About Measure CR – Sales & Use Tax Measure
Why does Claremont need to increase revenue?
The City of Claremont is facing increases in operating costs including contracted services, liability insurance, and personnel. Over the last two years, the city has implemented cost-saving measures, including reducing its workforce and cutting expenditures. Even with these steps and an improving economy, beginning in fiscal year 2019-2020, Claremont’s General Fund will face a budget deficit that is expected to expand to more than $2.8 million in 2023-2024.
Balancing the budget with a revenue deficit: deferred maintenance and unfilled staff positions
Over the past two years, the City has taken a number of actions to reduce the cost of its operations without sacrificing the quality of service to the community. To balance the 2018-19 General Fund budget, the City cut $3.4 million. These reductions included the elimination of several staff positions and the deferral of maintenance projects. In preparing the 2019-20 General Fund budget, $1.3 million in reductions was necessary to balance the budget.
California State Sales & Use Tax maximum is 10.25%. Other taxing agencies are interested.
The State of California’s Sales and Use Tax maximum is 10.25%. Currently the Sales & Use Tax in Claremont is 9.50%. Claremont receives 1% of this captured tax, the state gets 6.25%, the other 2.25% goes to Los Angeles County initiatives (see chart) The voters of Claremont have the power to choose to raise our Sales & Use Tax .75% to reach the state’s maximum. If the Yes for Claremont Sales & Use Tax initiative passes, the city will be able to capture that additional .75% for the General fund, thus addressing a major portion of the current budget deficit. There is strong likelihood that other Los Angeles County taxing agencies, LA County propositions or measures will seek to claim revenue from the available .75%. If the county claims this additional revenue it will not go into our General Fund. It will go toward funding large LA County project or programs. The YES for CLAREMONT Sales & Use Tax Initiative will increase the portion that the City of Claremont receives from Sales & Use Tax up to 1.75%. The revenues claimed from this tax will go into the General Fund and will be used toward a variety of the City’s operational expenses, including deferred maintenance projects.
The current breakdown of Claremont's Sales & Use Tax:
Claremont gets 1% out of the current 9.5% Sales & Use Tax. The remainder goes to the State, County, and regional agencies. Every bit of the 3/4 of a cent proposed increase to the Sales & Use Tax will go directly to our city. This will raise the revenue captured through the Sales & Use Tax up to 1.75%, all of which will go into the General Fund which provides our essential services.
- State General Fund: 6.25%
- City of Claremont: 1.00%
- Proposition A (Transportation): 0.50%
- Proposition C (Transportation): 0.50%
- Measure R (Transportation): 0.50%
- Measure M (Transportation): 0.50%
- Measure H (Homelessness): 0.25%
- Total: 9.50%
Many other local communities have increased their Sales & Use Tax up to the state maximum.
Many other cities in Los Angeles County have raised their Sales & Use Tax in recent years. Since 2016, nineteen cities in Los Angeles County have received voter approval to increase their Sales & Use Tax. Thirteen cities passed increases since November 2018, including the City of Burbank, City of Glendale, City of Pomona, City of Pasadena, City of Glendora, and City of Arcadia. Our neighboring cities are also working hard to cope with similar increased costs as the City of Claremont.
Roadwork, park projects, and public art are paid for through specially designated funds.
Cities receive revenue from property taxes, sales tax, permit and citation fees, grants, and state and federal funds. Revenues from property tax and sales tax go into the General Fund which is used to cover the expenses of the majority of Claremont’s operational costs. Revenues from grants and many state and federal funds are what is known as restricted funds. Road repairs, park improvements, public art, and sanitation are some examples of projects that are funded with designated restricted funds. The Foothill Boulevard Improvement Project is a good example of a big project that is funded through restricted funds. The City of Claremont received grants specifically designated for aspects of the project like bike lanes and bioswales. The upcoming improvement to the playground at Blaisdell Park is a good example of a project being funded through designated Park Improvement Funds that come from restricted funds from the state that can only be used for parks. The proposed .75% Sales & Use Tax increase will go to the General Fund and will help close the budget gap that our city is facing.
Some items are exempt from sales tax.
Groceries, prescriptions, medical devices, services, utilities and fuel are exempt from the Sales & Use Tax. The Sales & Use Tax rate on a car is determined by the vehicle’s registration zip code not the sales tax rate of the purchase location.
Related issues: costs of pensions (CalPERS), eminent domain case, and the news police station.
The unfunded liabilities of the City’s CalPERS pension plans are $49,561,373. As of 2018 CalPERS is underfunded by over a hundred billion dollars. In 2016 the board of CalPERS voted to lower their expected annual return rate from 7.5% to 7%, thus increasing the costs that California cities must pay toward their retired workers’ pensions. The unfunded liabilities are due to changes in CalPERS, these unfunded liabilities are contractual costs that cities must bear. The City Council has demonstrated a commitment to reducing its unfunded liability by including additional payments of $100,000 in 2019-20 to pay down the outstanding amount. Since 2010, the City Council has authorized over $2.8 million in additional payments to reduce its unfunded liability. These payments have been in addition to the City’s required annual pension contributions. Additionally, in 2012 the City of Claremont created a tiered pension system for new employees and increased the contribution that our City employees pay into the system to the maximum amount. Every California city that is contracted with the California Public Employees Retirement System is facing similar difficulties paying toward workers’ pensions.
In 2014 the voters of Claremont passed Measure W a proposal to pursue an Eminent Domain Case against Golden State Water. The City of Claremont wanted to claim our own water system rather than purchasing retail water from Golden State Water. Unfortunately, and to an expense the city lost this case in court. The City has paid the legal fees that accompanied the court case. As per the settlement agreement the City will continue to pay $234,000 annually for the next ten years.
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Checks may be mailed payable to "Yes! For Claremont" to: 2058 N. Mills Avenue #425, Claremont, CA 91711