Cerritos to Consider One Half-Cent Sales Tax Increase

By Brian Hews

The Cerritos City Council will consider, at next Monday’s May 2 City Council meeting, placing a measure on the March 7, 2017 ballot that would ask residents for approval of a one half cent sales tax increase.

If approved and passed, the measure is anticipated to generate $15 million in additional revenue for the city.

The funds would be used in part to pay for sheriff and Public Safety services and to facilitate much-needed infrastructure maintenance projects.

Cerritos City Manager Art Gallucci.

City Manager Art Gallucci cited many reasons for the consideration of the sales tax increase, with the dissolution of redevelopment at the top of the list.

The dissolution is costing the City over $4 million annually in assumed redevelopment employee costs and $800,000 annually to operate the Magnolia Power Plant.

The City has also made over $26 million in payments to State since the dissolution of the redevelopment agency.

In addition, Sheriff and Public Safety services have increased over $2 million since 2008-’09.

In light of the cost increases, the City has taken significant steps to reduce its operating budget, with the proposed 2016-2017 budget lower than the 2008-’09 pre-recession budget.

As part of that cost saving effort, the City has not filled a total of 18 management and 40 non-management positions that have been vacated through attrition resulting in an annual savings of $6.4 million, and over the past four years city staff has received a miniscule 2% wage increase.

Despite the cost cutting efforts, the City has been forced to take $22 million from its reserve funds with current level at $58 million, compared to $80 million in 2009.

And it will only get worse, with the current 2016-17 budget projected to have a deficit of $5.5 million.

The City, which in a no/low property tax city, could consider a property tax or a user/utility tax increase but that would, “significantly impact Cerritos residents.”

A property tax increase to generate $15 million would cost every Cerritos resident $645 per year; a user/utility tax that would generate $8.7 million would cost $545 per year.

The likelihood of the increased property tax or user utility tax measure passing would be slim given the recent defeat of Measure AA for the ABCUSD which would have cost only $160 per year for each resident.

A one half-cent increase in sales tax would “add 50 cents to each $100 purchase,” according to Gallucci’s report, “and have a minimal impact on the residents of Cerritos.”

In order to place the measure on the ballot, the City Council must give Cerritos staff permission to move forward with consideration at the October 10, 2016 meeting.

Cerritos will then conduct a public information/education program that is estimated to cost $15,000.

If the measure is approved by Cerritos residents, the city will then submit final documentation of the State Board of Equalization and it is estimated that it would take approximately 90 days following the election for the tax to be implemented.

Cerritos Mayor Ray told HMG-CN, “The City of Cerritos has faced numerous economic challenges since the onset of the Great Recession in 2008 and the dissolution of redevelopment beginning in 2011. To ensure that the City does everything it can to maintain the high quality of life and superlative services to which our residents and community are accustom, the City is asking voters to review and consider this one-half cent sales tax increase. The funds would be used in part to pay for sheriff and public safety services and much needed infrastructure maintenance projects. This will be presented for adoption later this spring.”