Anaheim ‘Taxpayer Protection’ Act Council Transcript, Part 3: When Bonds Payments Come Due

From left: Register's anti-Measure N Tax editorial, Kris Murray, Debbie Moreno, Jordan Brandman, Michael Houston

From left: Register’s anti-Measure N Tax editorial, Kris Murray, Debbie Moreno, Jordan Brandman, Michael Houston.

[Editor’s Note: This is part 3 of the preface to our series begins where the Voice of OC’s article on Tuesday night’s Anaheim Council meeting left off on the proposed “Anaheim Taxpayers Protection Act,” also known here as the “Protecting Anaheim Taxpayers from Their Own Opinions (“PATTOO”) Act.  The first section, on five relevant public comments, can be seen here.  The second, covering the beginnings of deliberations, is here. This section covers Mayor Tom Tait’s discussions with City Attorney Michael Houston, some petty bickering about procedure, the emergence on the scene of Finance Director Debbie Moreno, Jordan Brandman missing me very much, and the Murrbot executing her programs as best one could.  The transcripts are just here to make it easy for us to refer to what was actually said when we start discussing all of this in earnest on Monday morning.]

TAIT: I’ve got some questions.  I don’t know if you would know this, but has the City always had a 50% requirement to put something on the ballot?

HOUSTON: You mean put something on the ballot in general, or tax measures?

TAIT: I’ll start with “in general.”

HOUSTON: My understanding and my recollection would be that is the case, with some exceptions.  There is a provision in the Revenue and Taxation Code that requires transfer and use taxes to have a 2/3 vote notwithstanding Charter City status, but I don’t know whether we’ve ever put something like that on the ballot.  But as a general matter, the majority vote rule has been applied.

TAIT: So this initiative, this resolution, is to put on the ballot in November of ’16 a provision that, in the future, if a City Council wanted to put a tax measure on the ballot it would go from the 50% requirement that has been historically to a 2/3 requirement, supermajority.

HOUSTON: That is correct, right.

TAIT: And the city’s always, for anything else, had a 50% requirement.

HOUSTON: Generally speaking, yes.  There’s a handful of provisions in our charter that require supermajority votes for certain types of things.

TAIT: OK.  In your memory have we ever come across that?

HOUSTON: Come across what?

TAIT: Put something on the ballot that has required a supermajority?

HOUSTON: I am not aware of anything having required a supermajority to put on the ballot.

TAIT: So I’m thinking, in my history on the Council up here, four as Mayor, since I guess 1994, only twice I think we’ve put something on the ballot, once was the TOT tax, back in probably the late 90s – and that was passed by the people, that was a hotel tax – and then recently the Measure N, correct?

HOUSTON: That’s correct, yes.

TAIT: So Measure N, just this last election, where it took – actually it was a 3-2 vote, with Councilmember Kring, Councilmember Eastman, and Councilmember Brandman voting for it, to put it on the ballot, and Councilmember Murray and myself voting against it.  But having the 50%, that made it to the ballot, but it was eventually voted down by a majority of the electorate, correct?

HOUSTON: Correct, yes.

TAIT:  So, in that situation, if this was in place, that would have never gotten onto the ballot in the first place.

HOUSTON.  That is correct.  On the current Council, you would need four votes.  On the future Council of seven, you would need five votes.

TAIT: So – this is a big change.  I mean, in the history of the City it has always required 50% for everything I could think of.  It’s a – there’s no rush to do this tonight, I mean we have until August of 2016 to put something on the ballot?

HOUSTON: In terms of the time period by which we could place an item like this on the ballot, while we’d always like to have a little bit more time than cutting it close the deadline is generally the latter first week on August.  So between the 5th and the 7th depending on when Election Day is.  August 7, according to the Acting City Clerk.

TAIT: OK, August 7, so definitely a year and a half before the deadline approaches.  I have a lot of questions.  One is – you’re talking about other Charter Cities, I’m wondering if any other Charter City has done this.  I’d like to get a report to see if any other Charter City in the state has required this.  I’d also like to – I’ve got a concern about our bond rating.  And I wonder, by making it tougher to put something on the ballot for a tax increase, if the rating agencies or the bond markets will look at that unfavorably.  And it would be nice to get an opinion from a rating agency whether it changes anything.

