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Reference

Council Votes 6-3 To Offer Competing 2.5% Utility Tax Measure -- August 1, 2000

On or about July 26 (based on its filing stamp), Councilmembers Carroll, Colonna and Baker signed/initialed a written memorandum agendizing for the August 1. 2000 City Council meeting an item to:

"...respectfully request the City Council to request the City Attorney to prepare a ballot measure that would specifically define a 3% utility tax cut over the next five years as follows: Years 1-4, 1/2% cut; Year 5, 1% cut."
Their memorandum is posted at Carroll/Colonna/Baker 3% Memo to Council

The item as placed on the August 1, 2000 City Council agenda was:

"Vice Mayor Dan Baker, Second District, Councilmember Frank Colonna, Third District, and Councilmember Dennis Carroll, Fourth District, requesting the City Attorney to prepare a ballot measure that would specifically define a 3% utility tax cut over the next 5 years as follows: Years 1-4, 1/2% decrease and Year 5, 1% decrease. (Councilmember Dennis Carroll, submitting presentation on reduction in Utility User Tax.)(City Manager, submitting communication entitled "Utility Users Tax Rates: Cities With Utility Taxes".)"

At the August 1, 2000 City Council meeting, City Clerk Shelba Powell announced the agenda item basically as agendized.

The Mayor then asked which of the three Councilmembers wished to speak; a voice (off camera, sounded like Baker) replied: "I think we're gonna let the public speak first." The Mayor gave the floor to members of the public.

At this point, no one on the Council (including Carroll, Colonna and Baker) had publicly indicated anything other than their agendized 3% reduction. The speakers included:

  • Former LB Councilman, Dr. Tom Clark, spoke as "Co-chairman, People for Long Beach, which is in opposition to the current proposal to reduce utility taxes." Dr. Clark stated:

    "I'd like to make an observation in the context of my remarks. It's always something strange to me that knowing that the city has a deficit budget for I don't know how many years now, and we're not raising as much revenue as we spend, that someone could come up with a proposal that we should even make a reduction in the revenues that we have currently. Having said that, the reason I'm here tonight would be in support of a proposal that would give us an opportunity to possibly avoid some of the Draconian cuts that you're going to have with this proposal that's before you, before us now, the 5%...I would ask you to reduce your proposal to the least amount that you can. I certainly will work with you and work with that proposal..."

  • An individual (whom the Mayor recognized by name), a LB resident, urged the Council to "vote for a two and a half percent reduction in the utility users tax." This was the first public mention at the Council meeting of a two and a half percent decrease; the agenda item brought by Councilmembers Carroll, Colonna and Baker was for a 3% reduction.

  • Ms. Joanne O'Byrne, speaking as a boardmember of Friends of the Library, opposed 5% tax reduction and indicated Friends of the Library will support the Council "in placing an alternate measure on the ballot to reduce the utility users tax by no more than 3%."

  • Mr. Mike Murray, chair of the LB Area Chamber of Commerce, then testified in pertinent part

    "[T]he Chamber's Governmental Affairs Council and Board of Directors have heard various proponents and opponents of tax relief measures...It's the Chamber's position that the five percent cut over five years is too drastic a cut and is not a fiscally responsible tax cutting measure. We feel that the two and a half percent cut is a viable alternative. The Chamber and its 1,900 businesses strongly support this plan. The Chamber Board of Directors feels that the two and a half percent cut is a responsible and reasonable cut...

    "In a showing of solidarity that is unprecedented in my four years with the Chamber, the Board of Directors overwhelmingly approved the two and a half percent cut. Board members were calling me from vacations to ensure their vote was recorded...The Chamber urges the City Council to consider and eventually approve the two and a half percent utility users tax cut. Thank you."

  • Mr. William Molnar, CPA, former candidate for City Auditor, delivered a blistering reply to the Chamber.

    "I think when you see representatives of the Chamber of Commerce come before you, you have to sort of analyze the source. I think the Long Beach Chamber of Commerce is not the voice of business in this city, has zero credibility as far as representing the true voice of business because, like I said, a real businessman would never support a 10% utility tax or accept a 3% decrease in taxes when they could get a 5% decrease in taxes...Somebody also mentioned that the city is constantly in a deficit situation...

    "The city is always in a financial position of losing money, and you have to look at this in view of the current boom economy that we have, and I would say as a businessman and as a financial advisor, it's an absolute scandal and prima facie evidence that this city is mismanaged, that in these boom economic times in the state of California, where the state has a surplus, that the poor city of Long Beach, which is absolutely financially mismanaged, is running another deficit...."

