Emergency Council Meeting Held to Authorize New “Revenue Generation Method”

Posted 4/1/13 – As I wrote yesterday, I arrived home from Easter dinner at my sister’s to discover 3 different voice mails regarding a rumor that there was a special meeting of City Council held yesterday, Easter Sunday.  At that point, I was able to confirm that it took place, but had no further information as to what the meeting was for or why there would need to be a meeting on a day when almost no one would be able to attend.  I reached out to some folks who I felt should be able to give me some answers, and have now heard back from them.  Here’s what I’ve been able to find out…

Reason for the Meeting

Staff requested an emergency Council meeting because the budget had become dangerously unbalanced.  During its reviews of the status of the 2012 – 2013 budget, staff determined that we were nearly $1,000,000 in the hole (you may recall that last year all department heads were asked to cut costs mid-year and nearly $900,000 was trimmed to bring the budget back into balance).  Well, this year, everything has been cut so much that there was seemingly no way to cut another $1,000,000 without making drastic cuts to services that people in this town consider essential.  Staff wanted direction.  They had suggestions for revenue generation, one of which they knew would be controversial. Conspiracy theorists might suggest that the website being down when notice of a meeting with controversial subject matter (as required by law) was occurring, was a little too “convenient.” More on that in a minute.

How did we find ourselves $1,000,000 to the negative?  You may recall that estimates for repair of the damage for the windstorm were for $1.2 million dollars, and none of that was going to be reimbursed by the feds or the County.  While the Council had authorized about $595,000 of those repairs, that still left $600,000 that had been deferred until later.  Later, apparently, has come, and the $600,000 in additional costs can’t be put off if we are to remain eligible to continue our streak of Tree City USA designations.

Anticipated revenue from the state was down.  A series of financial maneuverings by the state related to the dissolution of the CRA meant that we received about $215,000 less CRA revenue from the state.  The grant we had expected to receive to install the automatic doors at City Hall and the Police Station was cancelled due to lack of Federal funding because of the sequester, which meant another $85,000 shortfall (the work has been paid for out of the General Fund, to be reimbursed upon receipt of the grant, which we will no longer be getting).  Increased fuel costs for the PD, FD and staff vehicles due to higher gas prices add up to a whopping $65,000 (they were calculated at 2011’s average cost of  $2.65 a gallon).  And increases in contributions to staff retirement funds were up $75,000 higher than expected, leaving a total shortfall of $1,040,000.

Possible Solutions to Shortfall – Cuts in Services

Staff brought two options before the Council.  One was to balance the budget by cutting spending, the other was to generate new forms of revenue to balance the budget (Editor’s Note: cuts or revenue, no blending of the two…sounds more like national partisan solutions than the local non-partisan politics we expect in Sierra Madre, doesn’t it?).  The options provided to cut services included several different ways it could be done, none of which seemed to please the Council.  One was to contract out police services, but all Council members agreed that that would not be acceptable to the people of the town, the majority of whom have repeatedly made it clear to the members of the Council that they did not want to see our PD go away.  And, as Mayor Josh Moran pointed out, when we looked into this as an option a couple years back, Arcadia wouldn’t even put in a bid, and Pasadena and LASD would require a higher outlay of about $1,000,000, or more, just to maintain the current services.  So, the choice was to keep the services we have at the price we are paying, or drastically reduce services for the same cost.  That idea was rejected.

Another idea was to close the Library.  The proposed 2013-2014 budget for the Library totals $897,612.00, and staff estimated that immediate closure would reduce the 2012 – 2013 budget by about $150,000, leaving a surplus of about $7,000.  However, Council members were mindful of the fact that the Library has been here longer than we’ve been a City, and feared the wrath of voters in the next election should they shutter the Library.  And, as Council member John Harabedian pointed out, “While some of my colleagues have families that are raised and out the door, the Mayor and I just recently married (no, not each other, though I do support marriage equality) and hope to one day have kids that will be using the library, and the last thing I want is for them to have their school friends taunting them over the fact that it was their dad that voted to kill the Library.”