Again, with this Council in the past we’ve taken actions where we’ve spent a lot of money.  We borrowed $200 million for the Convention Center, there’s been $200 million for the ARTIC, we’re looking at $300 million for a streetcar, promised $158 million for a hotel giveaway, not to mention tens of millions for a Gardenwalk sales tax subsidy, millions for future car dealer rebates, so my concern is that we have to make sure to be fiscally responsible.  I mean, that’s a principle that we all hold – should hold.

That when those bills come due we have to start making those payments, and if they don’t turn out the way that they’re anticipated by the studies, if they don’t create the room revenue that they’re supposed to, or the ridership that they said they will, or what not, that we might find ourselves in a situation where the taxpayers would have to ask themselves whether they want to be taxed.  I think that’s something that the City should not limit their ability.

So, given that this isn’t until August of 2016, and it does tie the hand of a future Council majority – particularly now that we have a new type of Council coming, with district elections coming up in 2016 – I’m concerned about tying the hands of future Councils indefinitely to do the fiscally responsible thing if need be. And I’m concerned about not allowing the taxpayers to have a voice, because I think they deserve a voice.  And I don’t agree with the term called “taxpayer protection” – as the speaker said, it’s “protecting them from who?” It’s the taxpayers themselves who get a vote on this.  It’s allowing people to have a say.  I think that the principle of being a government “of the people,” we don’t want to limit the ability to let them vote on things.

But having said that, there’s just a lot of questions I have.  So I’ll make a motion to table this to get that additional information, particularly from rating agencies.  Because if it’s going to cost us, if it’s going to hurt us in every rating for bonds, this will cost us real dollars today.

CLERK: Is that a substitute motion, as there’s already a motion?

TAIT: It’s a precedent motion.

HOUSTON: A motion to table takes precedence over the main motion provided it is seconded and there’s a majority vote to table.

TAIT: So there’s a motion by myself, is there a second –

MURRAY: I’d still like to speak to the main motion, if I may.

TAIT: This takes precedence.  Is there a second?

VANDERBILT:  Second for the purpose of a question.

MURRAY: We either can have discussion or we can’t.

TAIT:  So, excuse me –

BRANDMAN: Sir, can I be acknowledged just for a moment of clarification?

TAIT:  Let me ask this question first.

BRANDMAN: You’re going to want me to get this clarification.

TAIT: I probably have the same question.  Mr. City Attorney, a motion to table …

HOUSTON:  A motion to table that is seconded is a precedential motion to the main motion on the table and it cuts off debate on that motion for purposes of acting on the motion to table.  We now have a motion made by the Mayor to table, it has been seconded I believe by Councilmember Vanderbilt, so the next action the body could take would be to discuss the motion to table and then act on that motion.

TAIT:  Very good.  So we have a motion to table.  Any discussion on that first?  Councilmember Brandman?

BRANDMAN: Forgive me for being “Mr. Procedure,” but I would not recommend a motion to table.  I’d recommend a motion to postpone, because a motion to table doesn’t have debate, and it’s not parliamentary proper, parliamentarally appropriate.  So if you’d like to do a motion to postpone to a date certain, I would recommend that motion because I think that’s your intent.

TAIT: Actually, my intent is a motion to table –

BRANDMAN [interrupting]: A motion to table is a non-debatable motion, and I would ask clarification from the City Attorney because we did this months ago and the appropriate motion is a motion to postpone.

HOUSTON: A motion to table, once seconded, cuts off debate on the main motion, and if it’s approved by a majority vote then that item is tabled, if you will, and if it is not then brought off the table and acted on at this particular meeting then the action fails, as a procedural matter.  A motion to postpone to a date certain has the same effect, if you will, except that it places it on a specific upcoming agenda of the City Council for potential action.  Those are the differences.

TAIT:  Very good.  So, I’m going to stay with my motion to table.  And we can discuss the motion to table, as Councilman Brandman just did?

VANDERBILT:  No, I’d like to raise a question, I think he’s  –

MURRAY: We can’t discuss it.

