April 17, 2009

Commentary:

Prop. A is bad business for Chula Vista

By Ed Herrera and Russ Hall

On April 1, California became one of the highest taxed states in the nation. Should Proposition A pass, Chula Vista will be amongst the highest taxed cities in the County. Proposition A is yet another 1% increase that will increase the sales tax rate to almost 10% for 10 years. Now, for the second time, Sacramento is proposing Chula Vista City Hall’s Proposition A’s fraternal twin—Proposition 1A which will double the state sales tax, income tax, and almost double the vehicle tax (“Car Tax”). It seems that while the proponents of Proposition A argue that working families deny the reality of City Hall’s self created budget crisis, it is proponents of Proposition A that deny the reality of our economic, job, home, and business crisis.

In 2006, Mayor Cheryl Cox ordered an independent audit review of the city’s finances. The audit clearly stated that Chula Vista’s core financial problems were rooted in its spending, overhead personnel costs that equate to 80% of the city budget, and its purchasing of a new police department and city hall.

The City has been deficit spending, drawing down on reserves, time and time again, since 2002, even when revenue growth was healthy. What is most troubling is that City Hall politicians have supported unsustainable compensation which has increased by 600% in pension costs, between the years of 2004 and 2007, and have allowed our City debt to double between 2004 and 2007.

Nevertheless, the mayor and top level department heads continue to receive luxurious perks such as executive pensions, monthly car and cell phone allowances. The budget for the mayor and city council remains over $1 million. If the mayor, city council, and department heads alone all took a 10% pay cut, we could save our police K-9 unit. The city also continues to subsidize services to National City, not having renegotiated our animal shelter contact. And no cuts in salaries have yet taken place since the City declared a fiscal emergency.

Yet, our local elected officials seek balance the budget on the backs of taxpayers during an economic recession, increasing the cost of living and hurting businesses that are hanging on a thread.

Proponents admit that we are all hurting, including city hall, and ask they we all “share the pain” yet, in February the very same mayor and council that is asking to raise our taxes and share the pain, approved pay raises all across the board for employees, police, and fire, extending them, preventing the city from renegotiating those contracts, for another three years.

Every elected official at city hall has affirmed that they would “fix the budget mess” and “Clean Up City Hall,” but since being elected it is we, who have been cleaned out by City Hall. We must ask: at what point did the definition of reform translate to increasing taxes? There are alternatives. We must conduct a line by line item budget review. We must go back to the basics—cut the waste, control spending, and prioritize core services.

We have had an Economic Development Strategic Plan and since March 2003, our mayor and city council have done nothing to follow the 72 pages of policy that was voted on by the 2003 council. Had the present and the past councils implemented the Economic Strategic Plan and complied with the recommendations of the independent audit review of the city’s finances, the revenue gap would not be nearly as large. We must get serious about business development and aggressively market our assets. We are not National City; we have the right pieces, with shopping centers such as Chula Vista Center, Otay Ranch Town Center, and the Eastlake Design District that should serve as revenue hubs to attract consumers in their respective regions.

We are a bedroom community and therefore thousands of Chula Vistans commute North, South, East, and West to work and it is not difficult for us to shop and dine out of Chula Vista. A sales tax increase increases cost and cost affects consumption. Why shop in Chula Vista when it costs less in San Diego? With the need to reverse the trend and bring people back; we must be able to compete. But, with a higher sales tax, a higher cost, we become less competitive, giving Chula Vista a poor reputation “It costs more in Chula Vista.” Economists agree, the sales tax is regressive, particularly for the many families under low and fixed incomes. With many Chula Vista families struggling and hanging by a thread, living on a diminishing pay check to paycheck an increase in the cost of living is hurtful and causes many families to cut expenses. Cutting expenses translates to budgeting— we shop less (and spend less money). If our local economy and local businesses depend on our shopping (and spending money) and we cut out our expenditures from those businesses, businesses lose money, cut jobs, and/or close down. If the cost of doing business becomes too high, businesses must concentrate on eliminating expenditures. Paper clips and scratch paper only go so far, and business owners must look at cutting labor costs—jobs. A sales tax increase raises costs for businesses at the time when it is most crucial that the cost of doing business is decreased. Therefore, Chula Vista jobs are in dire jeopardy.

But Proposition A’s economic ramifications are only the tip of the fiscal irresponsibility iceberg. Politicians and their political consultants have preyed on our fears and politicized the issue of public safety, offering textbook doomsday scenarios should Chula Vista not pass Prop A. Do not fall victim. The City is meeting its Minimum Staffing Models for Police and Fire, meeting the growth management service thresholds. The very same individuals politicizing the issue of public safety never once expressed their concerns about staffing to the City of Chula Vista Growth Oversight Management Commission. They would go on to support the GMOC report. It is also important to note, that it is literally written in the firefighters’ contract that we cannot decrease firefighters.

Proponents argue that there are safeguards against misspending. Yet, not a single cent is earmarked for public safety, libraries, or recreation centers. As a matter of fact, there are no guarantees and proponents admit it. All Proposition A money goes directly into the general fund and can be spent however the politicians at city hall wish. Proponents also argue a purely cosmetic form of accountability, commonly used as a political selling point, with the inclusion of so-called “independent citizen oversight committee” —one that is approved by the very same Mayor and Council Members that put the tax increase on the ballot and one with no authority, not tasked with assuring Proposition A money will be used for what it is intended but rather “advising” the Mayor and City Council. Proposition A proponents’ response is “If we are not satisfied by the council’s actions on how the money is spent we can vote for someone else…” But how many politicians who do not represent the citizen, continue to amazingly, become re-elected time and time again by an unknown populous? Lastly, why is city hall asking for 5-7 million dollars more than needed? Why for 10 years? Why extendable forever? Why approve pay raises if we do not have money? We can rest assured that those of us, who would like to fix our roads, and think Prop A funds will go towards infrastructure, will be deeply disappointed. In addition to the above examples of wasteful spending, the city spent over $100 million to build a new city hall and police station. That money could have been spent to fix the roads but was not. The bottom line is always about how our elected officials at city hall spend the money, not whether there is enough money to spend.

As Chula Vista quickly approaches the final stretch of the May 5 Mail Ballot Special Election which will determine the future our city, I offer a final call to action. We have been told by City Hall politicians that they have “cut to the bone.” And we have been lied to. It seems that City Hall suffers from not only a budget deficit, but a deficit in leadership. Proposition A is another public bailout for politicians who opt for the politically advantageous easy way out as opposed to the ardent task of budget reform. Join The San Diego Union Tribune, Chula Vista Taxpayers Association, San Diego County Taxpayers Association, Southwest Chula Vista Civic Association, Chula Vista Businesses, and Otay Lakes Mobile HOA Board of Directors, in saying NO on Proposition A.

Herrera is Co-Chair of the Chula Vista Human Relations Commission, Vice President of the Southwest Chula Vista Civic Association, Boardmember of the Chula Vista Taxpayers Association, a small business owner, and member of the Chula Vista Chamber of Commerce Economic Development and Public Policy Committees.

Hall is a member of the Chula Vista Growth Management Commission, past chair of the Planning Commission, Parks and Recreation Commission and Economic Development Commission.

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