On March 7, 2017, there will be a Municipal Election in the Palos Verdes Estates including a Ballot Measure "D" to approve an extension of the Parcel Tax. This tax raises about $4.2 million in revenues each year for the City of Palos Verdes Estates. It is a special assessment applied to all homes in the City. For the sample Ballot, click here.
For an explanation the Parcel Tax on the Palos Verdes Estates City government website, click here.
For a comparison of sample property tax bills showing all the debt service and local district assessments for Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills and San Pedro, click here. Note that some of the District taxes are flat, and others depending on factors other than the Property Tax valuation (such as sq ft), so the total percent of valuation paid will vary within the same City; so for example, a house in PVE valued at $2.659M pays 1.15% while another house valued at $991k pays 1.27%.
TRUTH ABOUT THE PARCEL TAX (Measure “D”)
- When we pay our property taxes we expect it to cover all of the usual things such as police, fire\paramedic and roads- this is how every other city works. (Proposition 13 in 1978 dictates that property tax will be 1% of home value and may increase at only 2% per year)
- In Palos Verdes Estates, in addition to the property tax of 1%, we also pay a parcel tax for fire services – a tax that no other City in PV or even in California pays. For a 2450 sq. ft. home, this parcel tax is $813.50 (clicker for sample), while other cities have an extra tax of only $64.78 (click here for sample) for the same size house.
- Our city elected officials could attempt to save OUR money through budget restrictions or hiring freezes or other measures, but instead take the Easy (for them) approach and say to us “we have exhausted all of your funds and we have no money left to pay for your fire services, each of you is going to have to PAY MORE”.
- The city wants to keep this tax alive for another 12 long years and increase it annually (6.2%) not tied to the Consumer Price Index (CPI). An $ 800 parcel tax bill could double to over $ 1,600 over the contract term – with no input from the people.
- The tax was renewed in 2007 for 10 years. ONLY 23% of the residents bothered to vote in 2007 so it passed easily as there was no opposition – we believe that most people didn’t even KNOW!
- If this tax receives a “NO” vote, city council has assured us that there will be no impact on fire services as the costs will be funded from the city’s reserves. For the comments City Council members at the November 8, 2016 City Council Meeting affirming this, click here. And for the complete video of the discussion, click here.
AREAS OF CONCERN THAT MUST BE ADDRESSED:
- The City of Palos Verdes Estates is adding to the deficit by increasing staff levels significantly while the city population is not growing.
- Salary levels and particularly overtime costs are out of line for a city that is effectively running a deficit -- click here
- Why does the City’s budget over the next two years show costs increasing by 12% while revenues are only budgeted to increase by 2.6%, further worsening the annual deficits? click here
- Why hasn’t the increase in property valuations and resulting increase in property tax proceeds over recent years been used to reduce our fire/parcel tax? The extra proceeds have simply been spent. Property Tax revenues alone forecasted by the PVE staff to increase at 8.44% this fiscal year – revenue increases have averaged around 7+% for the last 30 YEARS! – Where has this money gone?
- The City formed a committee to research and investigate options for funding the fire/parcel tax, and then it disbanded that committee before they obtained any input from the residents.
- Why has the City not investigated the fact that all the other cities on the hill receive 23.3% value back from the basic 1% tax (Prop 13 Property Tax) we pay while PVE receives only 11.3%?
There have been statements made by those in favor of this tax that promise dire consequences with immediate and massive cutbacks in City Services if the tax does not pass. Those are not accurate. Here is some dialogue among City Council Members on November 8, 2016 when the Ballot Measure was approved:
Councilmember Jim Vandever: “If this tax were not to pass, we would immediately be in crisis because it would end in June .”
Mayor Jennifer King: “We would have to pay for it from our reserves until we can put it on the ballot again.”
Councilmember Jim Vandever: “It would take one year to get it back on the ballot. That would be approximately a $2.5M loss from our reserves.”
Staff Budget Director: “Yes. It would be about $2.5M loss and our reserves are at $9.3M“
Councilmember Jim Vandever: “So, we can continue our level of services. We are, gambling if you will, we are probably talking about a $2.5M loss for the year from our rainy day fund.”
