Loss of City’s Tax Revenue Has County Seeing Red

County supervisors blasted Ventura’s City Council on Tuesday for its vote to keep $572,000 in annual sales taxes that normally support the county’s budget, calling the move “divisive” and “ill advised.”

After the meeting, supervisors met in closed session to consider a legal response to the city’s action, but made no announcement about filing a lawsuit, as had been threatened.

Supervisors said the proposal fractures relations between the two governments and jeopardizes the county’s ability to seek more tax revenue from the state.

Supervisor John Flynn called the move “ill advised” and said it “borders on stupidity.”

“The city of Ventura thinks of itself as an island,” he said. “And this is another indication of the mean spirit of the City Council and the city manager.”

Supervisor Susan Lacey, whose district includes Ventura, called the council’s actions the result of a “divide and conquer” mentality.

But Ventura council members said they hope that withholding the one-third of 1% of Ventura’s sales tax from the county would prompt county officials to work more closely with the cities to pursue additional state funding.

“We’re competing for crumbs here,” Councilman Brian Brennan said Tuesday.

Flynn threatened to transfer from the city many county programs, such as a public health clinic, offices for the air pollution control district and the Ventura County Medical Center, whose workers contribute to the city’s tax base.

“Why shouldn’t we do that?” he asked. “If you’re going to have a big industry in your city you ought to treat it a little bit better.”

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Supervisors said Ventura City Manager Donna Landeros failed to inform council members that the city has access to $5.7 million from the Ventura County Transportation Commission’s budget and doesn’t need to horde the sales tax money.

“I don’t understand why anyone would say they need a half a million dollars when they already have $5.7 million of their own money,” Supervisor Frank Schillo said of money the county commission has set aside to use exclusively in Ventura.

But Landeros said her city already has dedicated the transportation funds to construction projects scheduled for next year.

“I think Frank is trying to create the perception that we’re sitting on a surplus,” she said. “And I think that’s bogus.”

Moreover, the city still needs to find nearly $40 million to complete long overdue residential road repairs in the next few years, she said.

“Even under the best of circumstances, we’re still short,” Landeros said.

Landeros and other city officials said the council’s decision to withhold the sales tax funds came after nearly two years of consideration.

Brennan said the county is unfairly threatening the city with a lawsuit when both governments are struggling to secure additional state funding.

“This is public money,” he said. “There’s no winner [in a lawsuit]. The only loser is the taxpayer.”

Councilman Carl Morehouse, who is a county planner, said the city has less than half the $4.5 million needed in fiscal 2000-01 to repair area roads.

“So every nickel and every penny counts,” he said.

Although the city’s sales tax contribution represents a tiny portion of Ventura County’s $1-billion annual budget, Ventura’s decision comes as supervisors brace for $15 million in budget cuts beginning July 1.

If other cities join the tax revolt, the county would lose as much as $2.6 million, Chief Deputy Administrator Bert Bigler said.

In the 12 months that ended March 31, Thousand Oaks contributed the most sales tax revenue to county coffers at $725,300, while Fillmore had the smallest share at $24,000, Bigler said.

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Ventura’s Monday night vote may invalidate a tax-sharing agreement reached in the 1950s between local cities and the county to exchange county services for a portion of the sales tax.

Nine Ventura County cities give up $3.30 per $1,000 in sales taxes collected to the county’s general fund, authorities said.

The State Board of Equalization, which collects and distributes sales taxes, released Ojai from sharing its portion of sales taxes with Ventura County in 1972.

County officials have said they are prepared to go to court to keep the sales tax revenues from Ventura and other cities, which they say help cover the cost of countywide services, such as the tax assessor, county registrar, planning departments, environmental agencies and public safety.

County government is one of the largest employers in Ventura, so the city benefits from the hundreds of county workers who live and spend money there, county officials said.

“The county contributes much more to [Ventura’s] economy through the sales tax,” chief administrator Harry Hufford said. “They, of all the cities, should be the least likely to do this.”

Supervisor Judy Mikels said the county’s growth policy consolidates development within cities and guarantees the municipalities more revenue than if the county had allowed sprawl into unincorporated areas.

“We let the cities have the commercial development,” Mikels said. “I’d urge their City Council to reconsider what they’ve done.”

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Supervisor Kathy Long said the county provides Ventura and other cities with important services in exchange for their tax contributions--such as paying for litigation that stalled the massive Newhall Ranch development in Los Angeles County. Ventura County argued that its water, agricultural industry and traffic patterns could be hurt by the 22,000-home project.

“When we fight a Newhall project, that’s for all the citizens of the county, and does help the residents of the city,” she said.

Ventura’s council is scheduled to adopt a final version of its sales tax proposal on Monday.

Several cities acknowledge a change in state law may be needed to help the tax plan resist court challenges, but Landeros said if the council passes the proposal Monday, “that’s really the only change that needs to happen.”

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Piccalo is a Times Community News reporter. Talev is a Times staff writer.