Redondo Beach voters will not decide on a 0.75% sales tax increase in March after Councilmember Nils Nehrenheim single-handedly rejected the matter Tuesday night, Dec. 3.
A motion to put the sales tax measure on the March 2020 ballot needed a unanimous vote. Nehrenheim was the only councilmember to voice his opposition to the measure, although it never actually received an official vote.
The ballot measure, which would have been decided in a special election aligned with the California primary, would have cost the city $205,000, according to City Clerk Eleanor Manzano.
In turning down the proposal, Nehrenheim said he believed the process was too rushed and would not survive a legal challenge.
The ballot measure would have asked voters to approve a half-cent sales tax that would have raised about $5.3 million annually. Voters would have also been asked to approve another 0.25 cent tax increase — raising an additional $2.7 million — that would go into effect only if another governmental agency with taxing powers in Redondo Beach put a levy on the ballot.
The maximum allowable sales tax rate from state, county and other local sales taxes is 10.25%, under California law. Redondo is currently at 9.5%.
Several councilmembers warned if Redondo didn’t secure those potential tax dollars, other agencies, such as Los Angeles County Metropolitan Transportation Authority or South Coast Air Quality Management District could snatch them up.
Nehrenheim voted against the tax proposal when it first came before City Council in October, then later voted in favor of the concept last month when it was on the consent portion of the agenda reserved for routine matters.
“It’s too rushed,” Nehrenheim said Tuesday, before making it clear he was not going to support putting the measure on the ballot, effectively ending a two-hour discussion. “If we don’t want to do the hard work it takes to do our due diligence, then I can’t support this.”
The debate over the proposed ballot measure devolved Tuesday night into arguments that exposed deep divisions and ongoing issues, such as possibly turning the Fire Department over to L.A. County.
An initial report from county officials earlier this year indicated the city could potentially save up to $4 million to $7 million in the move. But a subsequent analysis by the city’s own staff indicated the savings, if any, would be much less. That was enough for Councilman John Gran to pull his support for continuing a study that would cost the city an additional $24,000. The move sparked a recall campaign against the councilman and created a deep rift between him and the firefighters union.
On Tuesday night, Redondo Beach Firefighters Association President Greg Allen and Captain Dave Lorenson brought a giant check to the City Council made out for $24,000, which they said their union was willing to contribute to pay for the L.A. County Fire study.
“I remember standing here one night and you guys saying there wouldn’t be any new taxes before uncovering all the stones out there,” said Allen, who believes the potential savings gained by joining L.A. County could prevent the need for a tax measure.
“We have to look at it before we tax our residents,” Allen said.
Gran, for his part, called the check a “parlor trick” that would not cover the cost of the recall campaign the firefighters union has been campaigning for. A recall, Gran said, would cost roughly $40,000.
“This is really about going to L.A. County Fire because it’s good for the union,” Gran said.
Mayor Bill Brand said that while he supported putting the tax measure on the ballot, he likely would not have recommended voting for it because the city was not doing all it could to find potential savings, citing the halted Fire Department study.
“We should not have stopped that study, especially when they (the firefighters) were willing to pay for it,” Brand said. “I don’t see a lot of transparency. If that wasn’t hanging out there, I wouldn’t have a problem. I can’t really support it (the ballot measure) when we can’t even examine our own house.”
Despite these circumstances, the facts on the ground still remained. Due primarily to rising pension costs, Redondo Beach will continue facing a structural deficit going into next year, when it will either need to cut services or raise revenues.
The city’s pension obligation to the Public Employee Retirement System will grow to $18.7 million, a 13.5% increase from the year before. The city has responded to its budget woes in recent years by eliminating positions. There are 65 fewer city employees, including 10 fewer police officers, now compared to 2007, according to City Manager Joe Hoefgen. There are currently 432 full-time city employees.
“We’re still seeing significant increases for our cost participation in PERS,” Hoefgen said. “We’ve pulled a number of levers over the years to keep the budget balanced, but we know because of increased costs and our pension obligations, the next budget cycle we will be facing the same type of structural budget.”
Hoefgen also said the city has been putting off capital improvement projects in recent years.
“I’m not going to say it’s in significant disrepair,” Hoefgen said, “but there is a backlog of capital improvements that need to be corrected at some point.”
Several residents on Tuesday said the city needed to shore up its accounting and act on recommendations in an audit report completed in 2017. Hoefgen said the city has followed up on the report, but acknowledged there were more improvements that could be made. Still, he said, those potential savings would not be significant enough to balance the budget.
In a recent rating of LA County cities based on financial risk, Redondo came in 71st and earned a ranking of “moderate risk.”