Friday, May 25 , 2018, 12:29 am | Overcast 59º


Ron Fink: Too little Cash to Run Government; Why?

Cities and the county of Santa Barbara are short cash for their General Fund budgets. Why?

The General Fund, used for public safety, parks, street repairs and other general services receive revenue from sales and property taxes.

Some parts of the GF, like recreation, parks, planning and development functions partially pay for themselves by user fees that are supplemented by the GF.

Why isn’t there enough money?

Forty-eight percent of the county is owned by the federal government and is not taxed; local and federal government contractors and nonprofits who purchase supplies on the local economy do not pay local sales taxes.

In Lompoc, public housing providers such as the Housing Authority of the County of Santa Barbara and its affiliate partner Surf Development Company, manage 451 rental units.

Those rentals were either acquired or developed using low income-housing tax credits, housing revenue bonds, or other financing. Other cities and the unincorporated areas are faced with similar conditions.

In the past few years, the only housing projects built in Lompoc have been public housing.

None of these projects pays into the property tax pool, even though the developer is guaranteed full occupancy and market rate-rental income by way of tenant rent and taxpayer subsidies for the units for either 30 or 55 years.

Another significant factor is that government facilities (school districts, county and city facilities) and nonprofit groups (churches, hospitals and some medical clinics) don’t pay property taxes either.
The city of Lompoc receives only 1 percent of sales tax revenue out of 7.25 percent collected; the county and state get the rest. 

The state Legislature controls the allocation of local property tax to the county and cities within each county. Lompoc only gets 1.1 percent of property taxes collected; the county gets 25.5 percent.

There is more.

Lompoc, the only full-service city in the county, might discontinue the practice of diverting fees collected for Enterprise Funds (electric, water and waste water) to bolster the GF.

The reason that fee diversion might be stopped is that residents pointed out this practice had been successfully challenged in other jurisdictions, and courts found the practice to be contrary to legislative policies.

This, combined with a lack of significant new commercial/industrial development, has created a situation where fewer dollars are available for general services.

A perplexing question is: Why aren’t projects currently approved being built?

Several hundred houses and a large industrial park already have been reviewed and we are anxiously awaiting the jobs and tax revenue that these projects could bring. But the land is still vacant and developers continue asking for time extensions.

To our north, Santa Maria continues to experience significant growth, and judging by the number of public facilities being built and staffed, General Fund dollars must be rolling in.

So, the question for Lompoc city leaders is: What does our neighbor to the north offer that Lompoc doesn’t?

The county recently stopped Venco operations near Gaviota by refusing to issue a permit to repair a leaking pipe; while the Get Oil Out and environmental lobby was cheering, the number one principal taxpayer declared bankruptcy and left the county.

They also succeeded in killing a Pacific Coast Energy Company project on an existing oil lease in Orcutt that would have produced significant tax revenues.

It doesn’t take much effort to see that these three supervisors, no matter who is sitting in their seats, will always support efforts to eliminate oil production in the county to appease their well-healed donors.

I guess they are unfamiliar with the economics of their decisions as they continue their assault on the golden goose of the General Fund.

Noozhawk reported that “The Santa Barbara County Board of Supervisors will consider budget cuts — including staff layoffs and pulling from its strategic reserve fund to close its projected $35 million gap for the 2017-18 fiscal year.”

The simple fact is that government services are not free; the more we ask for, the more it costs. If you want well-maintained parks and a robust public safety infrastructure, the government must have revenue.

How to raise the money to fund these services is a challenge.

So, considering the business-killing political philosophy of the three South Coast supervisors and a lack of development in Lompoc, it’s no wonder they are coming up short.

Which departments will suffer the largest cuts remains to be seen. A change of attitude is needed to attract new investment and improve the tax base.

What will be cut remains to be seen as budgets are finalized.

— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at [email protected]. Click here to read previous columns. The opinions expressed are his own.

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