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Diana Carey, Westminster CC candidate

OC Tribune Staff
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CANDIDATE PROFILES for city offices in Garden Grove, Huntington Beach and Westminster.

Note to readers: The Orange County Tribune is posting the results of questionnaires sent to candidates for city office in Garden Grove, Huntington Beach and Westminster as a public service. These are not paid political ads and do not imply endorsement. They are being posted in the order in which they are received.

Name:                  Diana Lee Carey

Office:                  Reelection to the Westminster City Council

Residence:          Westminster

Occupation         Councilwoman/Educator

Education            BA/MA Degree

Public Service    (see attachment)

I am running for office to continue my service and dedication to the citizens of Westminster and the region.   I have an in-depth knowledge of transportation, water, and infrastructure issues.  My business and administrative management experience make me uniquely qualified for this leadership position.

Major Issue:  The major issue facing Westminster is our dire financial shortfall that is a result of a structural deficit caused by inadequate reimbursement of property tax, the loss of Redevelopment, and non-payment of sales tax.   I have included a copy of a “Financial Fact Sheet” that I researched on this subject.  All factual and historical information has been verified for accuracy.  While no one ever wants to pay more taxes, at this time, a .01 sales tax investment in our city will preserve our safety services, stabilize our finances, and enable the city to develop other revenue source, while maintaining a full-service police department better able to handle the escalating criminal activity affecting the City.

DIANA CAREY, candidate for re-election to the Westminster City Council.

General Accomplishments for 2015

Council-Related Activities

City of Westminster Financial Information:

Contact Councilwoman Diana Carey: Dcarey@westminster-ca.gov; 714-892-7979 (home)

General Background:

The City has a $12million long-term shortfall known as the ‘structural deficit,’ or the difference between ongoing General Fund Revenue and expenditures which includes needs not currently being addressed; the yearly budget deficit is $5-6million = current inflows vs outflows.  The City has been using reserves to balance the budget since the loss of Redevelopment Funding. The City will have insufficient reserve funds by 2018, and the structural deficit will be at $15.5million.

Questions & Answers….

  1. What caused the deficit problem?

Loss of Property tax…Westminster has the lowest return on Property Tax in the County and is 2nd to the bottom in the State.    Why?  Prior to the passage of Prop 13 in 1978, to keep taxes low the city councils systematically reduced the property tax rate.   We were the only city to reduce the rate.  When Prop 13 passed, it put the entire State on the same formula, however, it froze the rate of return at what was in place in the jurisdiction at the time of passage.  So, for every $100 that our residents pay in Property Tax, the city only gets back $7.36.  On a $500,000 home, paying $5000 in Property Tax, the city receives $368.    Why can’t we change the rate?  Because the city was incorporated prior to the passage of Prop 13.  The entire State would have to vote on the change.  How does the low rate affect us in comparison to other city?  If Westminster’s tax rate was at the County average, we would have received back $50 million in Property tax since 2010

Loss of Redevelopment Funds…. The City lost $111,000,000 of Redevelopment Funds when the governor pulled funding to balance the State budget.  Some of the money was reallocated to special districts and schools.  Some funds allocated prior to 2011 are being used for their intended purposes, such as the upgrade of 22 parks.  It is important to note, that the city would not have been in Redevelopment if the return on property tax was adequate.

Sales Tax Revenue…Westminster has the lowest sales tax growth in the County at .63% over the last 12 years.  The sales tax is 8%…This means that if you spend $60 at Home Depot, the City gets .60 cents, we receive only a fraction of that if a purchase is online.  What about cash only businesses not paying sales tax? That is an issue. HOWEVER…If every business in Westminster paid their appropriate sales tax, we would still need from 8 to 11 auto dealers to make up the $12M deficit. (We have room for one) What about auto sales? Sales taxes are paid by where the vehicle is registered, NOT by where the dealership is located.

Revenue Loss: the Utility Tax and the Bed Tax…Westminster has one of the lowest Utility Taxes at 4%, but it is not on modern devices. In 2015-16, revenue fell $500,000 and will continue to decline.  (It was originally passed at 5%, but the City Council lowered it. It will need a vote of the people to revise or increase.) Every 1% raise=$1,250,000.  The Bed Tax is the lowest in the area at 8%.  (This is an issue for law enforcement because we attract more transients and violators)

  1. Can we make more cuts? Only small items…additional cuts will be to personnel/service that have already been drastically cut…  

The City cut 1/3 of its workers with the loss of Redevelopment and the Great Recession.  Currently, the city is under staffed, with lower compensation comparatively.  The police are staffed at 1980 levels, and are the lowest paid in the County.  We lost many of our support staff. We are one of the busiest crime cities =2014-2015 overall increase=25% last year: violent crime 49.72%; property crime 39.05%; response time improved.

  1. How will the .01 sales tax help? It is an investment in the city.

The tax will stabilize the budget to maintain the reserve.  We will have funds to increase safety, code enforcement, and it will allow us to increase development and upgrade business districts, all of which will maintain property values.  Is it assessed on services?  No, it is not on services, doctor visits, medicines or food, etc.   The good news…The .01 cent stays in Westminster, and we will receive the full amount on online purchases. (Because of the property tax and current sales tax, we are subsidizing State and County government.)  Will it hurt business? No city has experienced a decrease in business. Cities such as Stanton and El Monte had significant increases because of safety and the upgrade to business shopping areas.   (Stanton added 156 new businesses). Other cities to pass sales tax measures are La Habra, Avalon, Commerce, Culver City, El Monte, Pico Rivera, San Fernando, Santa Monica, South El Monte, South Gate, Long Beach, and Arcadia. Fountain Valley placed it on the ballot, and Cerritos is considering it.

What about outsourcing the services, including the WPD?   We already outsource services where possible.  Outsourcing means a loss of local control and a potential for increased costs. We closed our fire department 16 years ago and contracted with the Orange County Fire Authority. That contract increases a minimum of 5% yearly.  We are responsible for the pension obligation of the fire (and police) for the years they work for us.   Those funds come out of the WPD pension fund along with our officers’ retirements.  If the WPD is contracted out, we will have no one paying into the pension fund so when it is depleted, monies will come from the General Fund causing the city to reduce service further, or go into bankruptcy or receivership.  Is the OC Sheriff Dept. a full service department? Only if you pay for the additional services.  For example…Stanton had only basic OCSD service (we provide backup if needed=inter-agency reciprocity) In, 2015, the city paid $1.6 million more than it did for the same number of officers in 2005.   Would we be able to start up again? No, the cost would be prohibitive and there are not enough officers coming out of the academy, or management transfers.  When they’re gone, they’re gone.

  1. What about bankruptcy? Or returning to the County? Or receivership?

We are not a good candidate for bankruptcy because we do not have debt, except infrastructure needs and pension obligations, which are not restructured.  Also, any of the above have a negative effect on businesses ability to get loans, and cause reduction in all property values. Disincorporation would need the approval of LAFCO (Local Agency Formation Commission) and a vote of the people.  If the city returns to the County, an analysis of the cost of providing all city services would be done.  If the property tax and sales tax do not cover the cost of services provided by the county, an additional levy would probably be assessed upon property owners.   With receivership (think Detroit)… a trustee would sell off all assets to meet the pension obligations and other debt; probably assess an additional fee on property owners and possibly institute a sales tax.  There would be a drastic reduction in services.  Under all scenarios the services we provide for seniors, underprivileged, students and the homeless will be dramatically cut or eliminated. We could sell our few assets, such as the water department, but when that money is gone, we are back in the same position, and with increased water rates.

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