Signal Hill voters will choose whether to increase the city’s sales tax from its current 9.5% rate to 10.25% in the upcoming November elections. During its July 28 meeting, the Signal Hill City Council agreed to add the Fiscal Stability Measure’s ¾-cent tax increase to the ballot, an item it had budgeted for in May.
The City estimates the additional tax would generate $5 million per year, enough to offset an ongoing structural deficit caused by expenses increasing at a faster pace than expected revenue, which is remaining flat, according to the staff report.
Furthermore, COVID-19’s blow to sales-tax revenues has made it “impossible” for the city to continue balancing its budget without reducing municipal services, City Manager Hannah Shin-Heydorn said.
“Unfortunately, the pandemic has been devastating to businesses and to Signal Hill, resulting in reduced revenues of $2 million for the fiscal year beginning July 1,” she said.
As a result, the City reduced its expense budget by $1.8 million for the current fiscal year, Shin-Heydorn said. Most of its cuts were to personnel– including hiring freezes and employee concessions– and delaying infrastructure improvements.
“Signal Hill does not have the funds needed to maintain current levels of service or restore [service-losses] made necessary by past cuts,” she said. “The city needs to secure a reliable, long-term funding stream that is locally controlled.”
The city only receives a tenth of revenue generated from its current 9.5% sales tax, Shin-Heydorn said, equivalent to one penny per dollar, or one dollar for every $100. The rest goes to the state and county. The city can raise its rate by ¾-percent before reaching the 10.25% maximum rate allowed by LA County.
“The Signal Hill Fiscal Stability Measure will create an additional 75 cents in sale-tax revenue– dedicated solely for Signal Hill– for every $100 in taxable sales,” Shin-Heydorn said. Signal Hill would, therefore, receive a total of $1.75 instead of $1 for every $100 spent in the city.
Shin-Heydorn also warned that if Signal Hill does not raise its rate, the ¾-percent difference could be taken and used by another state or county agency, which she said was especially likely in the wake of COVID-19. In other words, residents may be taxed anyway, with that money going to an outside agency.
As an example, Shin-Heydorn cited LA County’s Measure H in 2017 that added .25% to Signal Hill’s sales tax to pay for homeless services.
“Voters can claim the [10.25%] cap for Signal Hill, protecting it from outside interests,” Shin-Heydorn said, adding that many other California cities have already done so, including the City of Long Beach, which surrounds Signal Hill. Voters approved its 10.25% rate in 2016 and extended it indefinitely in March with the passing of Measure A.
If Signal Hill voters refuse to pass the ballot measure, the city will have to make further cuts to municipal services, including public safety and infrastructure maintenance, Shin-Heydorn said.
“All money raised will be used to fund essential services and facilities our residents have told us they value,” she said. “By law, no local-measure fund can be taken away by the state.”
Results from a July residential survey show that the community values services that add to Signal Hill’s quality of life, Shin-Heydorn said. Those include: maintaining streets, sidewalks and parks; removing graffiti; ensuring public safety and providing quick emergency response; assisting residents and businesses in recovery and addressing homelessness.
Furthermore, the measure would help maintain property values by keeping the city safe, clean and well-maintained, she said.
The City would account for its use of the funds through independent audits and annual spending reports to the community, Shin-Heydorn added.
On the November ballot, residents will be asked to cast a “yes” or “no” vote on passing the measure to pay for repairing streets, potholes and infrastructure; cleaning public areas and graffiti; responding to 911 emergencies and preventing crime.
The council unanimously approved three resolutions and first reading of an ordinance related to adding the measure to the ballot, which needs to be reported to LA County by Aug. 7, Shin-Heydorn said.
Most councilmembers expressed approval of the measure while recognizing the financial difficulties residents are experiencing due to COVID-19-related job losses.
“Nobody wants to see our sales tax increase,” Councilmember Lori Woods said. “But we also want to ensure that the sales tax that consumers spend here in Signal Hill […] can stay within the city and benefit the residents who are paying those taxes.”
However, Vice Mayor Tina Hansen said that while she approves the measure, it may not be the best time to put it on the ballot since residents may vote against due to their current financial hardship.
“I don’t know that this will pass,” Hansen said.
The council also agreed that Mayor Robert Copeland will write an argument in favor of the measure for the ballot, along with either Woods or a community member to be determined.
“We’re going to have to do a very good job communicating to residents that there’s a chance that the county, or some other special district, can come in and raise the sales tax anyway,” Copeland said.
The next Signal Hill City Council meeting will take place Tuesday, Aug. 11 at 7pm. For information on accessing and participating in the virtual meeting, visit the council’s webpage at www.cityofsignalhill.org/79/City-Council