Westminster Council Inaction Leaves Bleak Outlook for City’s Finances, Basic Functions

JEFF ANTENORE, Voice of OC

Westminster City Council Chambers.

A meeting filled with uncomfortable silences, tears and pleas from city staff ended with inaction and a potentially grim fate for Westminster, its finances, and the structure of its police department and City Hall.

One of the last chances for City Council members to ensure a steady stream of revenue for their cash-strapped town – by approving a ballot measure to continue and expand a citywide sales tax increase before it expires in 2022 – came at a Monday session in the middle of the day. 

The meeting ended, and the window closed, without enough support by policymakers to put the question before voters in time for Orange County’s Aug. 7 filing deadline for the November election. 

Either reluctant to continue a tax hike or from an apparent lack of better options to fall back on, some council members appeared to be at a loss for words Monday, unable or unwilling to present voters with a choice on how to prevent a potential fiscal calamity.

Without the indefinite continuation of a ramped-up citywide sales tax increase, city staff argued, Westminster could face a $17 million budget shortfall, a depletion of its reserves, and eventual bankruptcy a couple years after the expiration of the current tax hike. Among the casualties, they said, will be scores of part-time city employees, police department divisions and City Hall offices, as well as other basic city services.

The next chance to bring a tax increase before voters won’t be until November 2022. By then, officials say, cuts will have already been made and that tax, if approved by voters, won’t take effect until April 2023. 

Monday’s discussion provided a glimpse into many soon to come for other cities in Orange County where high sales taxes have served as only a temporary fiscal crutch.

“I don’t want to see layoffs,” said Councilwoman Kimberly Ho through tears at one point in the meeting, as she and her colleagues took in a daunting presentation by staff about the potential losses to come. Judging from Monday’s outcome, layoffs predicted by staff to come by next year now appear imminent. 

A motion by Ho to put the sales tax continuation – and a further hike of the already-increased rate from 1% to 1.5% – on the ballot failed without enough support on the council. 

A substitute motion by Councilman Sergio Contreras to place on the ballot a continuation of the current 8.75% sales tax with no further increase – which staff argued was necessary because not even the current rate could sustain the city’s finances in the coming years – also failed for lack of support because it needed four votes.

That vote failed because Mayor Tri Ta abstained without giving a reason, while Councilman Tai Do – who along with Councilman Charlie Nguyen said very little during the meeting – voted “No,” also without saying why he dissented.

Ta didn’t respond and Do wasn’t immediately available to comment Monday night.

JULIE LEOPO, Voice of OC

The Westminster City Council at a meeting in 2019.

Nguyen, along with Ho, voted “Yes” on Contreras’ measure, saying in a later phone interview Monday night that the next step is to salvage what little sales tax revenue the city can and “make it easy for business owners to bring businesses to Westminster.”

For much of the two-hour council meeting, it was staff doing the talking. 

To Mayor Ta’s vocal bewilderment, his invitations for council members to give input during the discussion were initially met by long silences. Though Ta himself rarely spoke about the topic at hand. 

As council members refused to speak up, Ta filled the silence wondering aloud if their microphones were working or they were on mute through technical difficulties. 

City Clerk Christine Cordon said everything was functioning.

Ho did most of the talking through clarification questions she had for staff and her unsuccessful motion to put the tax on the ballot.

Resident Roger Mindrum said he initially opposed the original sales tax increase approved by voters in 2016 “knowing people would take their business elsewhere with a lower tax rate.”  

“Now that more cities in our area have also increased, it is now more acceptable and a dire need,” he said, adding he would support a continuation of the sales tax increase and perhaps even the further increase on top of it. “But if there’s no sunset date I will vote no,” he added. 

Other cities like Santa Ana, La Habra and Fountain Valley are set to see their tax measures sunset before 2030. Santa Ana has the highest sales tax rate at 9.25% of the 34 cities in Orange County. 

Other residents like D’vorah Mariscal agreed there’s a need for the current tax to continue, though she said there should be more accountability and it shouldn’t continue indefinitely.

“If you choose to put this on with no sunset clause, I’m afraid I have to walk with my wallet,” Mariscal said. “I love Westminster, we’ve been here almost 20 years, but I’m unemployed now and I’m watching every penny … I’m not doing bottles and cans yet … but I have to take care of my family.” 

Acting City Manager Sherry Johnson said even if Westminster stayed the course with the current 1% sales tax increase, it would be on a path to eventual bankruptcy.

In her presentation to the council, she pointed to what got the city into the business of tax increases in the first place: the state doing away with redevelopment agencies in 2011. It was a move that devastated Westminster financially because the city used redevelopment money to subsidize staff salaries and in 2012 had to let go of a third of its workforce. 

“We also saw a staff mass exodus due to our low-paying status and our unstable financial future,” Johnson said. Add on to that a federal discrimination lawsuit against the police department that left the city on the hook for millions of dollars in 2014. 

Staring down the barrel of bankruptcy in 2016, City Council members first approved their 1% sales tax increase ballot measure, Measure SS, that allowed officials to close certain funding gaps, reinvest in streets, establish trusts to pay off pension costs, and even subsequently approve raises for and hire more police officers. 

The Westminster police union spent heavily in 2016 in support of the sales tax hike. The union’s current president, Kyle Seasock, also spoke Monday in support of extending the levy.

Yet continued lawsuits over corruption and allegations of wrongdoing at City Hall and payoffs to litigants through non-disclosure agreements have ramped up the city’s legal spending, largely related to the police department.

“Stop frivolous spending and wasting money and we may have a chance for recovery,” Mindrum, the resident, said in his public comments, echoed by others later during the meeting. Commenters said the city’s expenditure choices haven’t helped its current situation, which they noted mirrors the one it faced prior to 2017.

“Not all of our problems have been solved in four years, but we’ve made some good headway. Pre-COVID, we were looking to add another $1 million toward streets and possibly up to $2 million to our reserves,” said Johnson, the acting city manager. 

Then the coronavirus hit. 

Subsequently, the city this year faced a $4.7 million deficit even with the sales tax money coming in with equal, significant budgetary cuts required to meet that shortfall.

As it became clear that there wasn’t enough support to put any tax on the ballot this year, staff attempted to remind council members of the consequences of not doing so.

“We can’t keep not asking our residents to reinvest into our city,” Johnson said. “We have very few ways to bring money in and I get taxes are not popular – today we’re not asking the council to make a decision or to express their beliefs … we’re just simply asking them to allow the voters an opportunity.”

She added: “While one-and-a-half (percent) seems outrageous, we haven’t got any choices.”

At one point Assistant City Attorney Christian Bettenhausen jumped in wondering if the vote really needed approval of a four-fifth of the council and not a simple majority, a misperception City Attorney Dick Jones quickly corrected.

Mayor Ta eventually found himself ending the meeting with no action taken.

“That’s it, right?” he said.

“Ok,” Jones remarked.

Brandon Pho is a Voice of OC staff writer and corps member at Report for America, a GroundTruth initiative. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.