Wednesday, July 16, 2008

No "TOT" Increase - Elections Cloud Judgment

Tuesday night the Costa Mesa City Council voted unanimously to simply "receive and file" Linda Dixon's request and accompanying staff report requesting that an increase in the Transient
Occupancy Tax (TOT) be placed on the November ballot. That means no further action will be taken on this subject this time around - again. That motion was made by Allan Mansoor and seconded by Eric Bever.

Byron de Arakal, in his column today on this subject, really nailed it. You can read it HERE.


I won't go into the details of this issue - I covered it in my previous entry and many people chose to provide their comments on it - except to observe that
the staff presentation was a shorthand version of the discussion held at the Study Session last week. I doubt that audience members not previously privy to the details of this subject would have understood what this was all about from tonight's presentation.


Once again, the majority on the City Council have chosen to ignore the wise counsel of their senior city staff, including City Manager Allan Roeder and Finance Director Marc Puckett, on an issue that will have a long-term impact on the future of our city. Roeder and Puckett and their staffs have, for decades, effectively played a shell game with the city's finances, using the Fund Balance from the previous year's budget to balance the new one. Don't get me wrong - that's not a criticism, it's a statement of admiration. It's hard for me to imagine a municipal budget being
more effectively managed.

However, with the decline in sales tax revenue and the uncertainty of the property tax revenue stream because of the current worsening loan crisis, it is clear from all indicators that those two segments of our municipal revenue stream will fall well short of their budgeted levels. The two segments combined make up 70% of our municipal revenue stream.

The proposal by Dixon, which was heartily supported by Roeder and his staff, to place before the voters a modest increase in the TOT in November would have - if approved - dovetailed nicely in the sp
ring with the anticipated decline in revenues. The TOT is a tax felt only by visitors to our city and ours is currently the lowest in the county.

When it was clear that the Bever-led majority was not about to approve placing a TOT increase on the ballot, nor were they interested in tinkering with the business license fees, Katrina Foley and Dixon voted with the majority to blow off this plan. It is an election year, after all... I find it very curious that the city council had such low regard for the opinions of the voters that they wouldn't trust them to make a wise decision on this tax increase in November, so they just refused to place the question before them.


Next spring, as the city begins preparing it's next budget, the chickens will come home to roost. It will be very interesting to see what kind of a waltz our elected leaders do to shrug off the responsibility for the difficult financial times ahead. I'll remind you of their vote tonight when the time is appropriate. As Allan Roeder reminded the council tonight, when revenues fail to materialize it won't be a matter of simply tightening the municipal belt - that's the way he and the staff run our city in the normal course of doing business. No, it will mean deciding which services and improvements will not get done. When unfilled potholes begin occurring on your street, remember this vote.

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Anonymous Anonymous said...

If ever there was a campaign issue to throw these elected officials out, this is it. Congratulations on identifying the issue that will finally destroy these improvement minded representatives. The 6% TOT can’t keep up with the spending demands of the more progressive members of the city. Thirty years ago, when hotel rates were 40 bucks or less, 6% may have been enough but not now.

7/16/2008 10:10:00 AM  
Blogger Unknown said...

Another folly, and the city suffers again.

But just how likely do you think it is that either Mansoor or Beaver will pay the price?

7/16/2008 03:31:00 PM  
Blogger The Pot Stirrer said...

Kent, one can only hope that the electorate will be wise enough to understand what happened last night and act accordingly in the voting booth.

Alex, Mansoor will not suffer for this move, but Bever might, per the above comment to Kent.

7/16/2008 03:44:00 PM  
Anonymous Anonymous said...

so six percent of 40 dollars was good enough back when but now that room rates have soared above 40 dollars, six percent of the higher rate is less? was the vote unanimous? if so, how does one vote pay more of a price than another same vote? Just spin it?

7/16/2008 07:54:00 PM  
Blogger The Pot Stirrer said...

Commissioner Jim, back again, huh? Don't let those big numbers muddle your head. The point is that the city needs new revenue sources to offset the certain decline in sales tax and property tax dollars coming to the city. A 2% bump in the TOT would hurt no one. The hotel visitors won't even slow down as they sign their credit card receipt. Even at that rate, Costa Mesa would still be among the lowest in the county. The math is not complicated - 2% represents $2 million that we won't have in our coffers to maintain current service levels.

One writer wondered why there were only two residents at the council meeting to hear this issue. Good question. He also wondered why the representatives of the hotels, Chamber of Commerce, etc. didn't speak on this issue if they thought it would hurt their business. Another good question. Could it be that they already knew it was doomed because they checked with the council majority ahead of time? Do I smell a Brown Act violation here? That's another good question...

7/16/2008 08:38:00 PM  

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