Will the City Council Choose to Overtax Residents This Week?

(Photo by Micah Escamilla/The Sun)

On Tuesday July 24th at 6pm the City Council has the task of looking at the next years budget and the impacts of $120 to $150 Million in debt over the next ten years. There are a lot of tax ideas on the table and for the most part the city staff and the budget advisory committee have not advised any additional tax increases.

What the council chooses to do is always a surprise……

The scary thing is that even looking down the barrel of hundreds of millions of dollars in debt the current council seems to be spending money like drunken sailors. Most recently the massive 8% raise that Rialto Police Department got with a 2 year retro pay back wasn’t cheap. Early calculations put this raise at almost an additional Million Dollars a year (money we don’t have). There is no fund plan to replace equipment for these cops or to add additional officers to the streets as Rialto prepares to open a 2nd major retail development, we simply paid off the cops for some reason.

What is sad is the Fire Department and other city departments all are still waiting for their turn to get a hand out and sadly we’re not sure there is anything left.

Some of the taxes your council will be looking at adding to your bills are:

Sales Tax – Several cities impose a sales tax surcharge of 0.25% to 1.0% to help pay for public safety services. Local cities with such levies include Riverside, and Menifee, among others. If the tax measure restricts the use of funds for a specific purpose such as public safety, then
Proposition 13 requires a 2/3 super majority vote. This creates a high hurdle for passage,due to the absence of overwhelming popular support. To avoid the 2/3 vote requirement, some cities establish the tax measure as a general tax (so they can abuse and steal this money as they see fit) and commit to use the funds to maintain or enhance public safety (often with advisory votes). Sales taxes are the City’s largest revenue source for the first time in years, due to the completion of several retail projects (Rialto Marketplace) and the capture of sales taxes from the Medline Industries facility. The City forecasts that it will receive $16,231,000 in FY 18, a growth of $9,053,377 since FY 12. Medline Industries reported quarterly sales taxes to the City for the first time in June 2017 and the City projects full year returns of $4,400,000. The City agreed to rebate 50% of this amount to Medline as an incentive to relocate its point of sale to Rialto, so the net benefit to the General Fund will be $2,200,000. As the Renaissance Marketplace completes toward the end of FY 18, sales taxes should receive another boost of approximately $750,000 per year in FY 19.
Utility Users Tax – The City adopted the Utility User Tax in 2003 as an 8% levy upon all utility consumption. This revenue projects for FY 18 at $13,890,500. On June 5, 2018, the City’s voters approved a permanent extension of this revenue source. This revenue has grown reliably by approximately $500,000 each year because of economic expansion, and may receive continuing boosts in the years ahead from new development (Niagara and Building 5/6). The principal risk (other than repeal) is the trend toward co-generation and legislative exemption of certain utilities from the payment of local taxes. Households are also “cutting the cord” and eliminating cable TV service and landline phone service, depressing those sources of utility tax income. This is now a permanent tax at 8% and is supposed to be reduced to 6% as promised after the passage of the tank farm tax.
PERS Tax – In 1958, the City adopted Ordinance No. 414 creating a property tax surcharge to fund employee retirement. The City Council annually established the tax rate and collected the property tax. The rate ranged from a low of 0.1000 to a high of 0.1506, with a historical average of 0.1316. When voters approved the Utility Tax in 2003, the City Council did not abolish the tax, but simply set the rate to 0.0% each year thereafter. The City retains the authority to levy the tax. The current City Attorney opines that the City may use the revenues from the PERS Tax only to pay for benefits.
Residential Community Facilities District – A Residential Community Facilities District imposes a special tax upon the owners of new residential units offsetting the cost of public services, ideally producing a neutral fiscal impact to the City. Generally, residential development costs the City more in services than it provides in revenue, thus the special tax. The Developer of a new residential project approves the special tax and then passes it along to the homebuyer. The homebuyer considers this tax in the purchase decision.
Transient Occupancy Tax – Most cities in California levy a transient occupancy tax on short-term stays in local lodging facilities. Rates range from 4% to 15% statewide. Rialto’s rate is currently 9% of gross room revenues. Rialto does not have a significant lodging sector; however, developers propose two new hotels in the Renaissance Specific Plan and the City Council set high priorities for such development. Increasing the TOT rate may discourage these uses, and the City Council has reduced other development impact fees to incentivize the new hotels. An increase in the TOT requires a majority vote of the electorate at a general election. The current rate is 9% in Rialto.
Fire Protection District – A Fire Protection District provides a variant to the other forms of public safety taxes. A city may establish a Fire Protection District upon 2/3 voter approval – they are deemed special taxes under Proposition 13. The new district may levy an assessment as an ad valorem tax, a parcel tax, or other approved structures. The monies raised go directly to a special fund available only for fire protection
