Home Gray box 3 City Staff Propose Permanent Measure A Sales Tax Extension

City Staff Propose Permanent Measure A Sales Tax Extension

With the mayor’s support, city staff are presenting a proposal to the Long Beach City Council tonight, July 2, to extend the Measure A sales tax in perpetuity. Doing so, they argue, will ensure that critical infrastructure and public safety needs continue to be met going forward. Additionally, staff are proposing to use the sales tax revenues to pay down the city’s obligation for seismic work at Community Hospital.

Measure A was approved by voters in 2016 as a temporary sales tax that would address public safety and infrastructure needs, including reopening the police department’s South Division, restoring Fire Engine 8, paving miles of streets and alleys, rehabilitating park facilities, and more. It imposes a sales tax rate of 1% – on top of existing sales taxes – for six years. In 2023, the rate then drops down to a half percent for four years, expiring in 2027. With Measure A, Long Beach currently meets the state’s cap on sales taxes at a combined rate of 10.25%.

Instead of the approved 2023 decline to 0.5%, city staff are now proposing to institute a rate of 0.75% from 2023 to 2027. A quarter percent on top of this rate would flow to the Los Angeles County’s Measure H projects, which fund homeless initiatives. During this period, this proposed change would bring in an additional $15 million in revenue, according to Modica. Following 2027, the Measure A-imposed rate would again increase to 1%, but without expiration.

In an individual press briefing with Assistant City Manager Tom Modica, Fire Chief Xavier Espino and Police Chief Robert Luna, Mayor Robert Garcia told the Business Journal that if Long Beach voters do not vote to extend Measure A, it is probable that they will continue to pay the full 10.25% sales tax rate – but that their dollars would likely go to other entities outside the city. The South Coast Air Quality Management District (AQMD), for example, is mulling over the idea of a sales tax to fund its own initiatives, he noted. “It’s likely that voters are always going to pay the 10.25%. It’s just, where is that money going to? Is it going to the city, or are we going to send it off the AQMD or somebody else?” he queried.

City staff are proposing to place this initiative on the March 3, 2020 ballot. Voters would also be asked to approve use of Measure A funds toward the city’s annual payments for the seismic safety upgrades needed to reopen and continue operating Community Hospital. In an interim agreement with the hospital operator, Molina Wu Network, the city has committed to paying $1 million annually for five years, and $2 million annually after that for a total of $25 million over 15 years. Modica said he hoped to reach a final agreement with MWN within two months, but noted that he did not think these parameters would change.

When the city council approved this interim agreement in March, the council asked city staff to identify a revenue source to fund the city’s share of costs. Measure A is their solution.

Under the operation of its former leaseholder, MemorialCare Health System, Community Hospital closed in July 2018. Since that time, the fire department’s average transport time to emergency rooms has increased 10%, according to Espino. “Because Community is closed, we’re not able to transport there anymore. Now our rescues are going predominantly over to St. Mary’s and/or up to Memorial [Long Beach Medical Center],” he explained. “So that increases the time both of their transport and their wall time, because now we’re impacting these other hospitals with all the patients that would have gone to Community.”

Why Extend Measure A?

Modica said that Measure A has generated about $60 million a year so far, well above the originally estimated revenue stream of $48 million per year.

According to Modica, the measure has enabled the city to add 41 new public safety positions within the police and fire departments, of which 39 are sworn officers with badges, and two are civilian employees. The additional tax revenues enabled the city to hold fire and police academies to hire and train these recruits.

The funds have also allowed the city to maintain public safety staffing levels. “Personnel costs to have a police department, to have a fire department, grow every single year regardless of salary increases,” Modica said, referring to costs such as health insurance and workers’ compensation. “Even if you were to freeze everybody’s salary . . . the personnel costs for the same amount of personnel we currently have grows every single year.” Measure A has enabled the city to maintain 108 public safety positions, according to Modica.

“It’s something we need to do if we want to continue to move forward,” Luna said. “There are so many unfunded mandates when it comes to law enforcement – not just Long Beach. We are talking every agency up and down the state. . . . We can’t get there if we don’t have this increase in revenue. Actually, I should say we could get there, but there are a lot of other things that I think our citizens expect from us or demand from us that are going to be potentially reduced [to pay for it].”

The mayor pointed out that the city’s backlog of infrastructure needs would cost about $2 billion to address. So far, Measure A has raised about $88 million towards this cost. Modica chimed in, “This is a long-term problem and we’re going to need a long-term solution. And the longer we wait to address this, the problem just gets bigger and bigger.”

Detractors of Measure A have often pointed out that having a higher sales tax than other surrounding cities puts Long Beach at a disadvantage, but Garcia disputed that argument, producing a list of 17 other cities in Los Angeles County with the same sales tax rate.

Modica pointed out that the City of Long Beach is expected to have budget shortfalls in Fiscal Years 2021, 2022 and 2023. If the proposed ballot initiative passes, additional revenue from Measure A generated by adjusting the associated sales tax rate to 0.75% instead of 0.50% would substantially reduce the projected budget shortfall for that year. Modica estimates that without this change, the shortfall could range from $7 million to $21 million. With it, the city could end up with a shortfall closer to $6 million, or perhaps even with a surplus.

Will Voters Support It?

To determine the level of support for a Measure A extension, the city hired a polling firm to conduct 600 interviews of Long Beach voters. Results indicated that seven out of 10 Long Beach voters would support the measure.

Garcia noted that the same polling firm was used to estimate voters’ response to the original 2016 Measure A proposal, and that the results were right on the money.

“I was happily surprised at how high the number is,” Garcia said of the survey results. “The truth is that the Measure A extension is 10 percentage points more popular than when we first proposed Measure A in 2016. . . . So that tells me very clearly that [a] Measure A extension starts as being very popular across the city with voters.”

Garcia added, “Had this not been a popular thing I think we wouldn’t be having this conversation. The support is pretty overwhelming, and I’d like to think it’s because people see the value of what’s happening with the first Measure A.”

When voters originally passed Measure A, they did so with the assurance that it would sunset in 2027. To that point, Garcia responded, “The 10.25% [sales tax rate] is not going to go down. [The question is], who should the money go to? Should it go to the city or should it go to another agency?”

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