At Monrovia’s State of the City Address held last week, Mayor Adams announced that the city would be considering a local sales tax measure in Monrovia this year. Now with any proposed tax increase, there’s always the question of why. Because certainly, the overall tax burden in California is high, and government should not unnecessarily impose new taxes without sufficient justification. So to that end, the question of why Monrovia would be considering a sales tax increase is certainly fair and deserves a thorough explanation.
The city is contemplating the possibility of placing a sales tax measure on the ballot in 2019 for voter consideration because of current taxation trends in LA County.
Monrovia is in fact pushing up close to the local sales tax limit. Because with LA County’s current base sales tax rate at 9.5 percent, the vagaries of state law means there is only 0.75 percent of available sales tax capacity remaining.
Since 2004, LA County has been able to eventually pass every single tax measure that they’ve put forth to county voters even when LA County has needed 2/3 voter approval, they get it.
When LA County passes a sales tax measure, the funding doesn’t come to Monrovia. According to the city manager’s weekly update, the city ends up paying way more than the amount given back. On average, Monrovia gets only 10 cents back of every sales tax dollar contributed to the county, and there are several instances when the city receives even less than that.
For example 2017’s Measure H quarter-cent sales tax to fund services and help prevent homelessness. The tax will raise about $355 million per year across the county, and Monrovia contributes around $2.6 million per year towards the measure. Despite contributing millions, Monrovia has only received $30,000 from the county – or about 1 percent of what’s been paid into the overall program. Cities that have received tens of millions of dollars from Measure H for homeless services – cities like Santa Monica and Long Beach – have not paid a single penny into the Measure H fund.
Now the reason that cities like Santa Monica and Long Beach don’t pay the Measure H sales tax is because those communities approved measures to keep their funds local and away from LA County. There’s a cap to how much sales tax rates can be raised in any city, and once you reach that cap, LA County can’t impose any additional sales tax increases, even if the increase is approved across the county.
Those cities that have reached the 10.25 percent cap do not pay for additional LA County taxes, but are still able to receive the funds collected. Like in the Measure H homeless tax example noted above, cities like Santa Monica and Long Beach, who had previously reached 10.25 percent, have access to the new taxes generated, despite not paying a single cent into the fund.
Now given all that information, here’s what the city is concerned about, and here’s why they’re seriously considering a sales tax measure in 2019.
LA County is looking to go back out to the voters to ask for additional sales tax increases in 2020 and 2022. People know that LA County is laying the groundwork for an AQMD sales tax measure, and heard that the county is looking at an additional sales tax increase for more money for homeless support services. Based on the county’s track record, it is more than likely that they’ll get both sales tax measures approved.
If history is any guide, what that means is Monrovia will end up paying a lot, and will only get back around 10 percent of the amount contributed, claims the city manager’s update.
Based on LA County’s track record, it’s only a matter of time before they eat up the last 0.75 percent of local sales tax capacity remaining. And because that is the case, the question to be answered as a community is not whether or not Monrovians want to pay more in sales tax.
Instead, the real question needed to be addressed is whether the city wants to send money to the county for their use, or if the city wants to keep those funds here in Monrovia under local control.
Here at the city, Monrovians are incredibly sensitive to the fact that no one wants to pay more taxes, with the tax burden already being so high here in California. It is also known that LA County is planning these tax increase proposals soon, and the opportunity to keep city money local will not remain an option for too much longer.
Given this set of facts, the city will be exploring the option of putting a sales tax measure on the ballot for residents to consider in 2019. And during the next few months, officials will be working to engage the community to coordinate multiple outreach initiatives to learn more about this topic and see if a local sales tax measure could be a viable solution for Monrovia.
Monrovia State of the City address is online. Oliver Chi announced that a video of the City Council’s “State of the City” presentations is now available on the city’s website. The easiest way to access it is to go to the website at cityofmonrovia.org and select government. Click on ‘City Manager’s Update’ and then scroll down to Chi’s mention of the address and click on the link.