Foothills Sentry - October 2024

Page 7 Foothills Sentry OCTOBER 2024 JOHNSON MOTORCARS 34 Years of Specializing in the Service and Repair of Mercedes-Benz Gary Johnson 714-997-2567 982 N. Batavia # B13, Orange, CA 92867 gary@johnsonmotorcars.com @ ramblingroseoc Pay me now and pay me later By Peter Jacklin Governments tax citizens. Governments spend taxes with abandon. Governments need more money. Governments proclaim a crisis! Citizens happily agree to be taxed again. Return to step 1. This is a cycle as old as ancient history. Aesop wrote centuries ago that "A govern- ment which lays too heavy a burden on the taxpayer kills the goose that lays the golden eggs." Now we have arrived at such a place in the City of Orange. Previous city councils have assured us for years that they have been fiscally conserva- tive and have spent their revenues wisely and in the best interests of the city. Apparently, that is not the case, as Coun- cilwoman Arianna Barrios explained in her recent commentary, “Orange Faces a Mo- ment of Truth.” The city, at that time, was alleged to have a $19 million shortfall and, taken to its extreme, could result in a mu- nicipal bankruptcy if things don’t change. In that commentary, Barrios fails to explain in detail about the causes of the monetary misfortune. It’s clearly a CRISIS! Soon, supporters will be knocking on your door explaining how bad things are. If you believe in the aforementioned cycle, be prepared to be asked to open your wallet. Be prepared for a sales pitch on increasing the city’s sales tax by 1/2% for 10 years. One-half percent doesn’t seem like much, I’ve heard several people say, and it won’t go a long way. It’s not asking much! It’s a start, they’ll say. I have to disagree. For starters, the city has an operating bud- get of approximately $500 million, of which approximately $250 million is discretion- ary. The current shortfall, after decisions by a tearful city council to reduce spending, is approximately 3% of that budget, and amounts to about $8 million. The current city sales tax in 7.75%. Six percent of that tax goes to the state. Orange County receives very little of that money; we are a donor county. One-half percent goes to the OCTA. That money is used to keep empty buses running around most of the county. The remaining tax, 1.25%, is returned to the city. Sales tax is applied to almost everything you purchase, save a few exceptions like la- bor and some foods. It’s a very broad tax. And, the revenue it produces fluctuates from year to year. Prices, during the last few years, have risen dramatically, in some cases 40%, and that implies an increase in sales tax revenue for our city. Simple math will tell you that a 1/2% in- crease in the current sales tax (.5/1.25 = .4) almost amounts to a 50% in the amount of money that the city will garnish from its citi- zens and visitors who buy here. Under cur- rent conditions, this comes in the range of $20 million, an almost 10% increase in the discretionary budget. The council managed to reduce the $19 million deficit to a smaller amount by elimi- nating things that it believed have the least value ($425,000 for crossing guards!). If the sales tax increase passes, and the deficit is eliminated, how long before the deficit re- turns again? No one knows. And, if you believe that the tax will disap- pear in 10 years, please refer to my opening paragraph. I have to point out that five of the current sitting members have been on the council before, and two have served several terms. These are the same people who stood by, disinterested in how our taxes were spent, and claimed proudly that the city has been managed in a conservatively fiscal manner. Should you trust these council members the second time around? Here's the answer. In 1787, Thomas Jef- ferson wrote to a friend: “God forbid that we should ever be 20 years without such a rebellion. A lack of re- belliousness among the people would dem- onstrate a lethargy, the forerunner of death to the public liberty… And what country can preserve its liberties if its rulers are not warned from time to time, that this people preserve the spirit of resistance?” Surely, an armed rebellion is not needed. A simple “NO!!” from each and every one of us is sufficient. Please rebel against the idea on an increased sales tax. Bring back financial constraints. Have a long-term fi- nancial plan. Peter Jacklin is a longtime Orange resi- dent, homeowner and taxpayer. Guest Commentaries “Why is the city in such a financial mess?” By Carolyn Cavecche That is the question I am asked over and over again - in Target, Home Depot, at church, everywhere. So, I did a deep dive into the past 15 years of City of Orange budgets and financials, spent time with city staff. The answer is pretty straightforward. First, there has been little to no econom- ic development activity from the city since 2012, when redevelopment ended in the State of California. Second, for years, budgets have been balanced by not filling positions and not fully funding internal reserve accounts, and it all finally hit the fan. At the beginning of 2012, my final year as mayor of the City of Orange, the state dismantled redevelopment agencies or RDAs. RDAs were used by most cities, including Orange, as the funding mecha- nism for economic development efforts. When that funding disappeared, cities found other sources to pay for this reve- nue-generating activity. For Orange, that did not happen. Economic development was put on the back burner until this past year, when the current city council finally funded a fulltime economic development position to bring businesses to Orange and help increase revenues. Without a robust economic development effort, Orange’s revenue history has been stagnant. Was the council passing balanced bud- gets over the past decade? It was. But cut- ting back on employees (and city services) and not fully funding internal reserve ac- counts can only be done for so long, before it comes back to bite you. Internal Reserve Accounts are set up to fund future needs: workers compensation claims, vehicle purchases, financial emergencies. Anyone who has his own household budget knows it’s much easier to buy a new washing machine when the old one dies, if there is money set aside to do so. Works the same for fire trucks. It is a dangerous practice for a city to hold its breath and not fund these accounts year in and year out. During the pandemic, the influx of mil- lions of dollars in