    Mr. George Medak, a co-chair of "People for Long Beach" (an entity formed in opposition to Mr. Ryan's measure) and member of the Chamber's Board of Directors, responded:

    "[T]he 1,900 businesses represented on that chamber do speak for business in the city of Long Beach, with all due respect. And they don't want to have taxes raised; they don't want to pay taxes; everybody in business understands that, but they're looking at fiscal responsibility coming up with this compromise. And the new City Council has done a great job compromising, working with the business community, labor's involved, and we've come to a point where there seems to be some action we can take that, that fights the 5% that's onerous...I commend the three Councilmen for coming forward with this and I hope we can stay together. This is rather unique where business, and labor and management have all come together on a policy, on a position, and I urge you to support the two and a half..."

Following additional speakers, the Mayor gave the floor to Councilman Carroll:

Mr. Carroll said:

"Thank you, Madame Mayor and my colleagues on the City Council. The initiative proposing to cut the utility tax by 5% has created some difficulty for city officials and those persons in the business community who I think have concerns about some of the issues raised tonight, that is, the effectiveness, efficiency and accountability of city government. On the other hand, making sure that our citizens are served with respect to public safety, good safe schools, making sure our businesses are productive. I hope that tonight the City Council has coalesced around the proposed two and half percent alternative that I will be speaking for under the leadership of the Mayor, Vice Mayor Baker and Councilman Colonna and the other members of the Council. ..."

This was the first public meeting mention by any Councilmember of a 2.5% plan.

Before launching into a series of prepared graphic slides of the type usually presented by the City Manager or subordinate staff, Councilman Carroll said:

"...and before I begin with the slide show, I do want to say and acknowledge George Economides and Norm Ryan, the persons who put the 5% initiative on the ballot. I know both of them. I know them both to be responsible persons. I know they both love and care for this city. I know them both to be businessmen who do believe, as Will [Molnar] earlier stated, that the less tax the better, and that is a philosophical position that has a long tradition in this country.

"However, I think Mr. Medak [Boardmember of the LB Area Chamber of Commerce and co-chair of "People for Long Beach," the latter formed to oppose Mr. Ryan's tax cut measure] also suggested there is a different perspective, we can only cut taxes so far, we have certain services and responsibilities as members of the community as well. So, I think Norm and George have done this city a great service. It is going to focus our attention on the upcoming budget process.

"We have a new era, I believe, of openness and accountability which I believe has already begun. I know I've spoken to [LBPD] Chief Lance and [LBFD] Chief Beck. They have implemented efficiency reforms in the Departments that are very difficult to implement any more, and I think you're going to be seeing more and more effective use of all government resources on your behalf. I know speaking for myself I have not yet been through the budget process but I would like to be given an opportunity to be a more informed watchdog for all of you. I also want to acknowledge Curtis Tanney and the [City] Manager's office who have graciously provided me the opportunity to use their resources in presenting this program...."

Councilman Carroll then began a slide presentation making various budget and tax claims, including:

"In 1991, the utility tax was raised from 7 to 10 per cent to pay for additional police officers. Those police officers did come on board. Those of you who remember the early '90s and difficult times the city had. It is one of the situation, I think, is a credit to us all is we had the foresight to raise the tax which is never happy thing to do and it paid off. We are now enjoying some of the lowest crime rates in a long time."

[LBReport.com has posted the City Manager's 1991-1992 budget message in pdf form at City Manager's 1991 budget message. In pertinent part it basically described what a 5% across the board cut would do to balance the budget if it did not exempt police and fire. The Manager did not recommend this and said it could be avoided by raising the utility tax; the Council could have directed the Manager to return with other alternatives; instead, it voted 6-3 to raise the utility tax from 7% to 10%. (Yes: Braude, Edgerton, Drummond, Clark, Smith, Grabinski. No: Robbins, Kellogg, Harwood). The utility tax goes into the General Fund where it can be spent for items ranging from police to City Hall perks.].

Mr. Carroll continued:

"The fire department is being tasked to deal with the issue we all know exists at Community Hospital....We have seen, I think, the efficient and effective use of our tax money in the last nine years and we still enjoy the benefits of it. ..."

Councilman Carroll offered this explanation for City Hall's record of the past ten years:

"...[T]hose persons who feel that government is wasting their money, the level of scrutiny of government must increase and I think it is painfully clear to all of us that when property taxes are limited, it forces the city to use basically sales taxes over and above and apart from the utility tax. It creates a drive for a lot of projects that I'm sure the City Manager may not have given the nod to except he had to. I think the City Manager has had one of the difficult tasks that there is in the last ten years in trying to adapt with one hand tied behind his back, and I think legitimate criticisms may flow from some of the projects that have been proposed in this city, and they need to be carefully scrutinized, but I think it's important for us to understand the circumstances under which they are proposed. ..."