If you’d like to watch/listen to the whole meeting the video (Agenda Item #7), click here.
One other myth worth debunking. The PVE City Finance Director has asserted that Rancho Palos Palos Verdes taxpayers pay a separate Fire Tax for 0.1819% which is supplemental to the 1% Pro 13 tax assessment -- click here. However, checking actual tax bill from RPV shows there is no separate tax assessment for fire -- click here. In contrast, PVE tax bill shows the PVE Fire Tax as a separate line item distinct from the 1% Prop 13 tax assessment -- click here. An inquiry from the RPV Finance Director confirmed that there is no separate Fire Tax Assessment in RPV -- click here. So in PVE we are essentially being taxed twice for Fire Services. It is disappointing that our PVE Finance Director is not aware of this, or is spreading incorrect information.
Chronology of Events:
(From Jim Nyman, Mayor of PVE when this tax was passed by voters in 1978):
Proposition 13 was passed in by the voters in 1978. In 1979 all cities received a ‘bail out’ of about the same amount of property tax revenue as they received in 1978 – the City of Palos Verdes Estates was not the sole exception in California! I know as I was providing advice to the City at that time.
The City had its own fire department and paramedics. In specific, we had 5 persons on duty. When there was a structural fire, the 1st response was (and still is) to deploy 17 persons. In other words, we DID NOT HAVE SUFFICIENT STAFF to respond to ANY structural fire in the City. My words were that we were ‘pretending to have a fire department’ as whenever there was a fire we had to call for aid from the County (12 more firefighters). In 1986 the City finally came to its senses and contracted with the County for fire and paramedics since it needed them for every fire anyway! This was a good decision – but it was not done for cost reasons since the County (a) paid its employees more than we did, and (b) the County had more and better equipment. Since the contract was for men/women and equipment it is completely illogical to contend that this somehow saved money! It was a good decision but it was in order to deploy the correct resources to solve the problem (a fire in the City).
I authored the ‘parcel tax’ as a means to get rid of a couple of voter approved measures that handled the parkland and fire. It was necessary. But, even then (25 years ago) the property tax revenues were increasing, fast. The tax was embraced, but that did not occur by accident. As Mayor I formed a citizen’s advisory committee composed of ‘friends’ of the city and ‘skeptics.’ I told them that anything they could find to reduce costs or increase revenues was on the table. The result -- they endorsed the Parcel Tax 100%.
But that was 25 years ago and, over time, property tax revenues have increased at a much faster rate than the consumer price index. Restated, revenues are way up. If the City Council would have been good custodians of our money, then the Parcel Tax could have been significantly reduced or eliminated: it was not.
Instead they increased the city staff, the police budget, and the salary of the City Manager much higher than in the past. Police retirement costs are up 25% over just the last two years.
I have given up. This has to end. Allowing for the Parcel Tax to grow at about 3 times the CPI - Consumer Price Index (Parcel Tax can increase at 6.2% for 12 years while the CPI is running a about 2.2%). That's simply too much for too long.
Last, MOST EVERY OTHER CITY IN CALIFORNIA gets by just fine, without this tax. Rancho Palos Verdes, Rolling Hills, and Rolling Hills Estates don’t have it and don’t need it, nor should we.
-- Jim Nyman, Mayor of PVE in 1978 and running for PVE Treasurer in March 2017
In the January 13, 2016 City Council Meeting, the initiative was explained in a staff memo and instructions from the City Attorney on the prohibition against the City spending money to take an advocacy position on the measure -- click here for the report.
In the November 8, 2016 PVE City Council Meeting the issue was discussed and approved. For that staff report, click here.
Voting Record of Elected Officials:
The current City Council unanimously voted to approve adding the Parcel Tax as Measure "D" to the ballot.
