Financial Facts FAQ's
below have been compiled from residents that spoke at Town Hall Meetings, participated in the
Community Survey conducted online and at City Council Meetings. Check back, as this section
will continue to be updated.
What is the financial problem for the City?
Since 2011, the City
has experienced a 24% revenue decrease (over $2.9 million). What has caused
this loss in revenue? Several factors,
which include a $1.6 Million loss in Sales Tax due to a loss of a major
business, a$200,000 loss in Sales Tax as a result of a business model change of
a local company, a $400,000 loss in Sales Tax from declining oil prices, a $158,000
loss of Property Tax due to a key property owner moving to non-profit status,
and $500,000 loss to the General Fund due to the State dissolution of
In addition the City
has had rising costs, which includes increasing retirement costs largely
associated with prior unfunded liability obligations, and increasing insurance
costs due to loss history and escalating cost trends.
The projected ten
year gap shows consistent unbalanced budgets throughout the period, beginning
with the 2016-17 projected deficit of $771,800 and increasing to a projected
deficit of approximately $1.5 million by Fiscal Year 2025-26. If nothing is
done to address the structural deficit, the City will have come close to
exhausting its General Fund reserves by Fiscal Year 2025-26.
What has the City done to manage spending and address revenue loss?
In response to decreasing revenues, the City has taken several steps over the
past several budget cycles to address its financial situation. Through
the revisions in the General Plan, revenue opportunities were created,
including digital billboards along the freeway corridor. In addition to
creating new revenue opportunities, the City has made several reductions
including a 20% reduction in full time staff, restructuring throughout the
organization, significant changes in both the 2011 and 2015 labor agreements,
and cuts to programs and expenditures.
How was Measure JJ placed on the November 8, 2016 ballot?
On July 5, 2016, the La Palma City Council voted 5-0 to place a measure
on the November 8 ballot asking voters to approve the establishment of a one
percent (1%) transaction and use tax (local sales tax).
How much money would the ballot measure raise and who pays it?
The one percent (1%)
transaction and use tax (local sales tax) is estimated to bring in an
additional $1.5 million annually to the City.
The 1% local sales tax is imposed on the same goods and merchandise that sales tax is currently paid on and will be passed on to anyone who makes a purchase within the City of La Palma, including nonresidents. In addition, where sales tax is generally allocated to the jurisdiction where the sale is negotiated or the order is taken, the 1% local sales tax is allocated to the agency where the goods are delivered or placed into use. So in addition to point of sale purchases made in La Palma, the 1% local sales tax would be applicable to items purchased outside of La Palma and delivered and/or used in La Palma such as online and vehicle purchases. The additional tax on a $1 item would be 1 cent.
What exclusions or exemptions apply to the 1% local sales tax?
it comes to exclusions or exemptions, the 1% local sales tax is the same as the
existing sales tax that is paid now. These exclusions continue to include
categories such as Necessities of Life (food, medical, housing) and General
Public Benefit entities (alternative energy, museums, public art, nonprofit, religious,
and educations organizations).
Could the State cut or take the additional revenue generated by the 1% local sales tax?
No. All funds raised by the 1% local sales tax would
be legally required to be spent in La Palma, ensuring that our tax dollars are
used locally, with no money going to Sacramento.
How would the additional revenue be spent if the measure passes?
The 1% local sales tax
is a general tax to fund municipal services. The money will be put into the General Fund
and used towards general services the City offers which could include Police, Recreation,
and Public Works. The City Manager will
issue recommendations where the money should be used, however, the City Council
has the ultimate decision making authority.
Is there an end to the 1% local sales tax increase?
No, there is no sunset date on the 1% local sales tax. The City Council does have authority to
reduce the utility user tax during its consideration of the City’s General Fund
Budget should the projected fiscal condition of the City not be adversely
impacted by a reduction.
What will happen if the measure does not pass?
Without additional revenue, the City will need to reexamine current
services and make additional cuts to reduce costs. Potential actions by City Council could
include contracting out Police Services at
reduced service levels (which will close La Palma Police facility, have fewer Officers on patrol which could increase response times, the loss of Community Based Policing and the elimination of the Volunteers in
Policing program). In addition, there could be reduced maintenance/upkeep of City
parks and streets, cuts to graffiti removal, further reductions to Recreation
Services up to cancellation of citywide events such as the 4th of July Run,
Concerts in the Park, and Halloween
I have questions about information I received from a campaign. Who can I talk to about that?
City staff are
unable to answer questions about any campaign. They can only provide neutral
information and facts about the measure, such as this fact sheet. For questions
regarding the campaign, please contact the individual campaigns for or against