Facing a $4.6 million general fund deficit, the Garden Grove City Council will vote on raising the city’s paramedic tax by one cent Tuesday. The increase could mean $1 million annually for the city.
The paramedic tax is paid for through property taxes. Currently, homeowners pay six cents per $100 of property value. The average homeowner would pay an extra $30 with the one-cent increase, according to Kingsley Okereke, finance director.
The council held a study session last Tuesday to discuss ways to decrease the deficit. Another idea is to increase Garden Grove’s hotel tax, but that must be approved by voters.
Increasing the city’s hotel tax by 1.5 percent would likely bring in $1.5 million, and the rate would still be a half-percent lower than Anaheim’s 15 percent rate. Four council members must agree to place a tax measure on the ballot.
An increase in Garden Grove’s rate might even encourage Anaheim to raise its rate, said Matthew Fertal, city manager. But most cities don’t go higher than 15 percent.
The council’s biggest concern was how to get voters to approve the increase.
“We’ve failed on tax measures before because people didn’t understand them,” council member Bruce Broadwater said. “Someone needs to explain it.”
But council member Dina Nguyen said residents wouldn’t mind asking visitors to pay more.
“I think the public will go for it,” she said.
A word that did not come up during the study session was layoffs. No layoffs are planned and the city will do its best to avoid them, Fertal said.
Instead, furlough days for management positions are already in place. The city will save $655,000 with its current furlough system. Those savings could increase if more employee groups agree to take furloughs.
Also, some eligible employees will be encouraged to take early retirement. Eligible employees must be at least 50-years-old. If an employee retires, the city will not fill the position.
“Early retirements vacate positions,” Fertal said. “It’s softer, kinder way to create a vacancy.”
Employees who retire early get an automatic two-year bump in service time. So an employee with twenty years of service will get credit for 22 years and a 5 percent increase in retirement benefits. The trade-off for the city is a decrease in payroll and benefit costs.
Even if approved, the tax increases would still leave the city almost $2 million in the red. City staff will continue to look for ways to save more money until the final budget is due in June, Fertal said.