Second in an ongoing series.
Finance Director Barbara Arenado said the city isn’t broke during the council’s nearly five-hour long Strategic Planning meeting.
However, officials are looking at financial challenges and they are going to look at tax measures. (In related financial news, the City Council received and filed the audit of the financial year ending on June 30, 2023. The Sun will report on the audit in the Feb. 22 issue.)
‘Measure BB helped’
Community Development Director Alexa Smittle said that Measure BB helped “immensely.” She was referring to the 1% sales tax increase approved by Seal Beach voters in 2016.
The 2023-2024 adopted budget anticipated more than $6.2 million in Measure BB revenue. The actual 2021-22 revenue was more than $6.3 million. (The Sun rounded the figures.)
“And it would be awesome if we could talk only about our goals and our values and money is no object, but we all know that’s not the case,” Smittle said.
“But we also don’t control the economy and we don’t control the weather and we don’t set the cost of gas and all of these things that kind of get balled up in this giant picture that is public service,” Smittle said.
“Costs go up. Barb’s going to talk in just a minute about our budget practices and you all have been through that a few times,” Smittle said, referring to Finance Director Barbara Arenado.
Smittle said that unless there are sweeping changes, probably at the state level, there would always be a struggle.
“We are always going to fight for our budget every year and we are always going to have to make really challenging decisions about what we can provide and what we can’t provide and where we need to invest,” Smittle said.
“Like I said, BB was really, really important and it helped to keep us solvent, but it’s not a one and done,” Smittle said.
Arenado said Measure BB did solve the issues of six years ago. “It did add the police officers that were in need of the city,” Arenado said.
“It did cover the fire expenditures. It did handle the increased contract obligations from prevailing wage mandates, rising inflation, and then rising costs,” she said.
“It did cover the over 30% in rising insurance costs,” Arenado said.
She said Measure BB did cover repairs and maintenance.
However, Arenado said those issues “continue to continue on.”
“The city’s not broke,” Arenado said.
She said that, despite all the bad news, “revenues are increasing. We have healthy revenues. We have very, very healthy property tax.”
She said that even with high interest rates, the median price for a single-family home is still $1.5 million.
“We continue to also attract good businesses,” Arenado said.
She said the city knew Bed, Bath and Beyond was shutting down. That was replaced by Crate & Barrel.
“We had talked to our sales tax consultants and we think that revenue is going to be quite the same,” Arenado said.
She said that each year, the staff presents a balanced budget. She also said it’s a council policy to adopt a balanced budget.
Wages
Finance Director Arenado said the city’s biggest asset is the employees. According to Arenado, the city is falling behind in paying them.
Arenado said the city has to pay a minimum wage that has not been adopted by the council.
She said that right now, Seal Beach’s posted wages are less than what the state mandates. She said staff would bring that to council, but that would cause issues with the city’s full-time employees.
Taxes
Later in the meeting, council and staff discussed money before selecting their priorities. (“See Seal Beach City Council prioritizes projects at annual planning meeting,” at sunnews.org.) The discussion touched briefly on the money that the city has set aside; money for the end of the pier and for the swimming pool project.
Before the council members identified their priorities, District Five Councilman Nathan Steele brought up sales taxes.
“I don’t like taxes any more than the rest,” Steele said.
“I get the principle that you tax what you don’t want, so if you increase sales tax you were saying basically we don’t want your business,” Steele said.
“But from the fact that we are tucked into the megalopolis of Southern California and we’re right next to Long Beach and Huntington Beach and they’re already at the max; I don’t think people come to Seal Beach to save a half a percent on their sales,” Steele said.
“That’s not the end-all economic incentive, but I also didn’t know that the county could take that away from us,” Steele said.
(That same issue came up during Avalon City Council discussions prior to that city’s March 2022 municipal election.)
Steele said Seal Beach wasn’t getting more business because Seal Beach charges half a percent less sales tax.
He said his initial feeling was, no we just raised our sales tax.
“But if Orange County can step in front of us or the state of California or some other tax entity could step in front of us, I’ve got a big issue with that,” Steele said.
There was a brief discussion of taking a public opinion poll.
Steele said he wasn’t a pollster, which triggered some laughter. (Steele has taken multiple opinion polls since he joined the City Council.)
“Has this been done in other cities, where the county takes the remaining percent?” asked District Two Council Member Tom Moore.
City Attorney Nicholas Ghirelli said he thought it had happened in Los Angeles County. He didn’t know about Orange County.
District Four Council Member/Mayor Schelly Sustarsic wanted to know the timeline for putting something like that on the November ballot.
Ghirelli said the council would have to adopt a resolution and tell the county that Seal Beach was consolidating this measure with the November 2024 ballot. He said that usually has to be done in July. He said the drop-dead deadline is August.
According to city staff, the city would need to hire someone to begin the assessment.
“I like the idea but we’re also srarting at a $15 million hole and this is three out of that $15 million or something that would help the city,” Steele said.