VANDERBILT: I’m not going to discuss the motion to table, I would like to ask a question, which –

MURRAY: It’s too late.  [unintelligible]

VANDERBILT: No?  Point of order?

HOUSTON: [Long pause] Motion to table is not debatable.

TAIT: So we have a motion and second to table.  Please vote.

CLERK: The vote is two ayes, three nos, with a recorded “no” by Council Member Brandman, Mayor Pro Tem Kring, and Council Member Murray.

TAIT: OK, now we’ll go back to the original motion by Councilmember Murray, seconded by Mayor Pro Tem Kring to approve this item.  Councilmember Brandman.  Oh, Councilmember Murray.

MURRAY: You know, I have a question for either the City Manager or our Finance Director, whoever might be most appropriate, but: does anything in this charter amendment in any way impact our bonding authority or bonding capacity for the City, therefore would it have an impact on our rating capacity?

CITY MANAGER EMERY: I’m going to let Finance Director Debbie Moreno come down and get specific with you on that question.

Debbie Moreno applying her professional Finance Director skills to a City Treasurer question.

Debbie Moreno applying her professional Finance Director skills to a City Treasurer question.

FINANCE DIRECTOR DEBBIE MORENO:  Because, as I understand it, this would amend the charter to simply the threshold for putting it on the ballot rather than what it takes to approve that, I don’t believe – but without talking to the rating agencies I’m not certain – I don’t believe it would have a significant impact on our ratings, because the way the rating agencies would typically see the risk is the voter approval to get the tax.  Because currently, we have not anticipated any increased taxes, they are not likely going to be assuming that we would get those approved in the future, and therefore our ratings wouldn’t be based on any future taxes we may raise.

MURRAY: OK, thank you.  The other thing is – you know some of the city’s programs were listed tonight as having a cost impact to the City, but transportation programs that were mentioned have a transportation funding stream and for operations have a dedicated source of funding already delineated for them.  For everyone’s benefit, the TOT incentives that were recommended by Staff and approved by Council have had generators attached – economic studies by two different firms, for Gardenwalk, as well as, I believe, for the auto dealers’ incentive.  But the funding would be based on new funding and therefore exceed the amount of the subsidy and therefore are revenue generators for the City and are not putting the City in any long-term financial risk.  So I think it’s just important for voters and residents to be aware of that.

But what this really boils down to is: the voters have already spoken at the statewide level that they’d like to see this type of threshold in place, through Proposition 62, but they were only able to impact General Law cities.  This is really about conformity and ensuring that, as a Charter City, we are increasing that threshold with voter mandates that have already been – that have already taken place across the state, and ensuring long-term that if there is a tax that is being considered by Council that it is of such an imperative that it has a 2/3 support behind it before it goes to the voters for their consideration.

A number of the tax proposals that we’ve heard addressed over the last couple of years are regressive in nature: sales taxes, use taxes, utility taxes and even gate taxes.  Those have a cost-of-living impact, and they are a higher proportion of a low-income person’s salary and income than a higher income or more affluent resident.  And therefore if our City is ever going to look to those types of tax increases, it should be done with the full support of the Council.  I would say it should even have a unanimous vote of the Council.  But certainly, in line with Proposition 62, which was a statewide initiative, was approved by our voters.  The precedent has already been set for this 2/3, and we would be conforming with that, and in conformance with already voter-approved mandates, and really insure that if that type of tax is taken, is taken with a super majority of the Council, and that’s where the taxpayer protection element comes from.  I would just ask that we move forward, and insure that this type of protection is in place, this conformity is in place in Anaheim, and I don’t think that there is any benefit in waiting to put something before the voters for their consideration. Thank you. (1:53:16)

TAIT (1:53:19): Councilman Brandman.

BRANDMAN (1:53:22): Thank you. I’m so sorry that Mr. Diamond left.  He invoked my Democratic credentials, and for those in the audience, and those watching on TV, people who are close to me know how proud of that I am, I am a proud Democrat.  That really doesn’t have any bearing on my decision tonight.  My values, my values are Democratic values, but I don’t know if that’s germane to this discussion that being said, I found it entertaining, that he would come here and invoke partisan credentials. But, you know, that’s his right to do so. I’m the only Democrat on the Council.

