La Cañada Flintridge City Council members on Tuesday approved spending $30,000 to hire a consultant to gauge public interest in increasing the city’s sales tax from 9.5% to 10.25% by placing a measure before voters in an upcoming election.
The move — which could generate an additional $2.5 million annually — is being considered as a way to preempt anticipated sales tax increases proposed by the county and South Coast Air Quality Management District that could push the city’s tax rate to its state-mandated 10.25% cap.
In a special meeting Tuesday afternoon, City Manager Mark Alexander explained a local increase of .75% would allow collected funds to be used on city projects, instead of their being diverted to county or regional efforts.
“We do believe other agencies will take advantage of that .75% delta, so the question is does the city of La Cañada Flintridge want to take advantage of that opportunity first in order to ensure those funds that would be assessed otherwise would remain local?” Alexander posed.
The nearby cities of Glendale, Burbank and Pasadena recently passed similar increases in an attempt to keep their sales tax dollars local. From La Cañada’s current 9.5% sales tax, about 1% is returned to the city.
A $30,000 contract would allow Los Angeles-based research firm FM3 to conduct a communitywide survey that would collect feedback from residents and business owners on the potential hike and when such a measure might go before voters.
A local sales tax measure placed on a November 2019 special election ballot, at the cost of $173,000, would require adoption of an ordinance by two-thirds of the City Council and passage by two-thirds of voters. Funds raised would be restricted and their uses specified to voters in the measure.
Waiting for the March 2020 general municipal election would mean the measure could be passed by a simple majority and would allow the city to apply sales tax money to its general fund but could put La Cañada in direct competition with other sales tax proposals. In that case, Alexander said, it’s unclear what the outcome would be if both were to pass.
An ad hoc committee comprised of Alexander, Council members Terry Walker and Mike Davitt, City Treasurer Jeff Wang and Finance Director Rebekka Hosken determined funds generated by a boost in the local sales tax might be best allocated toward public-safety enhancements and street repairs.
“As a council, we’re doing our due diligence to educate the citizens about this possible opportunity and hear what their input is,” said Councilwoman Terry Walker. “To do nothing, to us, felt like we weren’t educating the public properly on the situation.”
In an interview earlier this week, La Cañada resident and owner of Flintridge Bookstore & Coffeehouse Peter Wannier said while he understand the city’s position and trusts the council’s judgment, increasing an already high sales tax could have a negative impact on his business.
“Every time it goes up, it’s a little harder to do business — we become less competitive, make fewer sales and have higher costs,” Wannier said. “The more California charges people for walking down the local street and visiting your store, the less likely people are to do that.”
Midyear budget review
Midway into Fiscal Year 2018-19, city officials have discovered revenues are higher and expenditures lower than projections made when the budget was passed last summer, giving the city an additional $349,275 to spend on projects and programs.
Finance Director Rebekka Hosken told City Council members in a special meeting Tuesday general fund revenues may be adjusted upward by $108,025, while expenditures will decrease by $241,250.
Considering where to apply the funds, the council decided to dedicate $30,000 toward the FM3 sales tax survey.