federal monies helped prop the city up, temporarily funding re- serve accounts. Then, during the budget hearings of 2022, just months before Mayor Dan Slater and Councilman John Gyllenhammer were elected, the then-city council decided to unfreeze positions and hire 11 needed po- lice officers, driving expenditures through the roof for the next year, without the cor- responding revenues in place. I have been told that the then-finance department head assured the council the money was there. He is no longer with the city. Our new city manager and finance de- partment head have finally laid out what the actual costs are to provide needed ser- vices to the community, as well as fully funding internal service accounts, and we are millions short, with the deficit growing larger every year. The question before the voters in No- vember is simple: what levels of service do we want our city to provide? Do we want to fully fund those service needs, or keep cutting back? Understand, public safety makes up close to 70% of the budget; we could completely close our library and community services departments and still not save enough to cover the deficit. Cuts to police and fire will happen. This is not the same budget crisis I faced as mayor during the Great Recession. At that time, we had the chair kicked out from underneath us suddenly. This crisis is the result of years of inaction, and most likely it is going to take years to dig ourselves out of it. Economic development is start- ing from a complete standstill, the Com- munity Development Department needs to be bolstered up to be able to even begin to process new business growth, and internal service funds need to be fully funded. It is going to take a concentrated effort by the city council to make needed cuts, streamline services, bolster up services that strengthen revenue growth, and make intelligent land use decisions that increase our tax base. Does all this piss me off? It does. Am I willing to pay more to give the city 10 years to dig out of this mess? Yes, I am. I love this community too much not to try. Carolyn Cavecche is a former Mayor of the City of Orange and former CEO of the Orange County Taxpayers Association. A threat to our sewer system! By Richard Nelson Longer-time residents remem- ber how, in 2016, the large water agency to the south, Irvine Ranch Water District (IRWD), spent thousands of dollars in an attempt to take over our local sewer sys- tem, instead of having our local East Orange County Water Dis- trict (EOCWD) run it. IRWD lost that effort by a large margin when local residents turned out in force at a county commission meeting to support EOCWD and keep lo- cal control of our sewer systems. Well, “they’re baaaaack.” In the 2024 November election, the former general manager for IRWD is running for a director’s seat for EOCWD. If he wins the District 1 seat and IRWD can get the other two open seats in the 2026 election, IRWD will have a majority on the EOCWD board and can vote to be acquired by the larger company. Read on if you would like to understand why the race for a sin- gle seat on EOCWD’s Board can mean a loss of local control and higher sewer rates. Loss of local control Tustin, North Tustin and part of East Orange comprise es- sentially all of the area within EOCWD. This means that the EOCWD board members are es- sentially 100% elected by Tustin, North Tustin and part of East Or- ange voters. If EOCWD were to be acquired by IRWD, our small area would be melded into the vast IRWD service area (Irvine, Lake Forest, part of Newport Beach, Orange and Costa Mesa), and your votes would be diluted by the hundreds of thousands of votes in the IRWD service area. We’d be lucky if we were able to elect one board member, instead of all of them, as we do now. Furthermore, all of the assets that you and I have paid to build could be acquired by IRWD, with no payment made for those assets. This is not specula- tion – IRWD has acquired five other water systems, and while they will tout reduced overhead and administrative costs, guess whose water systems didn’t meet IRWD’s standards? They had to use their local assets to pay to “upgrade” them. In Orange Park Acres, IRWD gained access to groundwater wells at a bargain basement cost. It doesn’t want your water system to reduce your rates, it wants it to benefit the thousands of its current custom- ers to reduce or offset their rates. Sewer rates When EOCWD acquired the local sewers from the OC Sani- tation District in 2016, it cut our sewer rates in half, from $18 per month to $9/mo. Eight years later, that rate has been mod- estly increased to $11.29/mo. At the same time (2016), IRWD charged its customers $24.05/ mo. for sewer service; today that cost is $32.50/mo. – almost three times what EOCWD charges. By the way, if you can’t sleep at night, just click on irwd.com/ rates-charges, read the 33 pages of rates and charges, and try to figure out what the rates are, and what your bill will be. Unless you are stimulated by doing a lot of algebra, you are going to feel very tired, very quickly. Motivation So why does IRWD want our water and sewer district? Big- ger is always better, right? Well, there’s actually an obscure, but more important reason: EOC- WD has a unique ability that only one other retail water district in Orange County has. It can sell “wholesale” water to other dis- tricts – and IRWD wants to be able to do the same thing. Acquir- ing EOCWD would open a whole new business line for IRWD. John Sears has been your board director for the past eight years, and has lived in the District 1 area for many years. He has no hidden agendas or other reasons to be on the EOCWD Board, other than to serve his community. I have known John Sears for many years as a fellow board member of the Foothill Communities Associa- tion (FCA), and know he always persuades and votes to do what is right for all constituents, and not for the benefit of any smaller group or individual. Many of us moved to this area because it’s not Irvine. Our wa- ter board member is our neigh- bor, and if you want to go to the EOCWD office to pay your wa- ter bill in person, Sylvia, Julian, or Cheryl will be happy to take your money and wish you a good day. Please vote to keep what is working well and economically. Vote for John Sears for Director of EOCWD District 1 and not a past IRWD General Manager. Richard Nelson is a North Tu- stin resident, and president of the Foothill Communities Associa- tion.