Readers comments 10-25-19
The PERS problem
Claremont faces a budgetary crisis that is by no means unique for a California city. Statewide, cities are having to make hard choices about their budgets due to rising costs. One of the primary budgetary pressures on cities is pension liabilities.
According to the Public Policy Institute of California, the state’s largest public pension plan currently covers only 70 percent of pension liabilities. After the 2008 recession, CalPERS has lowered its assumptions about investment returns and increased demands on the public institutions they serve.
There are also demographic trends that make pensions costlier: in 2018 about 15 percent of Californians were over 65. This is estimated to rise to 21 percent by 2030, with increasingly fewer younger workers supporting a growing number of retirees. California cities are disproportionately impacted by these trends.
Over half of employer contributions to CalPERS come from local governments, like Claremont, with small budgets and few options to significantly increase revenues.
The League of California Cities estimates that city pension costs will increase by 50 percent by 2024, accounting for an average of 16 percent of cities’ general funds. Given these facts, it’s hardly surprising that cities across California, big and small, conservative and progressive, are increasing sales tax to shore up revenues.
In 2018, over 10 percent of California cities submitted sales taxes measures to voters of an average increase of 0.7 cents on the dollar. And voters overwhelmingly have approved: 9 out of 10 of these measures passed by an average of 62 percent. There was little partisan divide on the issue: all 11 cities in Los Angeles, and all four cities in Orange County, passed measures with over 60 percent voter approval. A one percent sales tax increase narrowly passed in conservative Bakersfield, home of House Minority Leader Kevin McCarthy.
Claremont has been diligently working to make the best of this dire situation, and has managed over the last two years to pare over $3.4 million from the budget without significantly impacting services. Even with these cuts, Claremont’s general fund will face a budget deficit that is expected to expand to more than $2.8 million in four years.
This deficit will force decisions about deep cuts to services. Measure CR is the responsible solution to a common problem facing California cities, that an overwhelming number of voters have approved: a modest increase in sales tax that will directly benefit the city’s general fund.
It will allow us to eliminate the deficit, rebuild the city’s underfunded emergency reserves, and secure the essential city services that make our community such a great place to live.
Not if, when
Claremont’s current sales tax is 9.5 percent; Measure CR will increase it by .75 percent (three-quarters of a penny), bringing us to the state max of 10.25 percent.
More than 50 cities in LA County (including Covina, Glendora, and Pomona) have determined that the likelihood of LA county increasing the county-wide taxes to the maximum 10.25 percent is more than feasible and have proactively protected their cities’ revenue by raising their local taxes to the allowable maximum and keeping the proceeds local.
It is important for voters to understand that if LA county raises the tax to 10.25 percent before Claremont does, the county—not Claremont—will get the additional revenue. Alternatively, if we pass Measure CR, that additional tax revenue stays in Claremont. Over time, that’s a big deal.
In the long run, it’s likely not a question of whether or not we are going to pay 10.25 percent in taxes; it’s really a matter of where that additional revenue is going to end up.
Let’s keep our revenue local so we can balance our budget without cutting funding for tree and wilderness maintenance, free community arts programming, senior services, after-school programming for our youth, and a variety of other services that enhance the lives of everyone living in our community.
Protect our assets
Claremont’s current budget constraints are not unique. Every city is trying to cut expenses because every city is also grappling with the rising cost of services, pensions, healthcare and competitive wages for strong personnel. Those who claim Claremont is alone in this budget predicament are not watching other communities.
Measure CR breathes life into our budget in a manner that is even-handed and specific to dollars spent. It allows residents, and those who shop and dine here, to contribute to our community based on means.
For fiscal conservatives and tax watchdogs, Measure CR should be an absolute yes! The initiative keeps tax dollars local and protects property values.
Claremont property values are strong. Even in a downturn, our property values do better than other communities. People are willing to spend more to live here because of our quality of life—our parks are beautiful, our sidewalks are well-maintained, our police are community-focused, and our youth and senior services are unmatched.
If the city reduces services further, we begin to directly degrade the very elements that keep our property values strong, hurting our assessed values, ultimately limiting our access to capital and minimizing our retirement options.
It’s up to us as Claremont residents to protect our quality of life and our assets, and that means supporting Measure CR.
The wrong road
CS Lewis wrote, “The safest road to Hell is the gradual one—the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts…”
This is the path the proponents of the sales tax increase offer the community. Measure CR should be defeated. Vote no on November 5.
Ludd A. Trozpek
Finance funny business
Several letters in the last issue of the COURIER repeat the city’s statement that there have already been, variously, $3.4 million to $5 million in city “cuts.”
In the 2018-19 fiscal year, the nearly three-quarters of these so-called budget cuts came from reductions in budget requests made by various departments. They were not actual reductions in anything. In fact the budget for that fiscal year was nearly half a million dollars higher than the prior year.
Everyone knows how a budget process works: the managers ask for more than they expect to get and then the big boss and the finance people bring the requests into line.
The fact that the numbers from the city’s finance director have been all over the place since last fall might make the skeptic question not only this specious conclusion but also the underlying numbers.
Donna S. Lowe
A recent letter that focused on nonprofit funding by the city of Claremont through CBO grants was of interest to many of us who have been involved for decades as volunteers and board members of some of the nonprofits fortunate enough to have received grant funds.
The writer seemed to randomly select a few organizations he doesn’t deem as worthy as others for this funding. I have no disagreement with the two nonprofits on his “approved” list, but question what he knows about the others he mentions that provide services he deems less important.
CBO grants are for specific needs and services that directly impact and enhance the lives of the underserved in our community.
