Brea’s proposed sales tax increase is a very bad idea

Today’s OC Register contains a story of a potential November 2008 Ballot Measure in the city of Brea to raise their sales tax by one-quarter cent in an effort to raise an estimated $3.5 million per year.

As I think about the city of Brea I cannot overlook their active redevelopment agency which was heavily engaged in creating Bonded Indebtedness in their aggressive redevelopment activities. What the average citizen may not realize is that when your city, (or County), creates a Redevelopment Project Area, all of the commercial and residential property taxes within that boundary on that date become the “floor.” All future tax increases, be it for improvements on the property or resales, go directly to the local Redevelopment Agency. This is better known as “tax increment.”

While there are pass-thru agreements non of those funds can be used in the jurisdiction’s General Fund. Therefore, Brea cannot use the increased property tax revenue in Redevelopment Project Areas for police and fire protection.

In 2003-04, ranked 11th, the total indebtedness in the city of Brea was $466,868,415. Folks that’s a half billion dollars that eventually must be paid off. At the time it represented a per capita indebtedness of $11,192. Source. “Redevelopment: The Unknown Government.” Feb 2006. Eighth Edition.

What I find ironic in this story is that the Brea City Council will require voter approval for passage of the proposed increase in sales tax but did not require voter approval of their redevelopment agency actions that created a half billion dollars in current and future debt obligations.

A tax increase is the wrong solution. Cut the fat in government programs or staff. Don’t raise sales taxes that might cause a backlash by chasing shoppers to adjacent cities charging less.

Juice readers. What advise do you have for that city council?

About Larry Gilbert