What would happen to life in Westminster if the city goes bankrupt – closing all public parks, cutting entire police divisions and losing after-school programs in the heart of Orange County’s Little Saigon?
Westminster residents might learn the answer in a couple of years.
That’s according to a new, public report from City Hall, attached to the City Council’s meeting scheduled for Wednesday night – one of the city’s clearest and most direct indications yet of a coming fiscal calamity.
Without the extension of a sales tax measure that’s kept bankruptcy at bay since 2017, Westminster’s years-long structural deficit will increase “by over $16 million annually,” starting after 2023, the report reads.
“And by fiscal year 2024-25, the city is completely out of reserves,” it adds.
Bankruptcy.
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The report goes on to list the resulting public service casualties, like the ability to employ a community services director and top city planners, as well as access to all parks, street maintenance, and help from City Hall with property issues.
For the last three years, elected City Council members have been repeatedly warned about the growing emergency – and implored to act on it – by staff and a city-appointed fiscal watchdog panel created virtually in response to the same issues which previously came to boil in the 2010s.
Instead, vitriol between opposing factions of council members – over issues like political control over community events and monuments, and statements some officials make to the Vietnamese media – has put city business in the backseat and complicated basic policymaking.
And the hostility at the dais, whose elected Vietnamese American majority made Westminster a nationwide, civic representation symbol in 2008, has now made public meetings nearly unwatchable for members of the public.
“There’s so much of it that they’re not doing – the business of the city,” said Diana Carrey, a former council member who’s now a commissioner watchdogging Westminster’s spending of sales tax money. “That’s what a council meeting or school board meeting is for.”
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Carrey sits on the Measure SS Committee, which scrutinizes city spending of money that comes from a similarly-named sales tax increase measure that voters approved in 2016.
The measure passed after council members at the time agreed to put the choice before voters, facing the prospect of millions in yearly budget shortfalls after redevelopment agencies were phased out in California, which the city relied on for years to fund staff salaries.
But now the sales tax increase, which went into effect in 2017 and brought the city more than $10 million extra annually, won’t last forever.
Like other tax measures, it has a sunset clause, expiring on Dec. 31 this year.
So far, there doesn’t seem to be enough political will among council members to put the question back on the ballot in time for this year’s election cycle.
While public charges of bad ethics and conduct can fuel hours of debate in Westminster, council members in August 2020 had nearly nothing to say about the city sales tax situation when first asked by city staff to put the issue in front of voters.
[Read: Westminster Council Inaction Leaves Bleak Outlook for City’s Finances, Basic Functions]
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To date, a majority of council members have not decided to let the city’s registered voters choose whether to keep the sales tax increase.
Yet a chorus of residents that same year also questioned why they had to chip in for what they considered to be years of financial mismanagement at City Hall.
City staff members have acknowledged the displeasure in tax hikes, but argue the city’s now at a point where basic services are lost if the measure doesn’t live on.
The loss of programs like senior and youth services might be especially painful for the large immigrant community residing within Westminster’s borders, said City Manager Christine Cordon.
Cordon used to be the city clerk until an executive leadership vacuum meant she was suddenly top brass as of late last year – and the city’s first Vietnamese American to hold the top management job.
“And we do have a large, low and moderate income-based community – a lot of them families – who rely on these services,” Cordon said in a Tuesday phone interview. “The loss of the sales tax measure prevents us from being able to provide those basic needs.”
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The consequence would be a City Hall whittled down in its use for the public, where even local elections will get more difficult amidst what’s warned to be mass layoffs and downsizing, according to the staff report.
Another warning from the staff report is the potential impact on Human Resources.
Specifically, the report states that a decrease in oversight on personnel matters “will lead to increase in liability” for a city where, already, numerous employees have filed costly legal claims alleging wrongdoing at City Hall over the years.
Even with the sales tax measure in effect since 2017, “staffing levels have remained at minimum levels and many programs that were eliminated have-not been reinstated to ensure basic services were maintained,” the staff report reads.
“That sales tax should have put us ahead but really it didn’t. It just kept us even,” Carrey said.
“It’s unwatchable,” she said, of the city’s circumstances overall.
In the short term, the city’s current mid-year budget prospects are notably optimistic, according to a separate report attached to the council’s Wednesday meeting agenda. Though some positives were offset by negatives.
City Hall is saving money because of the staff vacancies, the report says, but the manpower shortage has subsequently eaten away at those savings through overtime pay for the employees and the need for part-time personnel.
And while some projections in the report “look very favorable for the City,” staff say current economic uncertainty, higher fuel prices “and expected interest rate hikes resulting in more costly financing for automobiles, homes, and consumer loans could impact these projections.”
With the expiration of a tax that officials now consider being the one thing standing in the way of them and bankruptcy, city services will be restricted to the essentials “that do not provide for enhancing quality of life or development of the community,” it adds.
“Absolutely unwatchable,” Carrey said.