The writer stated, “I do question why they are at city hall with hat-in-hand, and why the city is funding their endowments.” CBO grant funds do not go to “endowments” or to “day-to-day needs,” but to direct services that address specific needs and provide opportunities “that strengthen the social, family and economic fabric of our community.”
The fact that the city provides modest financial support through grants for local nonprofits is viewed as a huge plus by those involved and those receiving the benefits—our youth, seniors and the homeless. CBO grants are reimbursement grants and require documentation and proof that the money has been spent as intended before the city provides the funds.
This outreach and commitment to the common good is a key element in what has for years made Claremont the unique and desirable town we are fortunate enough to live in.
I also take exception to the writer’s use of the word “endowment.” Endowments are something every small nonprofit dreams about, but few have. An endowment is a gift given to an institution, the principal of which must remain intact in perpetuity. The income and earnings of an endowment are generally permitted to be spent annually for a specific purpose as defined by the donor.
As clearly stated in the 990s of the three nonprofits highlighted in the letter, only one has an endowment and it is a national organization. The other two have no endowments and operate on current funds they raise on their own annually through donations and small grants. One of these organizations has no executive director and no paid staff.
Neither of these organizations would be described as being “flush,” and yet they manage to do an incredible amount of good that benefits this community and its youth in obvious and untold ways.
Mary F. Weis
Yes for Claremont
As Claremont residents for nearly 50 years, we have come to realize what special gifts we offer to our citizens. This is why we are voting yes on Measure CR.
From services offered free to our city residents to the programs offered to our citizens at the Joslyn Center, for all the activities at the Hughes Center, we cannot afford to let these opportunities be lost.
The Future Financial Opportunities Committee proposed this increase to help remedy our deficit. Our neighboring cities have begun to approve tax increases, which will “stay home” and benefit their local economies.
The revenue return we will see by this modest increase in sales taxes far outweighs the risk of doing nothing to help our local economy.
Jerry and Maury Feingold
Measure CR: Some Q and A
I’ve been doing my best to understand the issues surrounding the proposed sales tax increase. In the hope that it helps others to make a decision, here are the questions I’ve asked, and the answers I’ve found.
Q: Why does the city need more money?
A: Costs continue to go up and revenue hasn’t. The city is required to have a balanced budget, so over the last decade it has decreased the number of staff and their hours, made changes in benefits and salaries, and deferred quite a lot of maintenance so residents wouldn’t see a serious effect on our quality of life. Without more money, we will see those effects.
Q: Can’t the city cut more?
A: Sure, staff and hours could be reduced more, the time between trimming trees or fixing potholes could be increased, bulk item pickups could be eliminated, and so forth. All of this would seriously affect the ability of the city to provide the quality services we expect.
Q: Why 0.75 percent and not a round figure like 1 percent?
A: The state has set a cap of 10.25 percent on the amount of sales tax that can be assessed. Since Claremont is already at 9.50 percent because of county measures, that leaves 0.75 percent as the maximum increase now allowed.
Q: We already pay 9.50 percent in sales tax. Surely that’s enough.
A: Of that amount, we only get 1 percent. Not a lot, and not enough to support current and future city costs.
Q: Why should we agree to pay more?
A: No one likes to pay taxes. However, having them support local needs is important. There are at least two LA County measures being considered that would take the remaining 0.75 percent. A number of cities have already reached the 10.25 percent cap so if the county passes one of these measures, those cities might not have to pay for it, but if we haven’t reached the cap, we will.
Q: Could the state increase that 10.25 percent cap? Hasn’t one city already exceeded that?
A: Yes, at some point they could but there are no plans to do that. Any hike to the cap would be something to oppose later. Our structural deficit is something we need to address now. The city of Santa Fe Springs went through a laborious process to get permission to exceed the state cap because they were going bankrupt, but the citizens still had to vote to approve the increase.
Q: How much is this going to cost me?
A: The increase adds 0.75 percent to the current sales tax of 9.50 percent, for a total of 10.25 percent. This translates to a penny or two on a cup of Starbucks, or 75 cents on a $100 purchase.
Q: Why isn’t any of the money earmarked for specific purposes, like the new police station? Shouldn’t we be supporting public safety issues?
A: If any or all of the money is earmarked, then the measure would require a two-thirds majority vote to pass, rather than a simple majority. As it happens, just under half of the money in the general fund goes to public safety, so a tax increase will help maintain and improve police services.
Q: Doesn’t this have a greater effect on those who are less well-off?
A: It might but sales tax is not added to food or prescription drugs and of course it doesn’t affect housing costs. In addition, the general fund supports Sunday library hours, low-cost summer programs for children, nonprofits providing opportunities that might not otherwise be available, and well-maintained and free parks, all of which benefit lower income residents.
Q: Won’t this cause people to do their shopping in other cities?
A: Less than one cent on the dollar is not likely to repel those who come to Claremont for the specialty businesses here or for the restaurants.
Q: Who supports CR and who opposes it?
A: Over 400 people are named so far as Yes on CR supporters on flyers and other material. To date, the No on CR group has provided no list.
Q: Will the city use the funds wisely?
A: Well, that actually rests in large part with us, the citizens of Claremont. No person or group always makes the right decisions, and this is especially true in hindsight. However, we elect the council and they are the ones who are supposed to approve how the money is spent. Normally they listen to what we want, but if they don’t, we have an obvious remedy.
There are a lot of reasons people want to live in Claremont and chief among them is the character of the city. So, magic wands being in short supply, I’m supporting Measure CR to help maintain that character. I hope you will too.
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