Tuesday, July 24, 2012

El Monte, California #5 -- Not Yet

Stockton, Mammoth Lakes, San Bernardino, Compton, now El Monte? Not yet. See LA Times:
Faced with a crippling combination of low revenues, high labor costs and decreasing funding from the state, El Monte is moving to declare a fiscal emergency and seek a tax on sugary beverages sold within the city.

The moves come as the city attempts to stave off the financial problems facing a number of cities across California. So far this summer, three cities — Stockton, San Bernardino and Mammoth Lakes — have moved to seek bankruptcy protection, and Compton officials announced the city could run out of cash in a matter of months.
Several story lines:

First, of course, another California city has it figured out: declare a fiscal emergency and then file for bankruptcy. 

Second, using taxes on "sugary beverages" as a way to raise revenue. I never thought taxing sodas had anything to do with obesity -- the sugar in sodas is not the problem, and the "lap band" folks figured that out a long time ago. Taxes on "sugary beverages" is all about raising revenue.

And, third, buried near the end of the article, the reason the city needs to raise taxes: to pay the $200,000 pensions for former city employees:
El Monte has also awarded generous benefits to some of its top employees. Former Police Chief Thomas Armstrong, who retired in May 2011, collected nearly $430,000 in his final year with the city through a combination of salary and payouts for unused time off. Armstrong and two other former police chiefs now receive yearly CalPERS pensions of more than $200,000.
That would have been my lede: declaring a fiscal emergency to deal with $200,000 pensions.

Oh, a fourth story line: a tax on food and/or drinks in a city like El Monte won't work. Folks will just cross the city line to surrounding towns/cities where there is no tax. This is not rocket science.

No comments:

Post a Comment