City of Stanton Faces Taxpayer Revolt

Back in November 2014, in a 54% to 46% decision, less than 20% of Stanton’s registered voters approved “Measure GG,” which increased their sales tax rate from 8.0% to 9.0%. Needless to say, this measure will not encourage retail businesses to relocate to Stanton, nor will it encourage residents to shop there. But like local tax proposals that passed in 116 other cities in California last November, this measure was represented to the public as necessary to adequately fund public safety.

Back in October we published an analysis, “City of Stanton Proposes Higher Taxes Instead of Cutting Pay and Benefits,” which documented the city’s official estimate that the new sales tax would add $3.1 million to their projected annual sales tax revenues, in order to alleviate a $1.8 million structural budget deficit. That is, they expected the tax increase would eliminate their budget deficit with $1.3 million left over. But tax increases without spending reforms are fruitless.

For example, CalPERS has announced a 50% increase in required annual pension contributions, to be phased in between now and 2017. If Orange County’s independent pension system follows suit, and there is no evidence their financial imperatives differ significantly from CalPERS, then Stanton’s annual required pension contributions will increase by $2.2 million per year – nearly all of that for public safety. Again from our October 2014 analysis, here are Stanton’s estimated costs per public safety employee, which they contract for from Orange County:

Orange County Public Safety – Average Compensation

If Stanton were to negotiate a 14% decrease to the average total pay and benefits earned by their 44 sheriffs and 21 firefighters, they would eliminate their structural deficit of $1.8 million – and their firefighters would still earn average pay plus benefits, after the reduction, of $187,285 per year, and their sheriffs would still earn average pay plus benefits, after the reduction, of $160,412 per year.

To put these public safety rates of pay into an appropriate perspective, the median earnings for full-time, year-round employed residents of Stanton is $35,769.

There’s another reform, also not on the table, that could alleviate Stanton’s “structural deficit,” which is to liquidate approximately five dozen formerly private properties owned by the city that were purchased with redevelopment funds. As reported by the Orange County Register, “Stanton Redevelopment Agency had two bond issues: One for $15.3 million, on which it will pay investors a whopping 9.496 percent interest; and another for $12.5 million, on which it will be paying 9.346 percent interest.”

To put Stanton’s interest payments into the context of their $1.8 million “structural budget deficit,” Stanton is paying $2.6 million per year to own property that, arguably, they never should have owned in the first place. We’re not talking about some libertarian scheme to sell off libraries and parks. We’re talking about commercial real estate that used to be in private hands and ought to be put back into private hands.

Only three miles in size, Stanton lacks a strong retail sector – yet their elected

officials believe the benefits of increasing sales taxes outweigh the costs.  

Some residents are fighting back. A local ballot petition is now being circulated to repeal the sales tax increase. Significantly, if the petition gatherers are able to muster enough signatures to hold a special election, 1,908, that will be a few hundred more people than the entire number of people who voted yes to impose this sales tax to begin with.

Activists in Stanton have their work cut out for them. During the campaign season last year, the city spent money on polling and “informational brochures,” targeting Stanton voters. Stopping just short of outright advocacy in favor of Measure GG, which would be illegal, the city spent funds to research voter receptivity, effective messaging tactics, and then paid for mailed flyers with photos depicting families and firefighters – along with information about Measure GG. The outgunned retail business owners who had the temerity to post signs saying “No on Measure GG” were visited by off-duty code enforcement officers and off-duty sheriffs, who asked innocuous questions about their businesses and city services. In some cases, these off-duty city employees suggested the business owners take down their “Yes on GG” signs, because it might dissuade city workers from shopping or eating there.

This is intimidation by any other name. No, it doesn’t compare to the practices inflicted on citizens of some corrupt mafia state. But it must be exposed and challenged, because it represents an unhealthy cultural drift away from pluralistic democracy and towards coercive cronyism in a system dominated by the nomenklatura. Government unions are the primary cause of this unhealthy drift, abetted in this case by bond underwriters who are pleased to loan money to local governments that blew up their budget to comply with union pay scales.

The efforts of Stanton’s reform activists are laudable. But until the entire paradigm is altered, they oppose special interests that are empowered with taxpayers’ money, perennially funded, perpetually engaged. In the public sector, collective bargaining should be severely restricted, if not eliminated. Political activity by organized groups of public employees should be curtailed. Until that happens, reform activists play at tables where the deck is stacked, and ordinary citizens are the victims.

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Ed Ring is the executive director of the California Policy Center.