HomeMy Public PortalAbout17-118 - Endorsing Ballot Measure for a Gross Receipts Tax on Businesses Where Petroleum is Blended, Mixed or Refined or StoredRESOLUTION NO. 17-118
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA,
ENDORSING THE BALLOT MEASURE FOR A GROSS RECEIPTS TAY ON
BUSINESSES WHERE PETROLEUM IS BLENDED, MIXED OR REFINED AND/OR ANY
FACILITY THAT STORES PETROEUM PRODUCTS, WHICH IS SCHEDULED FOR
CONSIDERATION BY THE CITY OF CARSON ELECTORATE ON THE
NOVEMBER 7, 2017 SPECIAL ELECTION BALLOT
WHEREAS, the City Council decided on August 7, 2417 to schedule an election for the
voters to consider a business Iicense tax on gross receipts for oil refineries, businesses that mix or
blend petroleum or petroleum products or businesses that store petroleum products. The revenue
measure would not tax Carson residents; and
WHEREAS, the annual total tax revenues that Carson receives from its oil refineries and
petroleum industries is less than half of what other cities with similar size refineries receive annually.
Torrance and El Segundo each have only one refinery. These cities receive approximately $11
million each annually respectively from their one refinery. Carson receives approximately $5 million
annually from its two refineries; and
WHEREAS. a major portion of Carson's land area is devoted to the petroleum industry and is
estimated at 12% of the entire land area of the City. The measure applies to refineries and large
petroleum industries in Carson only. The measure is written so that the tax does not apply to retail
gasoline stations. The City Council also considered the fact that Carson incorporated in 1968 as a
low property tax City, receiving 5.717c of the property taxes, while other communities like Long
Beach and Los Angeles receive a greater percentage of property taxes; and
WHEREAS, Carson has the lowest utility users tax rate in Los Angeles County, at 2% and it
only applies to electricity and gas. Whereas other cities have UUT on other services such as
telephone, water, and cable utilities.
WHEREAS, Fifteen local cities have adopted additional sales taxes, including Compton and
Long Beach, while Carson has not adopted additional sales taxes; and
WHEREAS. the City is experiencing an existing and immediate funding crisis, which is the
result of factors largely outside the control of the City, primarily resulting from the uneven and slow
recovery from the Great Recession, unpredictable decreases in revenues, the loss of revenues from
the State's dissolution of redevelopment, the continued State takeaways of local revenues, and
unforeseen increases in the City's operational costs; and
WHEREAS, Carson also experienced the loss of major automobile dealerships due to the
Great Recession, including Don Kott Ford, Don Kott Mercury, Don Kott Chrysler and Isuzu, with the
corresponding loss in sales tax revenues. Also, local retailers continue to face great uncertainty and
losses in sales due to the impact of Internet Sales and the imposition of a Congressional ban on
internet sale taxes. Major retailers that have closed include: K -Mart, with Sears down -sizing their
retail operations in Carson; and
WHEREAS, The City is facing budget challenges due to other factors. Over the last decade
the City has been unable to balance its budget, as required by State law, in eight of the last eleven
RESOLUTION NO. 17-118
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years and has had to draw down its reserves. As a result, some service levels are at historic lows.
Full-time City employees have dropped from a high of 399 prior to the Great Recession to 297 full-
time employees, a reduction to its full-time staffing levels by 26% in the last nine years, eliminating
103 full-time positions; and
WHEREAS, The City Council has also imposed a hiring freeze on 38 full-time positions;
which has adversely impacted all City departments, with most noticeable impacts on public safety,
community services and public works staffing levels. The City has responsibly and proactively
managed its finances and limited taxpayer dollars to mitigate the budget, by reducing expenses by
$4.2 million in FY2016-20I7 and by $3.1 million in FY 2015-2016; and
WHEREAS, increases in costs for public safety, including the contract with the Los Angeles
County Sheriffs Department, have left the City with less revenue for other critical City services.
The costs of the Sheriff contract have increased by an average of more than 3% annually during the
last decade, increasing by an average of more than $500,000 annually to maintain existing service
levels. The budget reductions have also resulted in the City deferring sidewalk, pavement and street
repairs, resulting in a multimillion dollar backlog in street resurfacing needs alone; and
WHEREAS, the City has attempted to maintain the same levels of service of public safety
and emergency preparedness in Carson, through the Los Angeles County Sheriff, the Los Angeles
County Fire Department and City staff. The City has had to eliminate four code enforcement
positions from the budget and a full-time analyst position in the emergency preparedness division.
