City Manager Proposes No Tax Hike

The Long Beach city manager has proposed a zero percent tax increase for 2011-12 by tapping into the city’s reserve fund ­­− which some say should be used only in a dire emergency − to the tune of about $900,000.

“I know we will have people at the budget hearings saying we should not touch the reserve fund,” said City Manager Charles Theofan. “But if you stopped people on the street and asked them what they would rather have, money sitting in the city’s coffers or no tax increase, 98 out of 100 would not want a tax increase.”

Theofan said the city will be able to survive with $2.87 million in the reserve fund and if “a catastrophe” should arise, the city could always bond or borrow the money.

He said the reserve fund ballooned when the city hit taxpayers with a 25 percent tax increase in 2006 and the city administration has been using that to keep taxes in check since then.

“I think if there were ever a time residents would be grateful not to pay for an increase in taxes, it’s now,” Theofan said.

The proposed budget of $66.4 million is up from the current $62.3 million. Theofan said taking from the reserve fund averted a 3 percent tax hike.

City Council members received the city manager’s proposed budget in early April. Two public hearings are scheduled, on May 17 and 24, which is when the council will vote on the proposal.

During the past six years, Theofan said, the city’s coalition has managed to hold the line on taxes, lowering them 5 percent and 3 percent and presenting two budgets with a zero percent tax hike. Last year, taxes went up 2.5 percent.

“I don’t want my taxes to go any higher than they are,” said one 30-year resident. “I’m definitely happy there’s not going to be any tax increase.”

But Karen Adamo, a city resident for 27 years, said the administration is making a mistake by dipping into the reserve to counter a tax increase.

“It’s not smart business,” Adamo said. “I don’t think the city has been tightening its belt. I don’t think they’ve trimmed down and cut back enough.”

The city’s reserve fund held about $3.8 million before the 2011-12 budget was proposed, Theofan said.

“How much is enough in the reserve fund?” said Theofan. “No tax increase amounts to good government.”

He said the city is saving money by consolidating purchases and not replacing employees who have retired.

City Councilman Len Torres said he favors a zero percent tax increase, but expressed concern about possibly depleting the reserve fund to get there.

“The idea to keep taxes at the rate they are is an excellent idea, but not when it’s going to impact the reserve fund,” Torres said. “The loss of part of the reserve fund is a concern to me. I’m a believer that you have to maintain your reserve fund in case of a big emergency. There’s always the looming danger of unexpected repairs that we have to do.”

In addition, police overtime has gotten out of control, said Torres, who explained that $450,000 was budgeted last year and the figure has grown to $919, 516 as of April 29.

Theofan said he is reining in overtime and has proposed $750,000 for police, even though they have requested $1.2 million. “We’re cutting overtime significantly citywide,” he said.

Torres said he is worried that the city manager is not properly planning for the future. As a result, he is banding together with Councilman Mike Fagen and the Democratic Party, working on an alternative budget that they will present to the council on May 24.

Torres said the alternative budget will also show no tax increase, but will do it by consolidating services.

“All along we felt that there has been spending in areas where we don’t need it,” he said. “We have to be careful because eventually the money is going to come from taxpayers.

“It’s mostly a managerial issue,” Torres continued. “You don’t see that type of planning and you don’t see it reflected in the [proposed] budget. That’s why we put together an alternative.”

He said even though taxes are not being raised, fees such as sanitation have gone up about 50 percent.

Fagen said the budget seems to fly in the face of what the financial conditions are across the country.

“Every municipality is tightening its belt, but this administration continues to spend without regard to economic climate,” Fagen said. “The citizens of Long Beach are not being fooled because all their fees are increasing by double-digit amounts.”

Adamo agreed that it seems as though all the fees have risen. “At least when you have a tax increase you could write it off,” she said.

Theofan strongly disputed that the increased fees were “a hidden tax. We’re not looking to make money. They are user fees and are meant dollar-for-dollar to cover the cost of providing that service.”

Council members Tom Sofield, Mona Goodman and John McLaughlin did not return calls for comment.