Councilman Carroll concluded:

"I thank all those persons in our city and the leadership of the Mayor and Vice Mayor Baker for bringing us together and I think you're going to see a coalition behind two and half percent tonight, those persons represented by Tom Clark and George Medak who have labored long and hard to find what they feel is fair both to the citizens as taxpayers and the citizens as consumers of the benefits of our city. And I think two and a half percent will be maybe a small step for this City Council, but it will be a giant step for the citizens of [sic] the Long Beach in the right direction, and if we find that after a two and half percent cut we can do more, I think you're going to find great support on this Council for revisiting that issue and doing what needs to be done for our taxpayers. Madame Mayor I would conclude my presentation and I believe Vice Mayor Baker does have a motion."

Vice Mayor Baker thanked Councilman Carroll, made a few remarks, then made a motion to request the City Attorney to prepare a ballot measure that would "enact a two and a half percent reduction in the city's utility user tax over a period of five years, a half a percent per year over five years." Seconded by Councilman Colonna.

Other Councilmembers spoke, including newly elected 8th district Councilman Rob Webb:

"I campaigned for a cut in taxes. I walked my district. I talked to my residents. I heard overwhelmingly from a lot of people that live in my district that they would like to see some tax relief. Now sitting in this chair, being responsible for coming up with a budget in the next month, I am faced with how do you, how do we deal with a, what would be a 10% reduction in our general fund. And that is a, that's a real reality that's hit home....So, I will join the ranks today and look forward to supporting some kind of a tax cut and 2 1/2% seems to be the flavor of the day and I will support that motion."

7th district Councilmember Ray Grabinski, who was part of the Council majority which voted to raise the utility tax from 7% to 10% in 1991, delivered a sometimes stinging rebuke to some of his fellow Councilmembers:

"[T]he reason we're in trouble is because we don't listen. We never brought those people [presumably, Mr. Ryan and his supporters] down here to sit and debate them here, in public, where everybody could listen, the 5% for five years, but I'll remind you, two times they sat down with members of this City Council and they were willing to compromise, and we kind of spit in their soup. And I'll tell you what, we're gonna pay for that...."

Mr. Grabinski continued:

"We should never be scaring the voters. Voters are wise enough to make good choices. And I'll remind some of my colleagues...the public went out and got these signatures, 19,000 signatures and they only needed 3,500...."

And in an enlightening revelation, Councilman Grabinski volunteered:

"The logic holds that if they get a choice between five and two and a half now, and I'll remind everybody it was three at two o'clock this afternoon so, I hope when it gets passed they put it in ink so it doesn't dry and become one and a half, because this is a tough, tough situation.

He continued:

And we have a good chance of staring 5% in the face. And this City Council, no matter how they vote on this, better start talkin' where we're gonna make the changes, I didn't say cuts, where we're gonna make the changes and what kind of, how we're gonna turn this into a positive thing, how we're gonna make this city run differently. How are we going to spread some costs that we had before, that we didn't have before. How are we gonna become creative with it. Because I'll tell you what. This was not representative of the community....[I]f we don't start workin' on how we make these changes, we'll be the ones goin' around spreading the bad news...cause that's how you sell something like this...`Oh, don't trust those five percenters." Even though they did everything right; even though they wanted to compromise with us; they're Draconian; we're the ones you can trust...Part of the reason they don't trust what's goin' on in government is because we don't deliver what we say we're gonna deliver, fixing the streets, taking care of the neighborhoods...

But all of those things are things that we could lose, and the reason we'll lose 'em is because of what George Medak said. Mr. Medak is one of the people who in some ways benefits from whether or not we do five percent or two and a half. I say that George because it's true. There's other people sitting on this Council who I kinda have a question as to whether they should be voting on this thing...

"You think about it. You think about the voters havin' an opportunity to vote on something that we took this long, I mean, this is the last time, we couldn't make any changes. And it came here as three percent and now it's two and a half percent. So anybody who wasn't privy to what happened this morning for the first six or seven hours is gonna be surprised when they wake up tomorrow, `I thought I supported three percent.'..."

On the motion by Baker, seconded by Colonna, the final vote was 6-3, requesting the City Attorney to prepare the 2.5 % measure for submission to voters. Yes: Baker, Colonna, Carroll, Kell, Richardson-Batts, Webb. No: Oropeza, Grabinski, Shultz.

Putting the City Attorney-drafted measure on the ballot required a second Council vote on August 8. To review those proceedings, click on Reference/Utility Tax Aug. 8 Council vote.

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