The May 19 Special Election defeat of all but one proposition on the ballot, could leave the city struggling to close another half million dollar gap in its budget as the state swipes funding from city coffers.
By Olivia Damavandi / Staff Writer
After already slashing its 2009-2010 fiscal budget by $1.2 million, the City of Malibu stands to lose another $700,000 and myriad city services if the state decides to borrow $2 billion in statewide cities’ property taxes as part of a plan to address what could amount to a $24 billion budget deficit.
The plan, unveiled by Gov. Arnold Schwarzenegger after voters on May 19 rejected a batch of ballot measures intended to generate $6 billion through mid 2010, would also hack billions from education, healthcare, law enforcement and social programs. If enacted as an urgency statute, the plan could be become effective July 1.
“As a member of the League of California Cities, we [the City of Malibu] are going to oppose that [the state’s plan to collect 8 percent of cities’ property taxes],” City Manager Jim Thorsen said Thursday of last week in a telephone interview, adding that property taxes are one of Malibu’s major revenue sources.
“We don’t feel it’s the right way to balance budgets,” he continued. “The cities are in dire straights as well, and we need to rightfully protect what is ours.”
Judy Mitchell, Rolling Hills Estates mayor and president of League of California Cities, a nonprofit association that advocates on behalf of cities regarding state and federal government issues, in a press release called the proposed plan “irresponsible” and said it would have “disastrous, long-lasting impacts.”
“Cities are already reducing services due to the recession and can’t afford to cut public safety and other essential services to bail the state out,” Mitchell stated in the May 5 press release.
If it chooses to collect municipal property taxes, the state must repay the entire amount within three years.
Thorsen said the city’s current proposed 2009-2010 budget has not changed in light of the prospective decision, but that additional cuts have been identified.
Water quality regulation could be jeopardized
While the state’s proposed plan would jeopardize capital for numerous projects within the City of Malibu relating to water treatment, computer updating, street improvements and park construction, the city is primarily concerned with meeting state-mandated storm water quality regulations, which requires funding, Thorsen said.
“As everyone knows, Malibu is under the gun to complete water projects,” Thorsen said. “But if we’re losing our property tax, it certainly puts a hindrance on our ability to move forward.”
The city has been criticized and sued over the years by a number of environmental groups that claim the absence of centralized wastewater and storm water treatment facilities in the Civic Center area make the city responsible for the notoriously poor water quality at Malibu Creek, Malibu Lagoon and Surfrider Beach.
The city plans to spend approximately $7.3 million on the construction of a storm water treatment facility at 15-acre Legacy Park, located on Pacific Coast Highway at Webb Way. Construction of the park is expected to begin during the summer.
The city also proposes to spend $2.1 million on the Civic Center Wastewater Improvement Plan, a wastewater treatment facility with expected completion in 2013, to prepare an environmental impact report, a coastal development permit, building permits and construction plans.
However, potential development of the La Paz property on Civic Center Way, where the city intends to implement the centralized wastewater treatment facility, is currently under review by the California Coastal Commission and by the Regional Water Quality Control Board.
Plagued by statewide budget cuts and staffing shortages, the Coastal Commission in February delayed the review of the La Paz property for up to one year.
Furthermore, environmental group Santa Monica Baykeeper in December sued the city for approving La Paz’s environmental impact report, which, Baykeeper says, fails to evaluate the impacts associated with flooding, water quality and storm water runoff in the Civic Center area.
Don Schmitz, head of Schmitz and Associates, Inc., the development consulting and land-use planning company representing La Paz, said last week in a telephone interview that he could not estimate when or if the development permits would be granted by the water board or the Coastal Commission, and that an administrative record is currently being filed in regard to the Baykeeper litigation.
Litigation could be impacted
The state’s potential 8 percent, or $700,000, acquisition of Malibu’s property taxes would also significantly impact the city’s ability to cover litigation costs of multiple lawsuits that have piled up over the years.
In fiscal year 2008-2009, the city projected it would spend $750,000 in litigation expenses associated with lawsuits filed by environmental groups the Natural Resources Defense Council and Santa Monica Baykeeper.
The Baykeeper alone has filed three water-quality related lawsuits against the city since 2007. The Malibu Township Council, a local nonprofit, has also sued the city over the construction of Trancas Canyon Park.
An additional $400,000 has been reserved for litigation against the NRDC and Baykeeper in the proposed 2009-2010 fiscal year budget. If the city is defeated, an additional $500,000 could be expended for a total litigation cost of more than $1.5 million.
However, the city earlier this month decided to collect Transient Occupancy Taxes of 12 percent of rental income from private homes leased for 30 days or less, beginning July 1. (A property owner will have to pay $120 per $1,000 in rent charged.)
The Malibu Municipal Code allows for such a tax, but the city has thus far only enforced it on hotels and motels, Administrative Services Director Reva Feldman told The Malibu Times earlier this month.
The tax will generate an estimated $200,000 per year and will require property owners of the short-term rentals to register with the city and obtain a transient occupancy registration certificate. A one-time registration fee of $25 per property will also be implemented.