September 19, 2018
Dear Resident,
One of the most significant challenges for any public agency, including Seal Beach, is the rising cost of keeping residents safe. Our fire, police, and marine safety personnel have an ever increasing demand on the quality and frequency of the services they provide. Balancing critical services while maintaining key infrastructure has become a serious budgetary issue that has arisen due to declining revenues and escalating costs. This financial dilemma poses great risk to the quality of life that residents and visitors have come to expect and enjoy.
The City continues to suffer from the fiscal instability caused by sources of revenue that are either declining, or not growing enough to fund the necessary level of essential City services. The State of California has taken local revenue from the City of Seal Beach and other cities on a regular basis over the last 20 years to solve the State’s fiscal problems, without any concern of the impact on local government services that our residents, businesses, and visitors need.
During the budget adoption process for FY 2017 – 2018, outside regulatory agencies and the State legislature created significant challenges associated with bringing a balanced budget to the City Council. Specifically, there was great concern about the increasing costs related to critical public safety services, retiree health, insurance, homelessness, the costs of improving infrastructure, pension liability, and complying with clean water mandates, as well as changes to the prevailing wage requirements for certain types of public works contracts. Consequently, the City Council adopted a budget for FY 2018-2019 with an operating deficit.
To make Seal Beach more financially secure for the future, the City Council unanimously approved placing a sales tax measure – Measure BB - on the November ballot. Measure BB is a prudent and sober recognition of the City’s current financial condition and the prospect that this condition can worsen without additional, stable sources of local revenue. Recently, City staff presented a Five Year Financial Model to the City Council and the public. The financial model revealed that without a viable and dependable revenue solution that Sacramento cannot take away, the City’s structural deficit will continue to increase as expenses rise at a pace greater than the revenue base can support.
Let’s look at where our sales tax goes. The current sales tax rate for Seal Beach is 7.75%. If you were to spend $100 then $7.75 would be distributed as follows:
If approved by the voters, Measure BB will increase the sales tax rate from 7.75% to 8.75% and is estimated to generate approximately $5 million in new transaction and use tax (sales tax) annually. For each $100 spent on taxable items in the city, the City would generate an additional $1.00 that would stay in Seal Beach. In other words, the City would maintain local control and the State would not be able by law to take these funds.
The population of Seal Beach is approximately 25,000. There are over 700 registered businesses in the City and these businesses serve a visiting population of approximately 2,000,000 each year. The visitors to the City would pay their fair share of the new tax, helping to offset the cost of the services they use.
Should Measure BB pass, it would be administered by the California Department of Tax and Fee Administration, formerly known as the Board of Equalization, in the same manner as the City’s existing sales tax. The new revenue would be separately identified when remitted to the City and would be placed in a separate revenue account, which will be independently audited.
The City is at a financial crossroads. In November, the voters of Seal Beach will determine the financial path of the City and in doing so will shape our town for generations to come. We ask that you take the time to consider what future you want for Seal Beach, weigh the potential outcomes, and on November 6th please vote and let your voice be heard.
As always, we welcome and need input from the community. If you have any questions or concerns regarding Measure BB or any other matter, please feel free to contact me at (562) 431-2527 or via email at jingram@sealbeachca.gov. The City’s website is also a great resource for information - www.sealbeachca.gov. Thank you for taking the time to read this important message and for your support in continuing to make Seal Beach such a great community.