California city plans sales tax measure to pay for essential infrastructure and services

The Ontario City Council has approved a sales tax measure Tuesday for the Nov. 8 ballot to fund $1.2 billion in infrastructure projects, and other California local governments are expected to take similar action.

The November midterm elections are expected to be particularly popular this year for tax and bond measures in cities, counties and school districts, as California has an abortion measure on the ballot, which is expected to increase voter turnout, said California tax advisor and consultant Michael Coleman. and creator of CaliforniaCityFinance.com.

If voters approve Proposition 1, California would be one of the first states, if not the first, to create explicit constitutional rights to both abortion and contraception.

The November election could see 60 to 80 similar moves by local governments, which has been typical for gubernatorial elections over the past decade, Coleman said. Gubernatorial and presidential election years are popular for ballot metrics, he said.

The city plans to generate $95 million a year to pay for essential city services such as public safety and cover $1.2 billion in infrastructure and neighborhood improvements. If the majority of city voters approved it, the sales tax would increase from 7.75% to 8.75%.

Voters check their registration forms at the City Hall polling station in San Francisco, California, U.S., Tuesday, June 5, 2018.

Bloomberg News

The additional revenue would support $242 million in improvements to its water and sewer system, a $59 million plan for a large park, and other park and playground improvements, $41 million for a real-time crime center and two ancillary buildings with 25 additional police officers, $118 million to provide low-cost high-speed internet services, and $15 million for housing and mental health services for the homeless .

Nearby towns — including Corona, Redlands, Riverside, San Bernardino and Claremont — have a sales tax rate of 8.75% or higher, said Dan Bell, the city’s director of communications and community relations.

Ontario, a city of 182,000 people 35 miles east of downtown Los Angeles, experienced significant growth as home prices in Los Angeles soared in the mid-2000s and that industrial warehouses have sprung up to service the movement of goods from the twin ports of Los Angeles and Long Beach. Ontario International Airport was recently ranked as the fastest growing airport in the United States and the largest gateway for outbound cargo, according to the city’s comprehensive annual financial report for the fiscal year ended June 30, 2021.

The city is not facing financial difficulties, but is concerned about rising costs, Bell said.

“Ontario is proud to be able to maintain its high level of service through fiscal accountability and operational efficiency,” according to the text of the ballot measure. “Despite a balanced operating budget, Ontario still faces challenges in its ability to fund infrastructure maintenance and upgrades.

The city has been able to maintain its “operationally balanced structure with continued spending restraint, continued budget oversight, and the use of additional fund balance reserves,” wrote Armen Harkalyan, the city’s executive director of financial services. Ontario, in a letter attached to its ACFR.

The city issued $236.6 million in taxable pension bonds on May 12, 2020 for the California State Public Employees Retirement System public safety plans. It received an AA-minus from Fitch Ratings and an AA from S&P Global Ratings on POBs, and holds an issuer default rating of AA from Fitch and AA from S&P. Both attribute stable outlook.

Reimbursing the unfunded actuarial liability of the city’s CalPERS safety plans could save $110 million over the life of the obligations, according to the city’s ACFR for the year ended June 30, 2021. The POBs will help the city stabilize existing CalPERS costs, but based on actual market performance, “actual contributions related to unfunded actuarial liabilities may be higher than expected,” Fitch analysts wrote in the March ratings report. 2020, adding that she expects the city to be able to manage the risk.

In addition to pension expenses, the city also faces rising medical benefits and employee costs, Harkalyan wrote, “and it is crucial that recurring operating expenses are strategically contained and do not exceed recurring revenues.” .

Michelle J. Kelley