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?
The Brea City Council needs to develop a way to shut down the redevelopment agency, and work out a way to retire the staggering debt and return the incremental property tax revenues to the city coffers instead of the pockets of corporate investors.
Going for a sales tax increase indicates the debt is so unmanageable the city cannot create another redevelopment project like the disastrous downtown makeover to play the pyramid game and raise new money to pay off old debt. The clock has run out on redevelopment in Brea.
Allan Pilger
“A tax increase is the wrong solution. Cut the fat in government programs or staff. ”
The costs of the redevelopment are sunk. You can’t get out of them, outside of discharging them via bankrupcy.
I have not examined the budgets, but it is possible (likely) the debt burdon is so big that if you scuttle everything outside of police and fire the office still runs a defict.
Once again, lots of ideology, little actionable substance. Except Allan’s comment which makes sense.
One actionable solution would include: Dump the redevelopment project, pass an ordinace that requires any future redevelopment project be subjected to public vote AND be revenue neutral with a sliding scale sales tax that recalculates and moves once a year. That way, if the commission gets too far out of line, somebody can raise hell about it and stop them. If it passes at all.
No_vaseline.
Yes, the “current” bonded indebtedness is beyond any corrective action. Let’s hope that any future project area “ideas” never leave the drawing board.
Ten years ago we testified for Tom Mc Clintock in his attempt to force voter approval of redevelopment activity. Didn’t pass out of committee. Polarization is “still alive and well” in Sacramento.
Brea’s financial woes prove that elected officials, at all levels of our government, know how to spend taxpayer money. Now if they could ever figure out how to live within the available revenue stream we would all celebrate.
Even with the high cost of fuel, raising sales tax may chase either or both consumers and merchants to neighboring cities.
It’s tough saying NO to special interests once you have created programs for them.
Thank you for your kind words about Alan Pilger. As Orange County Co-Director of CURE, partner of Supervisor Norby’s MORR organization, he is very knowledgable on the topics of redevelopment and eminent domain.
The City Manager just got a retroactive raise which puts him over 200K per year….Let him earn it by “Managing”. if the Council thinks he is worth that much give him the opportunity to run a streamlined city. Every time the economy goes south Governments want the taxpayers to bail them out…So far, Marty Simonoff and Roy Moore are the hold outs…Let us hope they do not backpeddle on this one.
Watching from the wings,
Fallujah, Iraq