It seems like every few years Fullerton City Councils are presented by the bureaucracy with a new “fiscal cliff”: It’s done slowly, tentatively, and then with an ever-increasing tone of persuasion, the argument for “revenue enhancement” unfolds.
Revenue enhancement means taxes or debt – one way or another. And so it is in 2024.
With time running out to put a tax increase on the November ballot, the urgency from “staff” is getting more direct. Time has run out for soft-sell concepts like phony push polls of unwitting citizens. At Tuesday’s council meeting our esteemed City Manager is presenting ideas for raising money.
TOT Tax. What is a TOT tax? Transient Occupancy Tax is a tax levied on visitors who stay in Fullerton hotels. The staff report tells us that several million can be raised with a slight increase and that hopefully we will remain competitive because we are so close to the Anaheim “Resort.” No on can prove this one way or another, but it seems like becoming comparatively less competitive is a poor way of raising revenue. The positive thing about a TOT increase, says the staff report, is that Fullerton taxpayers won’t be affected (unless, of course the concept turns out to be a money loser).
Sales tax. We have already seen the sales pitch on how a general sales tax only needs 50%+1 to pass. We are told that a “1%” increase (from 7.75 to 8.75) on sales tax is being pursued by cities up and down California, etc, etc. Of course they think we’re too dumb to know that this isn’t a 1% increase, but a 13% increase. As with a TOT increase, it’s hard to see how becoming comparatively less competitive is going to make money. The sales tax issue seems DOA. 4 votes are needed to put this on the ballot and Whitaker and Dunlap aren’t going for that.
POBs. And then we see the concept of Pension Obligation Bonds, in which bond revenues are deposited with CalPERS to buy down the actuarial unfunded liability. The idea is that the interest rate on the bonds is lower than the return CalPERS will give us and the difference is all gravy. This idea was floated back in 2021 by then Interim City Manager, Jeff Collier. FFFF covered the proposal, here. One upside is that this scheme is not constrained by the usual debt ceiling limits placed on local governments by the state. Great. More gambling.
Mr. Collier was kind enough to visit our humble site to educates us on POBs. Friends immediately pointed out the risks involved with POBs, and the lack of skin in the game Collier and his pals had. And that was three years ago when market interest rates were way lower. The equities market is now going through the roof so the idea looks appealing to our bureaucrats, but not to California pension system observers who note CalPERS ever-declining return assumptions and remember the disaster of 2008. Will the City Council approve this gambit? It’s possible, and a public vote is not required.
These various options involve raising taxes or encumbering property to some extent. That’s risk with a speculated payoff. Ahmad Zahra is bound to support anything risky and foolish so as to protect his friends in City Hall. So is Shana Charles, another liberal torchbearer who will tell us this is for our own good; or for the urban forest; or for boutique hotels, or something else nonsensical. Whitaker won’t go for any of this nonsense. Dunlap? Who knows these days. And then there is Fred Jung who had the opportunity to be the third vote to shut down talk of revenue enhancement last year and didn’t.
A problem with any tax revenue increase is that the increase, such as it were, will immediately be snatched up by the so-called “public safety” employees, whose unions have the clout to grab what they want and everybody else be damned. That’s exactly what happened in Westminster a few years when the cop union pounded the pavement for a sales tax increase, got it, then gobbled it all up. And Westminster is right back where they were before.
