HUNTINGTON BEACH : City Will Continue Its Retirement Tax

Property owners will continue paying a special tax that covers city employee retirement costs, despite opposition from two City Council members who voted to eliminate it.

The City Council this week voted 4 to 2 to set the rate for the property-tax levy, which is expected to raise $6.25 million to pay 67% of employee retirement costs.

Mayor Linda Moulton Patterson and Councilman David Sullivan voted against the measure; they wanted the tax to be phased out over a five-year period and to exempt public safety cutbacks from the effects of any revenue loss. Councilman Jim Silva was absent.

The special tax has been in place since voters approved it in 1966. The average homeowner pays $84 a year, city officials said.

“This is a poor tax,” Moulton Patterson said. “To me it has nothing to do with the retirement system. . . . I don’t like the way it is levied and I can’t vote to continue it.”

Sullivan had made a motion to phase out the tax.

“My objection is we’re the only city in Orange County that has this particular tax,” Sullivan said. “All the other 30 cities have to deal with it upfront out of the general fund.”

Sullivan also proposed putting a measure on the November ballot to let voters decide whether to repeal the tax, but he failed to gain the support of the council at the Aug. 1 meeting.

Councilwoman Grace Winchell said the tax “may not be a perfect tax,” but called it fair and equitable. Winchell added that there is no way to replace the revenue should the tax be eliminated, especially now when the city is facing budget cutbacks.

Sullivan called the tax, which on property tax bills is referred to as Huntington Beach city debt, a hidden tax that citizens are not aware they are paying.

The council majority also voted to send a letter asking the county auditor-controller to change the wording on tax bills to reflect the nature of the tax. The city will request that the city tax levy be labeled as “City Retirement Costs.”

The city pays for employees’ share of their retirement costs. City annual retirement costs total about $9.7 million.