Other options for service cuts included such ideas as closing the pool (contractual obligations with new City partner Waterworks Aquatics would likely lead to expensive lawsuits if eliminated), eliminating events such as the Art Fair, Wistaria Festival, Trail Race, 4^th of July, etc. (these events are too closely associated with the City’s regional identity) and others were considered and rejected, as well.

Possible Solutions to Shortfall – New Sources of Revenue Generation

So the Council turned to the other option, new sources of revenue.  Council member Harabedian, taking the lead of his party’s national leadership, wanted to tax the rich,  and suggested imposing a parcel tax on properties valued in excess of $500,000 or residents earning $100,000 or more per year, but more conservative members of the Council pointed out that a) these folks are the ones buying goods in town, so we’d be hurting local businesses and reducing sales tax revenues, and b) that definition of rich encompasses a majority of the residents, not the minority as is the case in the bigger, national picture, and since a parcel tax requires approval of two-thirds of the voters, it seemed unlikely to pass.

Another option suggested by staff was selling City owned property such as the former YAC property at Highland and Hermosa but the Council felt that this was a bad time to do that since property values have not fully rebounded, so, after much discussion this idea was also rejected.

So the Council turned to staff’s final recommendation, one which, according to my source, was the reason for holding the meeting on Easter Sunday, when very few people would attend (even De and Pat Alcorn, one or the other of whom has been in attendance at every Council meeting for the last three years, weren’t in attendance – Editor’s note: not only was it Easter, but it was De’s birthday, happy birthday, De!).  Apparently, numerous cities have found that installing traffic cameras in town has generated a lot of revenue for budgets that are stretched to the breaking point.

Council members discussed the idea that it would be nice to increase revenue generated by the PD without increasing staffing in the department, with the attendant pension contribution costs.

All on the Council agreed that we have a problem with people making illegal u-turns in the downtown business district (there is actually a STATE law that prohibits u-turns in a business district, it’s not one of our city restrictions), and that since that fine is $279, ten citations a day would generate nearly $830,000 annually, and that is just one of the possible citations that could be issued through traffic cams.  The drawback to this option?  There’s no place to post the cameras that would have the proper vantage point to catch the lawbreakers.

But staff had a solution for that issue.  Simply install traffic lights.  As they pointed out, every city in Los Angeles County has stoplights except Sierra Madre.  Just as we were the last City in the County to add paramedic service, they said, it’s time to end our dependence on stop signs and take advantage of the “modern” technology known as traffic signals.  The benefits, as defined by staff, include not only the increased revenue generated by the traffic cams, but improved public safety, improved traffic flow (who among us, staff asked, hasn’t been stopped by backed up late afternoon traffic at Sierra Madre Blvd. stop signs, or folks making left turns on Auburn when school is starting or ending, or on Sunday mornings when church is in session?).

While the cost to install the signals (Baldwin and Sierra Madre, Auburn and Sierra Madre, Lima and Sierra Madre, and Baldwin and Highland) totaled nearly the same amount ($970,000) as the shortfall, staff recommended selling bonds to pay for it, since the long term revenue generation would be in excess of the cost to pay off the bonds and to cover the shortfall, and there would be no immediate cash outlay from the City).  As Mayor Moran pointed out, Lingo Industrial Electronics, a company that is responsible for selling traffic signals, has been the City’s largest generator of sales tax revenue for many years, and as such, a) we could likely get a “home town” discount to reduce costs, and b) we would be getting back some of the cost with the city’s share of the sales tax revenue.

There was a lot of discussion among the Council members, with some fearful of the residents’ response to the action.  Mayor Moran said he thought there was a law prohibiting the installation of traffic signals in town.  However, the City Attorney pointed out that the Municipal Code states the following:

10.20.010 – Authority to approve, install, develop or improve traffic control devices.

A.             Whenever public safety and convenience require, and the California Vehicle Code permits, traffic control devices to be installed to give notice to the public of the application of the requirements of that code or other law, the city manager may install or cause to be installed the necessary devices. The city manager may remove, relocate or discontinue the operation of any traffic control signal not specifically required by the California Vehicle Code or this code whenever he/she determines that the conditions which warranted or required the installation no longer exist.

