East L.A. residents would have to pay more for cityhood

A proposed independent city of East Los Angeles would not generate sufficient revenues to cover its costs unless residents and businesses pay higher utility taxes to help close the budget gap, according to a long-awaited  financial analysis released today. The report that will be used to help determine whether cityhood gets put to a vote estimates that the new city’s general fund could start off with an annual short fall of $11 million and that municipal financial reserves could be exhausted within  four years unless new sources of revenue are found.  The financial analysis by Economic & Planning Systems Inc. said that increasing the utility tax rate from 4.5% to 10% would raise an estimated $6.7 million a year to help cover city expenses.  However, the increase in the Utility User Tax (UUT) would need to be approved by voters. Said the report:

ELA cityhood would only succeed if both votes (cityhood and the UUT increase) were approved by a majority of ELA voters.

The prospect of having residents of East Los Angeles, which would be home to more than 126,000 residents, vote on both cityhood and a tax increase poses an additional challenge for cityhood proponents.

Cityhood for East L.A., the group working to form a city, issued this statement in response to today’s report:

“We remain committed to this fair and transparent process, and look forward to understanding the true economic health of East Los Angeles. The CFA helps identify the preliminary financial needs as options and solutions will be brought to the table. Long-term viability is key to having a complete picture of our local economy, and we look forward to reviewing the numbers with the L.A. County as we move one step further to preserve the culture and history of East L.A.

The financial analysis was commissioned by the Local Agency Formation Commission for the County of Los Angeles, the agency that reviews the proposed creation of new cities and boundary changes, to help it decides if  cityhood for East Los Angeles is financially feasible. The formation commission has said it will hold a community meeting to review the report at the end of July. If the commission determines a new city is feasible, East Los Angeles residents would vote on the issue in June 2012.

Three previous efforts to incorporate East Los Angeles, now governed by the County of Los Angeles, into a city have failed. The last attempt was in 1974.

Related post:

  • Is East L.A. ready to be a city? EGP News

No comments

  1. I think it is premature to make any assumptions at this point, the proponents have a chance to challenge some of the numbers on the CFA. In the end it should be the people who should decide whether East L.A. becomes a city, not LAFCO.

    But this cityhood effort is just beginning!!!

  2. LAFCO has scheduled 2 community meetings to inform local residents of the Comprehensive Fiscal Analysis of East L.A. which was released today:

    1) Friday, July 29, 2011, 6-8 PM.
    2) Saturday, July 30, 10AM -12 Noon.

    Both sessions will be held in the Auditorium/Main Multi-Purpose Room, Esteban E. Torres High School, 4211 Dozier Street, East L.A.

    The CFA public review report can be found at http://www.lalafco.org.

    Parking for these meetings is located in the street-level underground parking lot located off of Marianna Avenue. Interpreters will be available.

    It is critical that local residents, as well as local businesses, and other stake holders participate in these community meetings to enable them to make an informed decision about the incorporation effort, what the analysis is indicating, and the consequences of any path going forward in light of the “not viable” finding of the CFA .

  3. East Los Resident 2

    ELA Resident:

    Are you kidding me!? LAFCO concludes that Cityhood is NOT a viable option, essentially reporting we, East LA, will not be able to sustain ourselves and still you want to move forward with Cityhood? Please explain how you plan to pay for services without raising taxes?

    The cities comparable to East LA if city-hood comes into fruition are Compton, Inglewood, Lynwood.etc. I mean not to insult those cities, but simply to demonstrate a real picture should East Los become its own city. Do we really want to be in that situation? Let’s be practical please!

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