Measure RP: Thoughts on the City’s ‘Tax Payer Protection Act’

Beverly Hills city council has placed on the November ballot a measure to conditionally add three-quarters of one percent to the sales tax IF Los Angeles County voters at some point in the future approve any increase. Dubbed by city council as the ‘Beverly Hills Tax Payer Protection Act,’ Measure RP would put our city a step ahead of the county by grabbing the resulting revenue. But the measure raises some questions about equity. In this time of unprecedented stress on county health and homelessness services, is it fair to put Beverly Hills first?

The thinking behind Measure RP: if county voters OK a sales tax increase in the future, then the resulting increase in sales tax revenue should be ours to spend. “Measure RP preserves local control over these tax dollars keeping their use for public safety protection, emergency preparations, infrastructure improvements, etc.,” says city council in its argument in favor of Measure RP. “This Measure is basically a Beverly Hills Tax Payer Protection Act.”

How would Measure RP work?

The Beverly Hills city attorney explains how Measure RP works:

The sales tax rate in Beverly Hills is 9.50%. The legal maximum rate for sales taxes in California is currently10.25%. Consequently, there is a maximum of .75% (or ¾ cent) of sales tax that is available to be imposed in Beverly Hills. Any governmental entity that imposes the .75% tax will be able to keep the revenue generated by the tax and use that tax revenue to benefit the entity that imposed the tax….Measure RP would authorize the City of Beverly Hills to impose this sales tax so that the revenue generated from the tax would remain in Beverly Hills. — City Attorney’s Impartial Analysis of Measure RP

For more information read the city’s Measure RP FAQ. City council unanimously supported adding Measure RP to the ballot and urges a ‘yes’ vote. “Rather than lose $28 Million to Los Angeles County, let’s keep it home where we all can benefit from its use,” councilmembers say.

However arguments in favor of Measure RP were not persuasive for one Renters Alliance reader who raises very good questions about the assumptions behind it. Here we post the message in its entirety.

Why you should vote NO on Beverly Hills Measure RP

While there is no organized opposition to Beverly Hills Measure RP on the November 3rd ballot, there is good reason to vote NO.Currently, Beverly Hills says that it doesn’t need to raise our sales tax. The City says they can manage the revenue shortfall due to COVID–19 through tighter management and budget cuts, which is a good thing. However, Measure RP provides that if Los Angeles County determines THEY need to raise the sales tax to continue to fund County services, then Beverly Hills can step in and usurp that money for themselves. The problem here is two-fold.

First, if Beverly Hills wants that money, they should make an honest case for it to their voters (as West Hollywood is doing by asking voters to approve a sales tax increase now) instead of letting the County be the bad guy, and then appearing to be the savior by claiming that tax money for the City.

Second, Beverly Hills is part of Los Angeles County. Los Angeles County supports our City in many ways, especially during COVID–19. Our restaurants benefit from the work of the County Health Department, many low-wage employees who keep our businesses running rely on County services, small businesses in our City can apply for County grants to help them during the pandemic, and the County runs our elections, to name just a few of the essential services impacted by COVID–19 that are provided to us by the County. Beverly Hills is not an island; we should be conscious of our role in supporting ALL the services that we benefit from, not just those provided by our City. Supporting the County – if they ask for it – in a time of need will come back to help us in the long run in this City many times over.

I urge you to vote NO on Measure RP. Let the City of Beverly Hills be upfront in asking for a tax increase if one is needed, and let’s all be willing to support the larger community of LA County in which we live.

We find those arguments persuasive. In sum, if our city wants the future sales tax revenue, then why not make a case to voters to raise the sales tax as 33 other cities in Los Angeles County have already done? (Only one other city in the county has adopted a conditional tax measure like Measure RP.)

The Hurry to Place Measure RP on the Ballot

Another question is the ground on which the council acted to put Measure RP on the ballot. The city was in a hurry to qualify the measure and, to that end, councilmembers unanimously agreed on August 4th to declare a “fiscal emergency.” That allowed council to adopt a resolution on an accelerated timetable. The only public speaker was under the mistaken impression that Measure RP was a new tax (which she opposed). View the discussion on council video (starting at 1h:48m).

So is Beverly Hills really experiencing a fiscal emergency that warrants an urgency resolution? Councilmember Bob Wunderlich was not persuaded. He cited instead the “vanishing window” of time in which the city could act to qualify the measure for the November ballot. “That really is the emergency,” he said. “If we don’t do something now we lose the opportunity to do something for the next two years.” He added, “It’s a protective measure but it is poor public policy.”

Whether or not the fiscal emergency warranted the urgency ordianance didn’t trouble other councilmembers. “I am strongly supportive,” Councilmember Julian Gold said. He envisioned using some of the new revenue (should it materialize) to “help businesses.”

After some discussion council voted to adopt a resolution to put the measure on the ballot. But that doesn’t make it good public policy!

Where Would Additional Sales Tax Revenue Do the Most Good?

This is the equity question. City council may capture any new revenue from a future sales tax increase but arguably it is Los Angeles County that most needs it. The county’s Department of Public Health is at the center of the pandemic response and the county has borne the brunt of caring for those without housing during the COVID-19 crisis.

Moreover, this past summer county supervisors agreed to roll out a $100M COVID–19 Rent Relief program to provide a cash rent subsidy to income-eligible tenants — including tenants in Beverly Hills. (In fact our city has referred tenants to the county for relief as we belatedly try to implement our own rent subsidy program.)

And the county really is grappling with a fiscal emergency — a $1B budget deficit — which county supervisors recently agreed to partially offset with staff cuts and a half-billion dollar cut to various county agencies. Is it right that any additional revenue should not go to the county if voters countywide approve a sales tax increase?

West Hollywood Asks Voters for More Money

The reader also harbored a concern that Beverly Hills has identified no purpose for that potential future sales tax revenue. The reader noted that West Hollywood has placed a tax-increase measure on the November ballot. But unlike the Beverly Hills conditional tax measure, West Hollywood instead asks voters directly to support a tax increase to “maintain critical services” during the pandemic. That’s courageous.

WeHo Measure E graphic

In contrast, Beverly Hills does not ask voters to commit to a sales tax increase even though the pandemic has blown a hole in our own budget. Far from asking for money, the city had doubled-down on no new taxes. “YOUR CITY COUNCIL MEMBERS ARE ALL OPPOSED TO ANY NEW SALES TAX,” says the argument in support of Measure RP. “AGAIN, NO CITY COLLECTION UNLESS THE COUNTY TRIES TO!”

Given the challenge that the pandemic has posed for local governments it seems an odd time to characterize a hypothetical future sales tax increase as a cash-grab by the county. But that’s how it reads to this reader and to Renters Alliance. You decide: a ‘yes’ vote on Measure RP favors the conditional tax while a ‘no’ vote opposes the conditional tax. (In either case the current sales tax rate is unchanged.)

Measure RP Resources