B.             The city manager may place and maintain or cause to be placed and maintained such additional traffic control devices as he/she may deem necessary or proper to regulate, guide or control traffic, but he/she shall make such determination only upon the basis of traffic engineering principles and traffic investigations and in accordance with such standards, limitations, and rules set forth in this section.

C.             In executing the duties set forth in this section, the city manager shall:

1.             Only expend monies appropriated by the city council by the adoption of a budget or otherwise;

2.             Comply with any and all requirements of the California Environmental Quality Act, Public Resources Code Section 21000 et seq., as it now exists or may hereafter be amended;

3.             Act consistently with the city of Sierra Madre general plan, including the prohibition on traffic signals; and

4.             Adhere to those traffic engineering and safety standards and instructions set forth in the most current version of the California Planning Manual—Part 8,Traffic, issued by the Division of Highways of the State Department of Public Works.

D.             The purpose of this section is to safeguard the health, safety, property and welfare of the city’s residents, businesses and visitors by establishing the authority of the city manager to approve, install, develop and improve traffic control devices within the city.

The City Attorney pointed out that the prohibition on traffic signals was not a municipal ordinance, but a section of the General Plan.  Since the General Plan is currently being updated, that prohibition could simply be stricken from the Plan, and the City Manager would then have authority to install the traffic signals.

Mayor Moran finally convinced others on the Council that if this was sold as a public safety issue as much as a revenue generation issue, the residents really couldn’t argue with it.  When one of the two resident members in attendance, a member of the Police Officers’ Association, pointed out that there would also be revenue generated from jaywalking citations because until now, it has been impossible to cite folks for jaywalking in Sierra Madre (the legal definition of jaywalking is crossing a street between two traffic signals, and since Sierra Madre has no traffic signals, you can’t get a jaywalking ticket in Sierra Madre; this would change that), it became clear that there was now a majority of Council members willing to vote yes.

Council Approves Installation of Stoplights and Traffic Cameras

A motion was made to authorize the City Manager to issue bonds to pay for the installation of traffic signals and traffic cams, authorize her to enter into negotiations with Lingo Industrial Electronics to reduce the cost of the signals, up to and including free office rent for ten years in a City facility, and delete any provision in the updated General Plan which would prohibit the installation of the signals.  Council voted 3-2 to approve the motion.

Oh yeah, this didn’t really happen…April Fools.

Did I get you again?  I know it’s not as good as last year’s, but that one set the bar pretty high.  In fact, I think I’ll probably have to take a year or three off to regain the element of surprise.  Anyway, here’s some clues that might have let you know that this whole thing was just an April Fools prank.

1. The date of the post.
2. Yeah, right.  Like there’s any possibility that all five Council members, staff, the City Clerk, and the City Attorney would give up their holiday over a FINANCIAL emergency.  I don’t doubt they would in the event of a disaster, or a public safety issue.  But not over bookkeeping.
3. The City’s website has not been down since Friday (I used it to research the Library budget, the Traffic Signal section of the Code, etc.).
4. Staff and the Council would never approve $600,000 in expenditures just to maintain a Tree City USA designation.  And we have received some grants for tree replacement that are reducing the city’s expenditures for replacing the trees.
5. There is a financial oversight committee related to the CRA Dissolution which would have already informed us if we were short $215,000.
6. The average gas price in California in 2011 never went below $3.00/gal.
7. The idea of closing the Library was going to combine this year’s budget and next year’s budget to save the $1,000,000 this year’s budget is short.  This year’s budget would still be short $897,612.00.
8. The Art Fair, Wistaria Festival, Trail Race, and 4^th of July are events that are either run by non-City organizations or that cover their costs through entry fees, sponsorships and fundraisers, so cutting them would not really effect the budget in any way.
9. While I’m not sure what the costs would be, it seems unlikely we could install traffic signals in four directions at four different intersections for under a million dollars, even if Lingo gave us a discount.  According to the state of Washington’s website, it costs the taxpayer $250,000 to $500,000 to purchase and install a traffic signal. Electric bills and routine maintenance amount to about $8,000 a year.  And of course, there’s the traffic study that we would need to have done to comply with the City ordinance.
10. The City Manager has no authority to delete any provisions of the General Plan or the General Plan Update.