The Long Beach City Council recently moved to expedite a sales tax increase by two years, aimed at addressing a looming budget deficit and reflecting voter intent. However, this decision has sparked a legal challenge asserting that the move may violate constitutional guidelines.
In December, the City Council approved a plan to advance the sales tax from its scheduled increment of 0.75% to a full 1%, potentially generating an additional $24 million annually. This adjustment raises the city’s total sales tax rate to 10.75%, ranking it among the highest in California.
A lawsuit filed on February 6 by a local anti-tax group argues that this decision is unconstitutional. The complaint highlights that the tax hike was not originally included in the ballot language approved by voters during the passage of Measure A in 2016, which permitted a gradual increase of the sales tax.
The lawsuit aligns with claims made by Ian Patton, a member of the Long Beach Reform Coalition, who emphasizes that any alterations to tax measures must be put before voters in a new referendum, as mandated by Proposition 218. “If you change anything that was voted on as a ballot measure, it can only be changed through another ballot measure,” Patton stated.
The City Council voted unanimously during a special session to accelerate the tax increase, responding to the immediate fiscal needs of Long Beach. Previously, Measure A imposed the sales tax incrementally and was set to reach the full 1% by October 2027, contingent on the termination of the county’s 0.25% sales tax, Measure H.
Legal advisors within the city contend that the decision is backed by legal precedent and mirrors the desires expressed by the citizens. They argue that while the transitional language of the ballot is significant, it does not solely dictate the legal course of action regarding changes to tax structures.
As Councilmember Kristina Duggan raised concerns about the legality of the advanced tax increase during the council meeting, city officials reassured her that this action was legally justified. “Our goal has always been to ensure that our community can access essential services. If we do not implement this tax increase, it could lead to a significant shortfall in our budget, affecting local services profoundly,” remarked City Manager Tom Modica.
California generally caps local sales taxes at 10.25%. However, recent alterations to the tax landscape, including the introduction of a new countywide 0.5% tax, have provided an opportunity for Long Beach to increase its sales tax ahead of schedule.
The city grapples with an expected $30 million deficit in the next fiscal year, with projections of an $87 million structural deficit extending through 2030. Failure to approve the tax increase could lead to dire consequences, including cuts affecting public safety and community services, as past budget constraints have necessitated the layoff of police officers and the closure of fire stations.
Patton, however, raises concerns regarding the implications of the proposed tax increase on local businesses, arguing that it could motivate consumers to seek purchases in neighboring areas with lower sales tax rates. “This tax hike could discourage local shopping and detrimentally impact the economy in Long Beach,” he warned.
As the lawsuit progresses, both the city and the concerned citizens await clarification on whether the council’s actions will withstand legal scrutiny. The outcome has the potential to reverberate through local governance and fiscal management for the city of Long Beach.
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