Facing tough budget situations stemming from over-spending, mismanagement and economic downturns, several Orange County cities are trying to solve their problems through the expedient of higher taxes. While this is standard operating procedure in California’s fiscally irresponsible state government and liberal urban centers like Los Angeles, it’s imperative we stop this trend in its tracks in Orange County.
In 2014, the Stanton City Council dealt with over-spending by putting a 1% sales tax hike on the ballot. Voters were told the alternative was higher crime, and it narrowly passed. Unfortunately, violent crime actually increased by 23%. This year, Westminster and Fountain Valley are following Stanton’s lead. Westminster Councilmembers Margie Rice and Diana Carey are pushing a 1% sales tax hike onto the November ballot – Measure SS. Fountain Valley also placed a 1% sales tax hike on the November ballot – Measure HH. If passed, Westminster and Fountain Valley would join Stanton in the 9% sales tax club – the highest in Orange County.
Tax hikes advocates claim they have no choice – but their budget problems result from years of bad choices. Westminster, for example, put virtually all its budget eggs in the redevelopment basket – and suffered accordingly when the state drained Westminster’s redevelopment fund into the state budget. In addition, Westminster willingly approved the pension agreements now gobbling up city revenues and spent $52 million during the Great Recession on a new police headquarters that still stands half-empty.
Passing these sales tax hikes creates an incentive for people to avoid shopping at Westminster and Fountain Valley businesses. Does it help the ailing Westminster Mall to make it a more expensive place to shop than nearby Bella Terra in Huntington Beach? And why pay 9% sales tax at Fountain Valley’s Costco when one can pay 8% at the Costco in neighboring Huntington Beach?
Furthermore, as Stanton residents have discovered, the people of Westminster and Fountain Valley won’t be able to avoid paying the extra 1% by shopping in other cities. When a city raises its own sales tax, that extra percentage follows residents wherever they go. For example, when Stanton residents buy a car in Garden Grove or a refrigerator in Anaheim, they still pay 9% sales tax – even though the sales tax in Garden Grove and Anaheim is only 8%.
Measures SS and HH shackle Westminster and Fountain Valley residents to a higher sales tax rate, while also putting those cities’ businesses at a price disadvantage compared to competing businesses in nearby cities. People are sensitive to prices. When you tax something, you tend to get less of it – and the sale of goods and services is no exception. Measures SS and HH will harm business activity and ultimately depress Westminster and Fountain Valley’s tax base.
Measure SS and Measure HH are symptomatic of the destructive policies ruining this state. This tax here or that one there may not, in and of themselves, break the bank. But the cumulative effect of all these taxes and regulations is ruinous.
I’m a financial advisor by profession. More and more of my family and clients have left California due to factors like these sales tax hikes – which give them fewer reasons to stay when they can keep more of their money by re-locating to lower-tax states.
It’s unjust to stick taxpayers with the tab for years of short-sighted decisions by City Hall. Other Orange County cities are generating tax revenue through economic development – reducing business regulation and enacting policies to attract business. Anaheim and Newport Beach are moving to make it more difficult for future city councils to raise taxes. The better course is battening down the budgetary hatches while vigorously implementing economic development plans to spur business formation and create development opportunities. This course is most consistent with limited government and economic liberty, and most certain to generate business growth and healthier city revenues.
Westminster, Fountain Valley, Stanton and other cities cannot tax their way to better times, but they can grow their way out. It starts with Westminster voters rejecting Measure SS, Fountain Valley voters opposing Measure HH, and Stanton voters repealing their recent tax hike by supporting Measure QQ.