In July, when a 14-member citizens advisory group met for the first time, not one expected that six months later, they would come back and recommend that the La Quinta City Council consider any type of tax increase.
“Coming in, nobody wanted to raise taxes,” committee member Jim Cathcart said, pointing out that many on the committee are local business owners who would be taxing themselves.
But as they pored over financial reports, they found a tightly run city that would still be $50 million in the hole in 10 years if something isn't done to increase revenues, said Dennis Byerly, who chaired the committee.
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In January, Byerly told the City Council it should consider putting a tax measure on the November ballot, asking voters to approve a 1 percentage point increase in sales taxto 9 percent. They estimate the hike could increase revenues $6 million per year.
“What we were able to do was paint the picture of what the city looks like without (doing anything) and it is so black and white for us,” said Cathcart, who chaired the expenditure committee.
“It almost becomes a no-brainer once you understand,” committee Vice Chairman Bob Leidner said.
The City Council is holding a study session on the recommendationsTuesday, and can accept, re-prioritize or reject the recommendations.The meeting starts at 4 p.m. at City Hall.
“No one rushed through this,” said Cathcart, adding there were, at times, heated discussions but in the end, the recommendations were unanimous.
The committee was appointed by the City Council in June after putting out the call for residents to serve on a finance advisory panel to explore ways the city can increase revenues.
Fourteen applications were received from people with a mix of backgrounds in business, finance, marketing and other professions.
The result of six months of meetings lasting at least two hours each and poring over city documents about 6 inches thick is a 72-page detailed report of the committee’s findings.
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The material the city gave the committee – including budgets for the next 10 years – proved too much for them to decipher as one group.
So, they broke into three subcommittees: expenditures, tax revenues and other revenues.
“It certainly wasn’t fun … but everybody on the committee cares about the city,” said Cathcart, who chaired the tax revenues committee.
They expected to find areas where the city might tighten its belt more, but instead said they found a well-run city that is by no means overstaffed.
“We didn’t find any glaring problems,” said Mark Johnson, who chaired the expenditures committee.
In the end, the committee’s report echoes what city officials have been saying for months: Expenditures are rising faster than revenues in a city that was once the fastest growing in the valley.
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It started in 2011, when more than $40 million in reserves went to the state when Gov. Jerry Brown dismantled Redevelopment Agencies. Cities such as La Quinta relied upon RDA money to fund capital improvement projects.To address the loss, the city cut about25 positions that have not returned.
Tie the loss of RDA funds with the rising costs of police services and a flat-lining sales tax revenue and the city winds up $50 million in debt by 2026if it doesn’t react soon, committee members said.
The committeelooked at trimming police services, but said residents are adamant they would rather see more officers on the streets, not fewer.
Like many cities in the valley, La Quinta contracts with Riverside County Sheriff’s Department for law enforcement service.
The city’s projected revenues for thisyear are $38.6 million and of that, $13.6 is earmarked for police service.
They explored the cost effectiveness of the city having its own police department or joining other east valley cities in forming a new department, but found both options too costly and not comparable to what the Sheriff's Department provides.
Byerly presented the committee’s report in January and the council asked that they meet one more time to prioritize their recommendations.
They ranked them by number with 5 being “urgent–implement immediately” and 1 being thelowestpriority.
A sales tax increase was rated 5, but before making that recommendation, Cathcart’s committee looked to Palm Springs, which passed a salestax increase in 2011, to see if it noticed a loss of business as a result.
“They said no, and that business is actually up,” Cathcart said.
The committee also recommends raising the hotel tax from the current 10 and 11 percent, depending on the size of the hotel, to 12 percent. But, at a projected revenue boost of $1.1 million per year, the groupsuggested waiting so there aren’t two tax measures on the November ballot.
Any tax measure would have to be approved by voters and requirethe support of at least four City Council members to get on a ballot.
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Other recommendations from the committee include boosting fees for services, Byerly said, pointing to permit fees running about $7 for the applicant but costing the city $10 to process.
It looked at the possibility of a vacancy fee charged to property owners as an incentive not to let storefronts remain empty for long periods of time.
But administrative costs would run about even with the fees, said George Batavick, chairman of the “other revenues” committee.
Raising SilverRock fees, including the resident card fees, by 15 percent is another recommendation.
Throughout the process, committee members all said city staff was available to answer questions and provide documents, but drew the line at getting involved with making recommendations.
“Our rationale is that the committee’s work must stand the test of much scrutiny and thus the city did not want anyone to think these were made as instructed recommendations,” City Manager Frank Spevacek said.
“I am very impressed with each and every (committee) member. I continue to be amazed at the depth of talent the residents and business owners in the city of La Quinta have,” he said.
City Council members had “noinvolvement whatsoever,” Leidner said.
“We give the City Council credit for doing this. They didn’t know what we would come back with,” Leidner said.
Desert Sun reporter Sherry Barkas covers the cities of La Quinta, Indian Wells, Rancho Mirage and Palm Desert. She can be reached at sherry.barkas@thedesertsun.com or (760) 778-4694. Follow her on Twitter @TDSsherry
