THE HERMOSA BEACH UTILITY TAX
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Including:

Updates
Home Page (2001)
Facts (2001)
Contact Page (2001)
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*Updates Page - Hermosa Beach*

 This Updates page contains information added to this site since the 2001 election - including info about the November 2007 City Council-sponsored Utility Tax increase, Measure "H."
This page was last edited on December 9, 2009. 
2009:  The Surpluses Continue 

During the 2001 election period, there was great contention as to whether there were surpluses, or not.   On the original site's Facts page (still up! - see link at the top of this page), under Topic # 1, we wrote: 

"We have said that the City does not need the utility tax because it has consistently been running budget surpluses that are now roughly equal to the utility tax revenue - a $2.4 million surplus last year, a $1.5 million surplus the year before that."


In 2007 we were surprised to see the re-emergence of 2001's uneducated "It's not a surplus, it's a rollover" argument.   It was particularly unsettling to see it coming from councilmembers who by now should have some understanding of municipal finances.  The 2007 "rollover" claim went like this:  "It's not a surplus, it's extra money we roll over to the next year's budget where we spend it on street repairs."  Our response hasn't changed - see Topic # 1 on the 2001 Facts page.

In 2008 there was another surplus.  And again in 2009.
  


The 2001 and Later Surpluses


The 2001 and later surpluses in the table below were obtained from the same official annual tabulation we used to determine the pre-2001 surpluses.  Copies of the 2001 and later tabulations are at the bottom of this page.***


Fiscal Year ("FY") Ending:
General Fund Surplus
(Per City's Tabulation)


6-30-01
1,156,164
6-30-02
1,514,928
6-30-03
1,792,407
6-30-04
3,037,269
6-30-05
3,626,374** ***
6-30-06
2,660,629***
6-30-07
1,166,917***
6-30-08
1,478,635***
6-30-09
1,095,034***
6-30-10
****


**During FY 2004-2005 (ended 6-30-05) the City paid $4,200,000 cash to purchase the public storage property immediately south of City Hall.  Even after that major expenditure, the City's Comprehensive Annual Financial Report showed (at page 30) that for all governmental funds (including the General Fund), there was a "net change in fund balances" (surplus) of $968,849.  Had the City not made the $4.2 million land purchase, that surplus would have been approximately $5.2 million.

***The surpluses for 2005 - 2009 have been adjusted to reverse the City's "Designated Sales Tax In-Lieu Cash Flow Adjustment."

****Source document to be available December 2010.


The Bank Balances Have Continued to Rise

On the original site's Facts page, under Topic # 1, we wrote:  "If, year after year, you spend less than you take in (run a surplus), the balance in your bank accounts or investments goes up. The City's bank accounts and investments have grown 50%, rising from $14 million up to $21 million, in just the last two years."

That was in 2001. At the end of Fiscal Year 2006-2007 the bank balance was $23.9 Million.    And it would have been approximately $28 million had the City not made the $4.2 million land purchase in Spring of 2005.  The bank balances for 1993 onward are depicted below, in an update of the graph found at the link noted in Topic # 1 on the Facts page.

The source documents are discussed at the bottom of this page.






*********


Source Documents

Source Documents for the Surpluses: 

"Formula to Determine Transfer of General Fund Unexpended Balance"
Obtained from:  City Finance Department

Note regarding terminology:  Until 1996 the City called a surplus a "surplus."  (See that year's
tabulation.)  Beginning with 1997 a surplus has been called an "Unexpended Balance."

Surplus FY Ending 6-30-01:




Surplus FY Ending 6-30-02:




Surplus FY Ending 6-30-03:




Surplus FY Ending 6-30-04:




Surplus FY Ending 6-30-05:




Surplus FY Ending 6-30-06:


199 = Contingency Fund
301 = Capital Improvement Fund
705 = Insurance Fund
715 =  Equipment Replacement Fund
An on-line source of this information is the City's Comprehensive Annual Financial Report ("CAFR") - see the middle of page 10 of the CAFR (the 24th image in the pdf file).


Surplus FY Ending 6-30-07:



An on-line source of this information is the City's Comprehensive Annual Financial Report ("CAFR") - see the top of page 10 of the CAFR (the 24th image in the pdf file).



Surplus FY Ending 6-30-08:





Surplus FY Ending 6-30-09:




Surplus FY Ending 6-30-10:
Document to be available December 2010.



Source Documents for the Bank Balances:

The source documents (monthly Treasurer's Reports) for the 1993 - 2001 Fiscal Year-ending bank balances are available on this site, at the link noted in Topic # 1 on the Facts page.  Beginning with October 2002, the monthly Treasurer's Report are available online on the City's website, as a click-able link in the agenda for the second council meeting of each month.

Special note, Oct. 2007:  Purely by coincidence, the 2007 City-sponsored measure to increase the UUT was given the same ballot letter designation "H" as the 2001 Citizen-sponsored measure to repeal the UUT!

All documents reproduced here were obtained lawfully..
 
Stop the Expansion of the Utility Tax - on Nov. 6, 2007 Vote "No" on Measure H

This is info about the November 2007 City-sponsored Utility Tax increase, Measure "H."
  It was last edited on November 2, 2007. 

