Local News

With Sales Tax Measure on the Ballot, City Manager and Mayor Give Dire Financial Assessment

During two recent public forums, Fullerton City Manager Ken Domer and Mayor Jennifer Fitzgerald gave dire assessments of the City’s financial situation, particularly if the proposed Measure S (sales tax increase) does not pass.

Partially due to the impact of COVID-19, the City is facing a $7.9 million budget shortfall for the current year, and a projected $5 million deficit per year moving forward.

The Observer spoke to City Manager Domer to determine how much of this deficit is directly related to COVID-19, considering property values (and thus property taxes) are up. Mr. Domer has not yet provided this information. Presumably, most of the shortfalls are due to less sales tax revenues. Property and sales taxes are the two main sources of city revenues.

At a study session with City Council on September 15, Domer and City Treasurer Ellis Chang gave an overview of the City’s current financial situation.

Aside from the impact of COVID-19, Domer cited Fullerton’s lack of a strong commercial/retail base (as compared to other cities), the limits that Prop 13 (passed in 1978) placed on property tax revenues, and a large pension obligation for retired City employees (particularly police and fire).

“The City has been forced to resort to holding numerous positions vacant, institute pay cuts, separate non-regular (part-time) positions, issue notices of layoffs to 7 full-time employees, reduce service levels across all departments, and identify use of limited contingency reserves to deal with the health crises’ fiscal impact,” Domer stated in a staff report.

Domer said that if Measure S does not pass, there would likely be further cuts to City services and departments, such as the Fullerton Museum Center, the Library, and other departments.

Slide from a powerpoint presentation given by City Treasurer Ellis Chang on September 15 showing vastly different financial projections with vs. without the add-on sales tax.

Councilmember Bruce Whitaker, who had voted against placing the sales tax increase on the ballot, criticized the study session calling it “a campaign event…trying to sell the sales tax.”

State law prevents government agencies from using taxpayer dollars to advocate for such a measure, though they are allowed to “educate” voters.

Critics of Measure S have asserted that the new revenue obtained from the tax would not go to infrastructure, but to maintaining City salaries and pensions.

Mayor Fitzgerald hosted a virtual Town Hall with City Manager Domer, on City Finances and Budgeting on September 24, which featured much of the same information given during the study session on the 15th.

Fitzgerald discussed cuts the City has made to address budget shortfalls, such as laying off 153 part-time employees and 7 full-time employees, and reducing salaries by 5% for all city workers.

“Even with all of those cuts, the revenue levels are inadequate to sustain services that Fullerton residents expect,” Fitzgerald said.

She asked Domer, “What are the most expensive things that we do?”

“Most certainly police and fire—public protection,” Domer said. “Really those are the core elements of what a city does.”

Fitzgerald stated that one police officer costs a total of about $250,000, including benefits.

The Mayor and City Manager discussed Fullerton’s aging infrastructure and the lack of funding to improve, or even adequately maintain it.

It was infrastructure needs that prompted the City’s Infrastructure and Natural Resource Committee to recommend earlier this year that Council place a special sales tax measure on the ballot that was dedicated to infrastructure.

However, polling conducted by an outside agency (FM3) found that there was not adequate voter support for a dedicated sales tax, which requires a 2/3 majority, but there was support for a general sales tax, which requires only a simple majority—so Council went for that option.

Ironically, it is the open-ended aspect of a general sales tax that has critics concerned that the increased revenue will not go toward much-needed infrastructure repairs, but will be used primarily to maintain the salaries of City employees.

Domer said that part of Measure S mandates the creation of a citizen’s oversight committee to make sure funds are being used mainly for infrastructure. However, Fitzgerald acknowledged that, having served on a school bond oversight committee, “that structure is ineffective as far as keeping governments accountable for how they promised the voters they would spend the money.”

To learn more about Measure S, including the official analysis and arguments for and against, visit the City Clerk’s web site HERE.

