by Venturans for Responsible and Efficient Government
We’re living through unprecedented times. No one knows how events will develop as we emerge from the COVID-19 crisis. Yet there are specific unmistakable trends to watch. We want you to be aware of the trends and to look out for the critical choices that will shape our future.
Now is the time to support our elected officials as they negotiate the COVID-19 epidemic. The time will come soon when the quality of their decisions will affect how much pain and sacrifice Ventura residents must bear. As a community, we’ve shown that we are resilient and generous. The Thomas Fire is a recent example. The impact of the Thomas Fire could pale in comparison to the coronavirus pandemic fallout.
The City of Ventura relies on income from two primary sources: property tax and sales tax.
Property tax revenue is constant and predictable. Yet, the Ventura City Council has little control over property taxes.
Sales taxes will be severely impacted by the COVID 19 pandemic, and Measure O depends on sales tax revenue. Sales tax revenue has already plummeted. The auto dealers, the casino, the Pacific View Mall and restaurants aren’t generating the taxes the city expected. They are the city’s most significant contributors to sales taxes.
How will Ventura make up the difference in sales taxes? Consumers are reeling from the loss of jobs, reduced hours, and volatility in the stock market.
Furthermore, many businesses closed by the shelter-in-place order will not open. Don’t be surprised by some of the large businesses that fail in addition to the smaller, Mom-and-Pop establishments that will inevitably close—resulting in even more job losses.
With the two primary sources of income for the City of Ventura in serious jeopardy, and the City Council has little control over either. Finding a solution will require ingenuity.
With no chance to increase income, the only option available is to reduce expenses for the city. Before COVID-19, the city faced a $4.1million annual deficit.
After the business disruption from the epidemic, the $4.1 million deficit will be a welcome alternative to what is likely to happen.
The most considerable expense for any city is payroll—including benefits and retirement. The salaries, benefits and pensions are all controlled by labor contracts. In fact, because of the
COVID 19 pandemic, these costs will likely blow up. The Ventura City Council’s control of this expense is limited to reducing staffing levels.
Before the start of 2020, CalPERS required Ventura to pay an additional $2 million above the
$16 million it pays typically. Even though the economy experienced a decade-long economic boom, CalPERS is only 70% funded. By October, the $2 million additional CalPERS requires Ventura to pay may be considerably higher.
The City Council will be in the troublesome position of making significant, painful decisions to cope with the fallout. Payroll is the only controllable, significant expense that this Council can alter. While a hiring freeze is likely, it will have limited immediate effect.
There are other costs the Council can influence. It’s time the City Council scrutinizes all the cost of services to consider less costly options. Those services can be General Fund items like fire and police, or they can be other operational items like water.
Any increase to cost of water will be damaging financially too many families already burdened by the economic shutdown.
Lost sales tax revenue, steady property taxes, and an out-of-control, bloated retirement plan are out of the Council’s control. We hope they will focus on the things they can control and rein in expenses to avoid more extensive economic pain for the city and its citizens.