is a difference for car purchases. A sales tax for cars is paid to the City based on the point of sale— where the car dealer is located. A ‘transaction and use tax’ for cars is based on where the car is registered. Thus, Long Beach car dealers will not be at a competitive disadvantage.”
Garcia enlisted the support of his two predecessors to promote the proposal for a tax increase. He noted that the voters have not increased tax rates since 1991, when they approved an increase in the utility user taxes. Former Long Beach Mayor Beverly O’Neill called the move “overdue.”
“We have not taken as good care of our infrastructure through the years,” O’Neill said in a phone interview, “and I’m really proud that this council was handling this.”
O’Neill served the city for three terms, from 1994 to 2006. She described that the city at that time had lost the Navy base and experienced an economic setback when over 50,000 jobs were lost and there was a $3-billion impact to the economy. At that time, she added, there wasn’t a lot of money for daily operations, and a lot of work had to be done to rehabilitate the city.
Garcia acknowledged that there aren’t a lot of options for the city without the ballot measure. He warned that the streets may get in worse shape, the City won’t be able to add additional police and fire services and some services may be cut, if the tax measure doesn’t get approved.
Along Atlantic Avenue, Elric Mors, owner of World Serpent Exotics, was annoyed at the proposal. His shop was a little busy last Tuesday night. One couple had just finished selling him spiders and buying other supplies. Another gentleman walked away with a plastic bag filled with what looked like live white, wriggling worms. He was already considering making the move to Signal Hill, and this proposal might make that decision for him.
Signal Hill has no plans to increase its sales-tax rate, according to Signal Hill City Manager Charlie Honeycutt.
Mors criticized Long Beach’s inability to budget the money it already collects in taxes.
“Constantly increasing money to make up for shortfalls in budgets that people can’t already make doesn’t make any sense,” he said.
Mors said he believes literally everything that is consumed is taxed.
“And if they can’t get by with the money that they already have,” he said, “they have absolutely no business taking more.”
The council did request for an oversight committee to review how the new tax revenue is spent. More details will be available when the city attorney’s office returns next week with a completed ordinance for the council to consider. The council needs to pass the ordinance in two readings before the measure is placed on the June ballot.
