Imperial Beach Goes for Broke on Utility Tax Vote

It started out as a simple utility tax measure--a modest proposal on Imperial Beach’s November ballot to raise $450,000 for the financially strapped city. But in tiny Imperial Beach, where politics is as much a passion as an exercise in democracy, there is nothing simple about a simple tax measure.

“There is a certain Orwellian quality in Imperial Beach that makes it whimsically attractive, like in Animal Farm, and sometimes unattractive, like in 1984. It’s impossible to simplify government problems here,” said city Councilman John Mahoney.

Earlier this year, a citizens’ committee was formed, under the direction of City Manager Ron Jack, to study ways to raise more revenue for the city. Imperial Beach, which nearly went bankrupt in June, is now in danger of going bankrupt in January, city officials say.

The group has proposed a 5% tax on all monthly utility bills--water, telephone, cable, electricity and gas--and has recommended that the City Council place the tax proposal on next month’s ballot, committee member Harold Wasserman said.

Wasserman said the 5% tax was “the best option” of several revenue-raising possibilities studied by the committee, but the group decided not to take a position on its own proposal. Wasserman, however, has taken a stand against the measure.

“I think it’s got very little chance of passing. Most people don’t want to pay the tax. They don’t think it’s worthwhile. I don’t trust the present City Council to spend the money wisely if it passed. I said it could pass only if they all resign. If they resigned en masse, I would vote for the tax,” said Wasserman.

The estimated $450,000 the measure would raise would be used primarily to cover the $355,000 in annual interest payments paid by the city on a loan for its $3-million pier, which was completed in March, Wasserman said. The interest payments will continue until 1995, when a $2.3-million balloon payment is due on the pier loan.

Supporters of the measure say the city--population 24,000 and covering 4.4 square miles--might not be able to pay its bills by January and could be forced to disincorporate if it fails. Bankruptcy and disincorporation have loomed over the city’s head almost since it was incorporated in 1956, so the threats are nothing new to local residents. Furthermore, Imperial Beach voters historically have been reluctant to approve tax increases.

The city’s financial problems began after passage of Proposition 13, in June, 1978. With virtually no industry and a large concentration of apartments, Imperial Beach must rely on property taxes for most of its revenue. By 1985, the city’s cash reserves had disappeared, and, by last June, the city manager told the City Council that Imperial Beach could not afford to fill a pothole.

In 1983, the entire Police Department was fired and the city contracted with the Sheriff’s Department for police services. Things continued to get worse. Sewage spills from Tijuana frequently fouled the city’s beachfront. Winter storms in 1983 and 1985 wrecked the pier, the city’s only landmark. Finally, in 1986 and 1987, the city lost about $300,000 in stock market investments.

Now, while the city scrimps for revenue, some officials are counting on a new tax to ensure Imperial Beach’s economic survival.

The uncertainty over the tax proposal has been magnified by the absence of an argument in favor of the tax measure in the November voter’s pamphlet. Although most City Council members support the tax, nobody bothered to write an argument in its favor. However, the Committee Against Utility Tax in Our Neighborhoods (CAUTION) filed an argument in opposition, and it is the only argument at all that appears in the pamphlet.

County Supervisor Brian Bilbray, whose district includes Imperial Beach, said he was “flabbergasted” by city officials’ failure to make sure a supportive argument was included in the pamphlet.

Bilbray, a former mayor of the city, was asked by both the measure’s supporters and opponents to endorse their positions. He politely refused, noting that he will probably be blamed, regardless of whether the measure wins or is defeated.

Tired of Being ‘Blamed’

“I’ve said no to both sides. I’m not going to take hits from either side. . . . I’m getting a little tired of getting blamed for every problem that shows up in Imperial Beach,” said Bilbray.

Bilbray’s neutrality did not stop the “hits” he has suffered because of his refusal to take a stand on the issue.

Supporters of tax proposal have charged that Bilbray refused to endorse the measure because he wants the city to go belly up so that the county can assume control when it becomes the city’s trustee. Tax opponents charged that Bilbray refused to take a stand against the measure because he wants it to pass so that the existing City Council can remain in office and under Bilbray’s control.

“There’s always a game being played on both sides of any issue. And somehow, I always end up in the middle,” said Bilbray, who lives in Imperial Beach.