5 replies »

  1. Domer cited 3 issues that are causing Fullerton’s shortfall, “Lack of a strong commercial/retail base” (presumably to bring in more sales tax revenue), “Limits that Prop 13 (passed in 1978) placed on property tax revenues, and a large pension obligation for retired City employees (particularly police and fire).”

    The one issue of those 3 that the city does not have any means of changing is 1978 Prop 13. But as individual voters, we do!

    Prop 15, on the November 3, protects homeowners and all rental housing tax bills to continue to be assessed under the 1978 voter approved Prop 13. However, commercial property, excluding small businesses, would be assessed at market rate valued, thus restoring a big chunk of the property tax revenue list by Prop 13.

    Fullerton residents struggling with how they can help the city balance their budget without voting for the regressive tax (disproportionally hurts those with low incomes) proposed as Measure S, also on the November 3 ballot, can instead vote for Prop 15.

  2. How about they cut pensions? It’s completely lopsided burden on the city. Until you cut these pensions, you can raise sales tax all day long… It will never make up the loss that they’ve( city council) created for the residents.

    I cannot believe how backwards this city is. Have you not learned anything? I cannot believe how corrupt the city continues to be, even with a spotlight on it… The residents need to hold people accountable. Apathy is at its highest in the city of Fullerton.

  3. Totally agree Fritz… It is totally unfair to continue to raise our taxes to fund the lavish pensions that were promised to “government employees”… We in the private sector have to work till what 62 or 67 and that means we end up working for over 40 years… DO NOT RAISE MY TAXES PERIOD AND THEN LIE ABOUT WHY IT IS NEEDED!

  4. When will taxing the citizens EVER be enough? Only when our elected representatives quit spending money that create future expenses will we truly be able to manage successfully. In your personal household, how long can you live on borrowed or credit card debit? At some point you have to begin cutting and making better decisions or doing business a new way.

    Sales tax is a regressive tax, which means that it disproportionately hurts the working poor and elderly. They cannot as easily afford the tax increase, compared to someone who is wealthy. A sales tax is also double taxation: Money you have has already been heavily taxed with INCOME TAX, PAYROLL TAXES, SOCIAL SECURITY TAX, MEDICARE TAX. After all that (plus employer taxes) when you seek to spend what remains you will pay nearly 10% in SALES TAXES if this measure passes. Of the 293 total local measures in the last election, 237 (81%) were bond or tax measures. The majority were defeated because taxpayers understand there is only so much that can be given (taken) to the government from each household. If the city council truly wanted to fix our roads and improve our services, I must ask, why didn’t they put forth an initiative with restrictive use of those funds. That is truly the only way to ensure that the funds are used for improving the quality of life in Fullerton. #FullertonSaysNo #VoteNoMeasureS

    First, contact each City Council person and tell them WHY you do not support Measure S. Reach out to Mayor Jennifer Fitzgerald(jenniferf@cityoffullerton.com), Mayor Pro tem Jan Flory (appointed to the council) (jflory@cityoffullerton.com), Ahmad Zahra (ahmadz@cityoffullerton.com) and Jesus Silva (jesuss@cityoffullerton.com). Next, send a THANK YOU to Councilman Bruce Whitaker (bwwhitaker@live.com) who was the only reasonable representative who voted against this measure to keep our businesses competitive. Next, tell everyone you know to vote NO on Measure S. You can reach out with your own social media networks (facebook, instagram, nextdoor, twitter) to spread the word that we want our businesses to THRIVE and stay competitive with surrounding cities all wanting you to shop in their city. Lastly, VOTE in the November 3rd election. Visit http://www.ocvote.com to register and encourage others to vote too. #FullertonVotes

  5. We want our roads fixed. An “open-ended” sales tax does not guarantee infrastructure improvements-just business as usual. An oversight committee oversees what and the committee will probably be, as our mayor states, “ineffective.” A no vote will force our city council to come up with a better plan.