June 23, 2006

National City Council Members Pass 2006-07 Fiscal Budget

Critics say local residents will carry burden of financial woes

By Raymond R. Beltrán

At the National City city council meeting this Tuesday, representatives of Harley Davidson Motorcycles requested their Temporary Use Permit to be waived for their annual beach run event on Hoover Avenue. Denied.

Lifelong resident Harold Aranda complained about the lack of traffic control in the Old Town area. He wants security cameras installed in the heavy traffic areas of Old Town and for people to obey the no smoking and drinking laws at Kimball Park.

All issues point to National City’s current financial woes, or deficit. But with a new “restoration” plan, the city has much to prove to it’s residents that they’ll act responsibly with a taxes they’re now going to impose on consumers and insert into an increased spending budget.

This Tuesday, National City City Manager Chris Zapata introduced the $36.5 million general fund budget, which city council passed unanimously.

Among plans and projects, referred to as the Sustainability and Restoration of Services, the city plans to fill an approximate fifty vacancies, some of which were frozen or cut last year. The positions range from senior police officers and a sergeant to fire captains and a graffiti removal assistant.

The budget’s “Back on Track” plan proposes opening pools, regular library hours, turning on public facility lights, and other standard operations accompanied by a responsible city budget.

In comparison to last year’s general fund, there is a $6.5 million increase for the coming fiscal year. The city manager attributes this to $3.3 million rolled over to this year from cutbacks in 2005, the state’s lack of cutbacks from National City this year, and with much acclaim, a recent sales tax hike within the city.

The controversial tax increase, or Proposition D, is an initiative passed by voters on June 6 that raises the city’s sales tax by 1 percent, or 8.75 percent total, beginning October 1. It will last one year, and can be rescinded within that time by council members, depending on future analysis and results.

For proponents, it is the fuel that will light the fire under an estimated $9 million per year revenue explosion, ideally solving a $6 million deficit and restoring community services mentioned that were cut last year.

But critics like South Bay Forum, San Diego Tax Fighters, and The Committee on Chicano Rights disagree with the sales tax increase, having recently defeated it on November 8 under it’s alternative title, Proposition B. They say only National City residents will feel the impact of the tax hike, ultimately filling the financial crater that critics accuse the council members of having dug themselves between 2004 and 2005.

They highlight the city’s under funded pension plan, which cost $3.8 million last year, according to city records.

“[National City’s] deficit, up from $1 million to $6 million in five years is due to NC politicians’ raising city pensions 50% with no funding to gather favors from city employees/unions in an election year. NC politicians and employees pay zero into the fund while you, the NC taxpayer pays 100% of the cost,” states literature leafleted by critics.

“Why is there a $6 million deficit?” asks local resident Herman Baca, who owns and manages Aztec Printing in National City. “They’ll say, ‘the state took it.’ No they didn’t. They only levied what you owed.”

The city manager did refer to the pension as a problem, but highlighted a California pension program called “rate smoothing,” where the state increases local funding in profitable revenue years, and decreases it during low years, such as 2004 to 2005. This year, the state did not cut back, according to Zapata.

Although, ‘responsibility’ is a word that critics find hard to pronounce when speaking about the new budget. Two reasons, because the city’s general fund does not tie down city officials into guaranteed spending habits, not even to public service restoration proposals. This could possibly lead to filling the financial deficit that exists, leaving the previous bills up to the residents alone.

Second, the estimated revenue from Prop D taxes is in no way a guaranteed income for the city, causing residents to ask, ‘Why wouldn’t consumers just shop in Chula Vista where it’s cheaper?’

The city rebuttals that in the passed five years National City has earned an annual $17 million in sales tax and $1.7 billion in sales total, and with a Costco and Mervyn’s opening in National City, an optimistic city manager believes sales will continue.

When asked about an alternative plan if estimates don’t materialize, Zapata prefers to depend more on a “conservative approach to the budget” that will restore vacancies and public services in phases throughout the year.

According to him, the bulk of the city’s revenue comes from Dixieline lumber and more importantly The Mile of Cars. City officials say their hands are tied by state law about releasing Wal-Mart’s role in city’s revenue, even though the store and most of it’s goods are subject to the extra one percent. Groceries and medicine are exempt.

They also claim that in reference to their analysis on the city’s consumer patterns, two-thirds of shoppers are outsiders, implying that two out of every three dollars spent for public services comes from non-residents.

But these outside consumers are exempt from Prop D when purchasing automobiles due to state laws defining the place of purchase as the vehicle registration address, according to City Clerk Michael Dalla.

Because of this state law, National City residents trying to purchase an automobile will soon find themselves bearing the burden of sales tax increases in their city and elsewhere.

“Obviously, it’s going to affect all business,” says Baca. “The people at the top don’t think it’s going to affect them. Well, the jury’s still out on that one.”

In June 2007, the affects of Prop D and the new budget can be evaluated with at least a nine month financial history to study, speculates the city manager.

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