Laguna to Keep New Tax Despite Windfall

Laguna Beach officials said Thursday that despite unexpected pledges of $16.7 million from federal and state officials, they still supported a sales tax increase that voters approved to pay for repairs from last year’s landslides.

The half-cent-on-the-dollar tax hike, which begins July 1, was intended primarily to cover repairs in Bluebird Canyon that the city thought would be ineligible for much state and federal relief. But after state and federal agencies agreed to cover $16.7 million of the expected $18 million in costs, city officials said they would still need the extra tax revenue to build a $4-million fund for future disasters.

The tax revenue also will cover landslide repairs that are ineligible for state and federal aid, including a project to re-grade portions of a wrecked hillside along Flamingo Road, said City Manager Kenneth C. Frank.

“Whether we like it or not, every five or six years we have some problem, and we’ve never had a fund set up to pay for that problem,” Frank said.

In 1978, a landslide just below the site of last June’s disaster destroyed 24 homes. Fifteen years later, brush fires destroyed hundreds of homes.

With the boost in federal and state funding, Frank said he expected the reserve disaster fund to fill up in four years; the tax doesn’t expire for six. The City Council will then decide whether to eliminate the tax hike, he said.

Sen. Dianne Feinstein (D-Calif.) announced this month that the Federal Emergency Management Agency would reimburse the city $12.5 million -- a turnaround from August, when the agency refused to offer assistance. The state Office of Emergency Services announced last week it would give the city $4.2 million.

The tax measure, approved by 56% of voters in December, doesn’t require the reserve fund to be used for disasters. But Frank said it would be “political suicide” for the City Council to use it for anything else.