services. These funds may supplant or supplement funding from other sources, including the General Fund, Community Facility District levies, and others. Ultimately, the new revenues from this structure release existing general fund revenues to support other services. The responsibility for managing the Fire Protection District typically resides with the City Council. The District could establish the tax at the full net cost of Fire Department (approximately $16 million) or some lesser amount. (This tax is levied on everyone, there are no special exemptions for Seniors or Low Income individuals)
Measure U – Adopted by voters in 2014, Measure U established a business license tax on fuel storage capacity. On November 4, 2014, Rialto voters approved a tax of up to $1.00 per cubic foot of liquid storage capacity for any wholesale liquid fuel storage business. The primary targets for the new tax were the businesses that operate the “tank farm” on Riverside Avenue, south of the I-10 Freeway. The businesses scheduled to pay the tax included, among others, Kinder Morgan, Tesoro, and Shell Oil. The tax did not apply to retail service stations. The City Council pledged to reduce the utility tax from 8% to 6% upon implementation of Measure U. On February 22, 2017, the Superior Court for the County of San Bernardino ruled in favor of the City of Rialto and determined that the tax was valid and enforceable. The plaintiff businesses then filed an appeal with the Appellate Court of the State of California. The parties expect to present the case to the Appellate Court in May 2018, with oral briefings approximately 6-9 months thereafter (late 2018 or early 2019). The City expects a decision before June 2019. Depending upon the outcome, either party could appeal to the California Supreme Court, lengthening the time before a final determination. The City holds approximately $22 million in escrow pending the court determinations. The annual revenue averages approximately $8 million. The pledge to reduce the Utility Tax by 2% reduces the annual revenue yield by approximately $3.6 million. (this tax was sold as the savior to our financial woes and now there are talks of settling with the tank farm operators making this entire effort a wash if the council were to keep their promise on reducing the Utility Users Tax).
Truck Transportation Fee – The BAC and the City Council have asked whether a fee can be levied upon truckers or trucking operations that burden City streets. The City would levy the fee on a per trip basis or some other logical driver using tracking technologies. The City Attorney opined that state and federal law likely prohibit a fee upon trucking for the use of City streets. A fee based upon weight may be permissible but the City could only impose the fee to recover permitting costs (and not generate revenue for public service costs). Based upon
CA opinion, it does not appear to provide a significant revenue source except as a cost recovery mechanism for the regulatory costs. Keep in mind the Trash Fee (TAX) is completely legal. The city charges you a fee every month because trash trucks cause to much damage to the road. So the city can tax you but not the people responsible for the damage!!!! Also remember Burrtec has a 10 year contract with the city and single handedly funds the Mayors campaign efforts.
Code Enforcement – Cities often levy fines for non-compliance with property maintenance codes. Rialto issues administrative citations for code violations and collects a small amount of fines, penalties, and interest. The City Council directs Code Enforcement to obtain compliance, rather than collect revenue. Consequently, our implementation procedures routinely waive fines upon compliance. The City
does collect out of pocket abatement costs. In 2015, staff proposed to levy additional costs for re-inspection costs but the City Council tabled the proposal for further clarification, again repeating the primary purpose of Code Enforcement. The City currently does not collect significant sums from code enforcement violations, primarily cost recovery for third party abatement costs. The Staff Recommendation is that City Council revisit added costs for extraordinary Code Enforcement compliance issues, notably repeat offenders. BAC Recommends that the City Council add stronger provisions to the Rialto Municipal Code authorizing administrative citations to encourage compliance, seeking restitution from repeat offenders, and instituting procedures to resolve code violations expeditiously. Get ready for the hammer to drop!!!!
Street Sweeping Program – Most cities cite vehicles parked in areas scheduled for street sweeping. Throughout California, Regional Water Quality agencies are aggressively requiring cities to implement storm water remediation programs, and street sweeping programs implement this mandate. The City is developing the mechanics of a program to improve the efficiency of street sweeping. The City currently contracts with Burrtec for street sweeping services. Burrtec simply avoids parked cars, resulting in inefficient sweeping. The City must incur capital costs for signage installation, and recover its costs from fees. The goal of this program is compliance and neutral costs, and not primarily as a revenue generator. The City estimates the potential 1st year net revenue at $700,000.

So residents have to decide how much more taxes are you prepared to pay? How much more control are you willing to give and why are you allowing the council to act so recklessly with your money?

If you’re scared of talking to these people in public face to face then email them or call them. The only way they get the message is by knowing that there are others out there with questions!

MAYOR: DEBORAH ROBERTSON

drobertson@rialtoca.gov

(909) 873-8874

(909) 644-8520 Cell

MAYOR PRO TEM: ED SCOTT

edscott@rialtoca.gov

(909) 875-0653

(909) 746-7643 Cell

COUNCIL MEMBER: JOE BACA, JR.

jbaca@rialtoca.gov

(909) 820-2519

COUNCIL MEMBER: RAFAEL TRUJILLO