Measure H is a tax increase, cleverly disguised as a decrease.  In your Sample Ballot booklet, the official ballot title for Measure H has the word "reduces" in the middle of the top line.


Official ballot title, as adopted by Council.


Neither the presence of the word, nor its prominent position, is accidental.  The City Council realized that if they designed Measure H to include a small adjustment* - changing the rate on phone services from 6% down to 5-1/2% - they could legitimately use the word "reduces" in the ballot title despite the fact that the Measure expands the grasp of the Tax.  They also took action to make sure the word would be in a prominent position - before the Council re-arranged it, the (staff-recommended) ballot title had looked like this:


Staff-recommended ballot title, from staff report for July 24, 2007 Council meeting, not adopted.

Don't be fooled by the "r" word!  Measure H is actually an expansion of the Utility Tax.  When you read just a little further along in the ballot title, you find the Measure's true nature:  "Shall an ordinance be adopted that... 2) protects the tax… 3) includes new communication technologies."  In other words, the tax is to be maintained, and expanded to apply to new types of services.  The Impartial Analysis says the same thing:  "The proposed ordinance would... apply the... tax to all types of communication and video services..."

Seniors:  You're exempt from this tax, but vote "no" anyway; send City Hall the message that you don't like it when they try to trick the voters.

Aside from sending City Hall a needed message, the dollars-and-cents justification for a "no" vote is that the City has had big budget surpluses for the last 11 years - $2.6 million was the most recent one - and doesn't need more taxes. (The surpluses are documented below.)  Repeated surpluses are what built up the huge cash deposits (see graph below) which allowed the City to pay $4 million cash for the property south of City Hall.  The surpluses are likely to continue - the Mermaid property is up for sale and is likely to be turned into hotel space with a substantial 10% bed tax stream, all of which goes to City Hall.  Also, the property tax on that land will go up manyfold, and the City gets 1/5 of that.

The "yes" on H movement is like your kid asking for an increase in his allowance when you can't help but notice that he has piles of coins and paper money all around his room, gathering dust.

If in the future the City actually needs a new or increased tax, the Council could easily put a tax measure on the ballot at that time, and it would require only a simple majority (50%) to pass.  In the meantime, the saying "Money burns a hole in your pocket" applies to governments too.  When government has excess money it squanders it to benefit fat cats and special interests.  At the federal level think pork barrel projects and crop subsidies.  At the city level we don't need to look any further than the residential taxpayer-subsidized security for the downtown club scene.  Hermosa's Utility Tax has almost entirely been switched from the originally promised sewer repair, to paying for the ever-increasing cost of policing Hermosa's bars.   Policing the downtown club scene should NOT be paid for by a tax on residents.  It should be paid for by a tax or business license fee applied to the clubs - something that almost was on the Nov. 6 ballot, except that the council shied away at the last moment.

Vote no on Measure “H” November 6.

*The change to 5-1/2% does not apply to electricity, water or gas bills. They remain taxed at 6 percent.  The 5-1/2% rate would apply to local land-wired telephone and cable TV, and if you approve Measure H it will additionally tax a whole host of “new communication technologies” not presently taxed.  To be taxed at 5-1/2 percent will be telephone, cable TV, Internet telephones, FIOS cable services, satellite TV, wireless telephones and systems, and additionally, future new wireless telecommunications and methods. The dollar amount you pay will increase every year as all these communication services increase.


Desperate Disinformation from Yes on H

I.

In late October 2007 "Yes on H" began claiming:  "If this tax goes away we can never get it back, even if we need it."  Also, they have been saying that a 2/3 vote would be needed in order to reinstate the tax. 

Both claims are flatly untrue.  California law is very clear:  Just as it will take only a 50% "yes" vote to pass Measure H, it takes only a 50% vote to impose a brand new tax.   It is surprising that the councilmembers behind "Yes on H" are unfamiliar with the law - especially since the same disinformation tactic was used, and debunked, during the 2001 election.  (Read  "Topic # 11" on the 2001 Facts page of this site.)

II.

A November 1 Beach Reporter article said:

Although [Mayor] Keegan argues the tax will not bring in additional income, he said if voters do not vote in favor the council's decision, then the city would have to trim its funding for Capital Improvement Projects, which includes street improvements, and the city would also have to cut staffing for the Police and Fire departments.

Again, both of these "Yes on H" claims are flatly untrue. For years the City has been having large budget surpluses.  In other words,  money is coming in faster than the City can spend it!  If we vote "no" on H and thereby let a small portion of the tax go away, the City will simply have a slightly smaller surplus.  There will be no need to cut services of any kind, and the money not sent to City Hall (where they are just hoarding it in a bank account - see bar chart below) will circulate in the private economy, benefiting local businesses.


Not All Candidates Support Measure H

"Yes on H" has been trumpeting that all council candidates support Measure H, but it is no longer true.  Candidate Jeff Duclos has moved from "undecided" to a "no" on Measure H.


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Official Web Host of the [2001] Committee to Repeal the 6% Hermosa Beach Utility Users Tax