This has resulted in reducing code enforcement activities, delaying response times to complaints
about health and safety issues (such as hording), blighted properties and abandoned vehicles; and
WHEREAS, the State ordered the dissolution of all redevelopment agencies in California in
2011. The Carson Redevelopment Agency was one of the largest and most active agencies in the
State, resulting in the investment of more than $28 million annually into the City of Carson. Much of
this funding was devoted to capital improvement projects, with $1.1 million devoted to providing
staffing for the former agency. The Carson Street Improvement Project is the last of major
redevelopment projects and will be completed at the end of 2017. This project will exhaust the
remaining redevelopment bona funds and Carson will then be hard pressed to allocate funds to
capital improvement projects; and
WHEREAS, the City's 5 Year Capital Improvement Program has identified over $155
million in community improvements, including repairs to neighborhood streets, sidewalks and parks,
which are in dire need of repairs, with the majority of those project unfunded; and
WHEREAS, a recent survey of the condition of Carson's streets has revealed that $8 million
in annual investments will be need in the next decade to maintain streets in their current overall
condition. The pavement management engineers recommend that Carson invest $9 million to begin
to improve the overall street condition. The survey of lifted, cracked and damaged sidewalks
revealed over $11 million in critical repairs that are unfunded. In fact, the City's budget includes only
$1.8 million for annual pavement repair. The City has identified over $156 million in capital
improvement and repair projects citywide to address public safety and resident concerns. Without
significant new investment, the City's residents should anticipate further deterioration of the City's
streets, sidewalks, parks and civic buildings; and
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WHEREAS, the City has also eliminated a large number of cultural programs and City
events, decreasing support for senior citizen programs and afterschool programs for children,
reducing the quality of life, safety and welfare for this vulnerable population; and
WHEREAS. after decades of environmental and human health issues created from the oil
industry, Carson requires programs to improve contaminated soils and water runoff and air quality;
and
WHEREAS, the measure's revenues would be allocated to the City's General Fund, for a
wide range of municipal expenses and the funds could only be used in the Carson and would be
subject to strict accountability requirements. These expenses include funding for public safety, 911
emergency response, senior, youth and gang diversion programs; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA,
DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. That the City Council has carefully considered the proposed business license tax
on oil refineries and oil related industries, including conducting a survey of California cities with
refineries and the total annual revenues that these cities receive from their single refineries,
determining that Carson receives less than $5 million in total annual revenues from the two refineries
located in Carson, while the cities of EI Segundo and Torrance receive approximately $11 million in
total annual revenues respectively from their single refinery.
Section 2. That the City Council has reduced expenditures by $4.2 million FY2016-2017,
$3.1 million in FY2015-2016, resulting in the redaction of nine code enforcement officers to five,
with corresponding impacts on health and safety issues, such as remediation of blighted structures
and abandoned vehicles and costs for the Los Angeles County Sheriff's Department has grown by $8
million annually over the Iast decade.
Section 3. That the City has experienced the loss of $28 million annually from the
dissolution of redevelopment by the State of California and lost four automobile dealerships due to
the Great Recession. Retail sales taxes revenues continue to be eroded by the Congressional
moratorium of the collection of sales tax revenues. This year one of the City's largest retailers, K -
Mart closed and Sear is downsizing its retail operations in Carson.
Section 4. That the City Council has worked to reduce the City's structural budget deficits,
resulting in the inability of the City to maintain service levels, resulting in programing and staffing
reductions that have adversely impacted public safety, park patrol, graffiti removal, parks and
community service programs.
Section 5. That the City has identified over $I56 million in needed improvements to streets,
sidewalks, bridges and civic buildings, that are unfunded. The City Council recently completed an
engineering analysis of the condition of the City's streets and sidewalks. The pavement management
engineers recommend that Carson invest $9 million annually to begin to improve the overall street
condition in the City. The survey of Iifted, cracked and damaged sidewalks revealed over $11 million
in critical repairs that are unfunded. The City's budget includes only $1.8 million for annual
pavement repair and without significant investment the City's infrastructure will continue to
deteriorate.
RESOLUTION NO. 17-118
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Section G. That the City Council endorses the proposed Business License Tax for Oil
Industries, which is scheduled for consideration by the City of Carson electorate at the November 5,
2017 Special Municipal EIection.
Section 7. That the City is limited by State law to providing information on Measure C and
no expenditures of public funds can or will be used to promote Measure C.
PASSED, APPROVED, and ADOPTED this 5`h day of September, 2017.
STATE OF CLIFORNIA )
COUNTY OF LOS ANGELES
CITY OF CARSON )
AT ST: -�
City Clerk Donesia L. Cause, MMC
I, Donesia L. Gause, City Clerk of the City of Carson; California, hereby attest to and certify
that the foregoing resolution, being Resolution No. 17-118, adopted by the Carson City
Council at its meeting held on the 5`f' day of September, 2017, by the following vote:
AYES: COUNCIL MEMBERS: ROBLES , DAVIS-HOLMES , SANTARTNA, HICKS, HILTON
NOES: COUNCIL MEMBERS: NONE
ABSTAIN: COUNCIL MEMEBES: NONE
ABSENT: COUNCIL MEMBERS: NONE
RESOLUTION NO. 17-118
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—I)n( L=
City Clerk onesia L . Gause, MMC