And interestingly enough, I’m going to talk about another Democrat, now Assembly Member, Tom Daly, who was Mayor of this Council, elected Mayor in 1992.  And one of the biggest reasons why he was elected Mayor, is because this Council, prior to Prop 218, enacted a Utility Tax, in a, and he ran on a platform, against the then-Mayor, Fred Hunter, to repeal it. And he won. And that tax was eventually repealed in 1993, when, interestingly enough, after Fred Hunter was defeated as Mayor and was still sitting on the Council, he didn’t vote for it either, to extend it. Interesting how the voters have sent their messages.  And then in 1994, the City of Fullerton, trying to cure the same issue that Anaheim was, which is funding a budget gap – they approved a utility tax, and their voters went so far as, they just got recalled. And, again, it’s interesting how voters respond to tax increases.

With all that said, I don’t understand, truly, the immediate issue we are trying to solve here tonight. To my recollection, not a single time since Anaheim enacted their utility tax, and Fullerton did theirs, has there been a tax placed on the Ballot, by this Council, previous councils, either in Anaheim, or anywhere else in North Orange County, to my knowledge.  I think that there’s a pretty good indication, for, in this City, that we’re a very taxpayer friendly City – a taxpayer friendly community and I don’t think that’s going to change anytime soon.  And with that, I’m just – what’s the issue we’re really trying to solve, tonight?

And then, I have a procedural issue with this proposal, cause I know it’s been an issue since the court decision in 2002.  If I recall, Mr. City Attorney, that it’s been a simple majority for Charter cities and a 2/3 majority for General Law cities, provided by Proposition 62, and if that’s the case, it would have been really nice to have had this discussed, in Charter Review.  And I would recommend, you know, if it’s the will of a Council Member who sees this as a problem, when we do Charter Review again, that the problem be discussed. Again, I’m not seeing the immediate problem, cause I think that past votes by the people in Anaheim, and then to the north in Fullerton have, have pretty much dictated that voters don’t like tax increases placed on the Ballot, by City Council or passed unilaterally. So, with that, I will not be supporting this tonight.

TAIT (1:58:06): Councilmember Murray.

MURRAY (1:58:08):  Thank you. Thank you, Councilman Brandman, for asking some valid questions.  I raised this in my oath of office ceremony, after running for reelection successfully, because we are changing our form of governance.  We are moving to a new form.  We do have a number of candidates who talked about the funding priorities, and that they were open, and would potentially embrace, the type of taxes that have been discussed here tonight.  Again: regressive taxes on utilities, so that could rear its head again; on sales taxes; on gate taxes; on other use taxes; as a means of supporting programs.  That they were supportive of – as we go into a larger City Council, as we go into a new paradigm of governance – and again, to bring Anaheim in line with a requirement that’s already there for General Law cities.

I believe there is a time relevance to bringing this up now, and having it before the voters for their consideration in the next election. Our City Attorney has done a great deal of research on this, spent the last couple months working on it, has brought forward a thoughtful proposal, and I believe we are ready to move forward, with consideration, if we’re supportive of a 2/3 vote threshold as approved by the voters in Prop 62, and as approved in place for a number of tax measures, that voters and/or other legislative bodies must consider, before putting measures before the voters. So with that, I again would humbly and respectfully ask for my Council representatives’ support here tonight. Thank You.


About Greg Diamond

Somewhat verbose attorney, semi-retired due to disability, residing in northwest Brea. Occasionally runs for office against bad people who would otherwise go unopposed. Got 45% of the vote against Bob Huff for State Senate in 2012; Josh Newman then won the seat in 2016. In 2014 became the first attorney to challenge OCDA Tony Rackauckas since 2002; Todd Spitzer then won that seat in 2018. Every time he's run against some rotten incumbent, the *next* person to challenge them wins! He's OK with that. Corrupt party hacks hate him. He's OK with that too. He does advise some local campaigns informally and (so far) without compensation. (If that last bit changes, he will declare the interest.)