PVE Community Newsletter

Serving Lunada Bay, Malaga Cove, Montemalaga and Valmonte

This Issue

• $7 million Baseline Tax to Continue Existing Services

• $17.5 million Tax provides New (TBD) Services

• Why isn’t Council giving Residents choices?

• City increased spending 9% annually, for 6 years

• Staffing Misinformation

• Conflicting Information at Town Halls

• Cost Savings Opportunity #4

• Council Doubles Down on Subsidies causing Tax Increases

  Council reaches out to residents stating more specifics on tax increase are promised in the future

$17.5 million Tax for New (TBD) Services

While CM McGowan titled his slide “Anticipated Needs”, he then described his $17.5 MM tax as “nice to haves” like trimming all the trees in the city. Appropriately, former Mayor Murdock points out VIDEO no other city in CA does so because it is cost prohibitive.  The city already has a process for resident to apply to trim cities trees funded by the applicant.

• Measure E Police Tax replacement: this makes sense

• Capital Costs: CM McGowan admitted they lacked analysis [VIDEO Time: 38:37] for costs, so his $4.25 million is just a placeholder. Due diligence is still needed on the city’s $14.5 million Unfunded Capital List LINK (page 75), includes costs already funded by the County and finally fixing City Hall Complex.

• Projected Structural Deficit: this seems to make sense, but appears overstated. It includes many one-time costs, such as the Bay Boys lawsuit and the Housing Element which artificially inflated the baseline by about $2 million.

• Wildfire Risk Management: This is unnecessary. The 2025 cost was $700k, which the City Mgr said he can reduce by $400k with goats LINK. Nov 2024: County’s Measure E passed, which can provide County funding for fire abatement LINK, which should be used to increase fire abatement. Fire clearing the #1 request per the residents’ survey.

• Pension ‘Pay Down’: the city contradicts itself by representing here that $1.3 million will “pay down” the debt. At the town hall, the City stated $1.3 million “is to prevent additional debt, not eliminate it.” [VIDEO Time: 30:33]

• Special Projects: lacks specifics and due diligence (padding?)

• Increase in Fund Balance: the city already satisfies the “Fund Balance Policy” Page ii, with more than the amount required. This money does not need to be replenished annually and makes no sense.

The $17.5 MM Tax was Left Unjustified

Residents are told their feedback is important, however…

The City will not provide service choices between the $7 MM baseline tax and the $17.5 MM New (TBD) Services tax that residents can actually choose from….

Residents are not Given Choices

City Increased Spending 9% Annually, for 6 Years

2020 (6 years) average annual increases: 9% LINK Double rate of Inflation: 4% LINK

2010 (9 years) average annual increase: 2% LINK Inflation: 2% LINK

2027: Council seeks another 45% increase in expenses to $40 million, requiring taxes are tripled to fund their elevated spending.

Source: Audited Financial reports: LINK

Staffing Misinformation

CM Lazzaro falsely claimed staffing positions were eliminated; 4/15 video and video again, 7/1 video:

Contrary to CM Lazzaro’s assertions:

• 2019: 56.5 Positions Link (see Exhibit I)

• 2026: 56.5 Positions LINK (17th page)

Council now claims they “need” to hire 8 new positions (LINK Page-3) to maintain the services 56.5 full time employees have been providing for many years.

Why doesn’t the City focus the impact of the 15+% vacancy rate they have maintained for 5-years LINK (2nd page).

What are all these people going to do?

Conflicting Statements at Town Halls

Council members made the following assertions at the Townhall:

1. CM Quinn claimed we have funded our police LINK.

   This is inaccurate: We have underfunded our polices’ pensions by $13 million, which costs us $1 million in interest each year and growing until we pay it [VIDEO Time: 30:33]

2. CM McGowan explained his annual $4.25 million infrastructure tax. He said “I’m talking about everything from the sewers, the streets, the City Hall buildings, the club, the cliffs" [VIDEO Time: 35:22]

   However, PVE’s consultant stated the County pays for 90% sewer costs VIDEO and most of PVE’s street maintenance VIDEO. Due diligence is needed.

3. CM McGowan claimed [VIDEO Time: 16:02] that other PV Cities receive 23% of property taxes, while PVE only receives 11.3%

   However, city records show other PV cities receive 6.3% LINK (page 23), not 23%

4. CM McGowan claimed the costs to collect money for paid parking exceeded the revenue LINK

   However, when the Council reviewed paid parking (11/26/24) expected revenue was not discussed or disclosed LINK

If tax increases are essential, why not justify with facts?

Cost Savings Opportunity #4

1. The city struggles filling positions and have discussed the tight labor market for public sector employees.

   Opportunity: Attract and seek private sector employees who bring unique perspectives and skills. The private sector has tremendous talent to offer.

2. The city assumes employees are less expensive than contracted services.

   Opportunity: Conduct a cost comparison of fully loaded employee costs, including overhead and pensions.

The city has struggled for years to hire a finance director and now the Council wants a new financial system. Since finance is not a core responsibility (back office), outsource the function to a firm that provides public financing services.

To Help our City, keep your suggestions coming. Send to Info@PreservePVE.org

Council Doubles Down on Subsidies

Council votes to increase subsidies for private development using deficit spending and future “essential” taxes.

This will benefit high-density building, Council claimed to oppose.

Amid:

• 2 years of deficit spending

• out-of-control debt growth

• hiring a PR firm for crisis/reputation management LINK (noted on 4th & 5th pages)

• expensive/repetitive mailers marketing tax increases as “essential” without justification

2024-2025: Council unanimously voted LINK to increase building and planning fees by 6% after giving 11-16% COLA increases + 5% merit salary + pension increases to staff who provide these services. Union Contracts: 2024: Admin, Police 2025: Admin, Police

WHEN will Residents get a Voice?