November 8, 2016: City Council Approves putting the parcel tax on the ballot
Voting For: Jim Goodhart, Jennifer King (Mayor), Betty Lin Peterson, John Rea, Jim Vandever (Mayor Pro-tem)
Voting Against: None
Police and Fire/Paramedic Services are the most essential safety services in any city. At PVrrg, we strongly support our PVE Police and Fire/Paramedic Departments.
PVE's essential safety services rely on financial stability; to continue the same increases in expenses from 2013 to 2016 in the future is not sustainable -- click here.
A solution also needs to consider the large number of neighbors on a fixed income who get less than 1% increase in their fixed retirement payment/pension incomes.
Our position on Measure D has always been to ensure Police and Fire/Paramedic services are NEVER impacted, while we use this opportunity to strengthen the City's finances to establish that PVE will always be in a position to safeguard the current level of safety services. Let's use a solution that better addresses the needs of PVE.
We at PVRRG believe that the Sensible Thing to do is that the Parcel Tax should be Refined and perhaps Reintroduced for the Following Reasons:
1) Current spending practices at PVE are not sustainable: We have genuine concerns about the sustainability of the current spending practices. For example since 2013 (when the current City Manager, Tony Dahlerbruch, was hired), spending has increased at an alarming rate while the population has not changed. (for more details click here) For example:
- General Government expenses 44.2%
- Police 21.1%
- Public Works 71%
2) Current City Council has not shown commitment to address these excess-spending issues.
3) There is a viable alternative if Measure D does not Pass: The Council on 11/8/2016 identified a viable alternative if the tax does not pass (for video click here):
- Temporarily borrow $2.5M from the $9.3M reserve fund to ensure no negative impact to safety services.
- Redraft a version of the tax to submit for resident approval in March 2018.
RECOMMENDED ALTERNATIVE: to ensure PVE's financially stability for the future and preservation of our current level of safety for the long term:
1) Vote the Measure D down in 2017; temporarily borrowing $2.5M from the $9.3M reserves; as suggested by Council in 11/8 meeting (for video click here):
2) Review the fire contract for improvements: get rid of the excise tax, bring annual increases down to CPI plus 50%, protections from CALPERs risks, etc.
3) Eliminate excessive spending: Create an independent “Citizens Financial Advisory Committee” tasked with working together with the City financial staff to find excess spending and inefficiencies (while preserving existing safety service levels.) This would likely include a hiring freeze until further information is understood about the necessity of all the new hires and the CALPERS impact. Also to be reviewed will be the year over year excessive overtime and pension spiking.
4) Direct intended Fire funds to Fire: PVE receives 5% more (or $3.4M for year 2016) of our 1% property tax from LA County than other PV cities because PVE is supposed to be paying for its own fire services; this covers 72.3% of the $4.7M actual cost of our fire services contract. The City should be directing at least some of these funds towards fire, for which it was intended.
5) Hold PVE spending to rate of inflation: Increases in property tax receipts above inflation should be contributed towards Fire expenses; (8.44% last year). PVE cannot continue to hire and expand operations at the current rate because many are permanent commitments; these commitments pose a huge risk to our Reserves.
6) Lead effort to obtain equitable funding from the County to PVE: Contact the County to see if PVE can get more equitable property tax pay back to cover 100% of our fire services like other cities. (Currently, PVE only receives 72.3%)
7) Increase Reserves: Use extra funds (from 1-5 above) to increase the Reserves from 6 to 9 months.
8) Review Parcel Tax for March 2018: If funds are still needed, then a new Parcel Tax, at a lesser amount that would be acceptable to the residents can be introduced on March 2018, with a sunset date that gradually weans the city off these funds. This will provide immediate relief to our residents, particularly our seniors who live on fixed incomes, while ensuring our city's safety services are preserved for the long term
This Recommended Alternative should address the City’s spending problem as well as end the Parcel Tax eventually. The scary part for us is if Measure D does pass and John Rea is elected the new City Treasurer as the City wishes, it will be business as usual or worse. The residents of PVE will be stuck paying this tax for generations to come and there won’t be an incentive for the current City Manager and City Council to do anything about run away expenses. Therefore we must encourage our City officials to ACT RESPONSIBLY NOW!
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