Most opponents oppose the measure because they say the city can be saved without it. Alfred Hughes, a former city councilman and treasurer of CAUTION, called it “a bill of goods.”

“It’s a bill of goods that’s being sold to the voters. The party line initiated by the city manager is that we’re going into debt and only this can save us. If they go to a conservative budget, without unnecessary expenditures, we wouldn’t need this tax. This City Council has mismanaged the city’s affairs and wants the tax merely to bail themselves out. But we don’t think the city is on the brink of bankruptcy and we’ll have to disincorporate,” said Hughes.

City Manager Jack failed to return repeated phone calls. Two weeks ago, finance director Richard Jung warned the City Council that in order for the city to remain solvent, “the utility tax or other revenue sources” will be needed.

Notwithstanding Hughes’ and CAUTION’s arguments, most observers have tied Imperial Beach’s future to the success or defeat of the tax measure. Wasserman said “it’s a possibility the city will go bankrupt if it fails.” If this happens, some city officials say the town will have to make a decision about disincorporation.

But Mahoney, who is in his first term on council and who supports the proposed tax, insists that failure would not force the city to disincorporate.

“I think the tax would be a great benefit for additional revenue. But I don’t think its right to conclude that if we don’t get it we’re done for. . . . The notices of Imperial Beach’s demise are premature,” Mahoney said.

On the Other Hand ...

Nevertheless, Mahoney admitted that he and other city officials have discussed “alternatives” should Imperial Beach be forced to disincorporate. He said the three most common solutions are consolidation with the county, San Diego or Coronado.

“I would prefer Imperial Beach to remain itself. But I would think that consolidation with the adjacent cities (San Diego and Coronado) would be better than going to the county,” Mahoney said.

Of the three alternatives, Mahoney said he favors consolidating with Coronado. Coronado City Manager Homer Bludaureacted cooly to that suggestion.

“On face value, there doesn’t seem to be any incentive for Coronado to do this. This decision would have to be made by the elected officials. But at the same time, I guess we would have to remain open to any discussion,” said Bludau.

Another Coronado community leader, who requested anonymity, was more blunt in his comments when asked about the possibility of Imperial Beach consolidating with Coronado.

“That would be like answering a knock at your front door and finding a truckload of poor relatives, asking if they could move in with you,” he said.

Wasserman agreed that the chances of consolidating with Coronado are slim. “I wouldn’t mind having a Coronado address, but why would they want us?” he said.

Who Wants Imperial Beach?

Imperial Beach’s shaky financial standing and debts will make it difficult for the city to consolidate with anyone but the county, said Bilbray.

“The question is, ‘Who will be willing to take over the debt?’ . . . The hassle now is to throw the debt (of the pier) on the back of the taxpayers. It’s going to be tough to do. I’m not sure Coronado is ready to take that jump,” he said.

San Diego City Manager John Lockwood said that San Diego city officials “would be happy to discuss annexation” with Imperial Beach officials. But Lockwood said that San Diego has no plans to annex the city.

Despite Mahoney’s reservations about consolidating with the county, Bilbray argued that it is the best alternative. Should the city go bankrupt, Bilbray said, the county would become Imperial Beach’s trustee for three years. After three years, Imperial Beach voters would have an opportunity to vote on incorporation again.

“The worst option is going to San Diego. If Imperial Beach becomes part of San Diego, they will never be a separate identity again. The voters of Imperial Beach will never have a right to vote to become a separate city again.. . . . They would have to put the question to de-annex to a (San Diego) citywide election, not just the affected area. Under the county, the same question would be voted on only in the affected area,” said Bilbray.

Mahoney, who owns a monthly newspaper in Imperial Beach, acknowledged that the constant political infighting and financial crises have given the city a reputation as a community where nothing works right.

“Others have a sardonic view of us. . . . The city’s personality is kind of abused by its own history. I think that people here are tired of always being put behind the eight ball, whether it’s because of political infighting or revenue shortfalls,” Mahoney said.

“Most people in Imperial Beach are more intelligent than what others give them credit for. Sure, there might be more eccentrics here. But Imperial Beach has been a getaway place for more than 10 years, when we’ve been trying to make it a destination. The truth is, there comes a time when a Hobson’s choice is something you have to recognize. But I’m not convinced that that’s what is facing us now,” he added.