Lemon Grove Once Again Facing Bitter Choices Over Its Future

Government

Lemon Grove Once Again Facing Bitter Choices Over Its Future

Conversations about trying again to pass a new tax measure have kicked off another round of public debate about the true costs of disincorporation as the city of 27,000 teeters toward insolvency.

Lemon Grove City Hall / Photo by Adriana Heldiz

Residents and local officials in Lemon Grove know the city faces an uncertain future if it does not successfully pass a new sales tax measure, and some of them are ready to get it done. But they’ll have to win over the trust of citizens, many of whom are dissatisfied with the way the city manages their tax dollars.

Those citizens say adding a sunset clause to the measure, making it temporary rather than permanent, could warm them up to the idea. They also want to see a spending plan for the revenue.

These conversations have kicked off another round of public debate about the true costs of disincorporation as their city of 27,000 people teeters toward insolvency, spends most of its money on public safety and faces the possibility of handing over land use control to the county.

When the small, cash-strapped city presented a sales tax to voters last spring, the message was clear: If residents couldn’t secure a new revenue stream, they would have to say goodbye to their independence. That effort went down in flames.

Measure S, a three-quarters cent sales tax, was swiftly rejected in March 2020 with 57.5 percent of voters opposed. But many citizens have said their “no” vote wasn’t necessarily a vote in favor of disincorporation — they thought the city should spend the money it already has more wisely.

“The biggest issue that I have come across, and I know it’s different with everybody, is trust,” said Chris Williams, who ran an unsuccessful bid for mayor in 2020. “Right now, there is a lack of trust in leadership and that was proven when Measure S ran.”

With few new sources of revenue on the horizon, some citizens and local officials are eager to get another chance at passing a sales tax. Councilman Jerry Jones predicts that, at this rate, it would need to be done in 2022. The latest budget projections show the city exhausting its reserves in about five years.

“There needs to be a more open, detailed list of where the added revenue from the sales tax will go to,” said Lemon Grove resident Tim Felton. “I think that would help with public trust.”

Williams said a sunset clause should help generate more support among Measure S’s opponents who are reluctant to give more money to a city with a well-documented history of financial troubles.

Getting a sales tax hike passed isn’t easy. California’s Proposition 13, passed in the late 1970s, requires local measures that would raise money for a specific purpose to get two-thirds approval from the voters as opposed to a simple majority. Nearly 60 percent of voters rejected Measure S, some of whom argue that disincorporation is not only inevitable but preferred.

“We’re too small of a city and we can’t afford to be a city, because there is too much administrative overhead,” said longtime Lemon Grove resident Jack Moore. “We should be like Spring Valley, Lakeside, Alpine and Fallbrook. Those are bigger cities than we are, and they’re not incorporated; they know it doesn’t make any financial sense.”

But even if the city disincorporates in a few years, the residents might not be able to escape a future tax of some kind.

According to a 2018-19 financial audit, Lemon Grove has about $13.2 million in long-term debt outstanding, about half of which is related to pension liabilities.

“As part of the deal to get the successor agency to take on these liabilities, we would need to facilitate some kind of debt payment plan and perhaps that would be a special tax over a period of time — 20, 30 or 50 years — to cover that debt so the county and the rest of the county taxpayers are not unnecessarily taking on a clear detriment,” said Keene Simmonds, executive officer at the San Diego Local Agency Formation Commission, commonly known as LAFCO, a subdivision of the state agency that oversees the dissolution of local governments.

Lemon Grove is currently pursuing a handful of other revenue streams — including a tax on marijuana sales and digital billboard signs — although Jones said those efforts would barely be enough to pull Lemon Grove out of the red.

“If we want something better, then that sales tax will not only guarantee us more years of maintaining our autonomy, but we would also be able to bring back some of those services and bring back the quality of life that people want,” Jones said.

City Manager Lydia Romero said the city isn’t exploring any other revenue options. She attributed the budget constraints to the rising costs of government services such as police and fire. Mayor Raquel Vasquez did not respond to Voice of San Diego’s request for comment.

Marijuana Provides a Helping Hand

The City Council in December approved a 5 percent marijuana tax that was authorized by voters following the success of Measure J in the general election.

Projections show Lemon Grove taking in about $350,000 annually from the sale of medicinal cannabis from every operating dispensary, with one business currently open and another slated to open in early 2021. Because of zoning restrictions, the city anticipates it will max out at four marijuana businesses – a number local officials hope to reach by 2024.

Lemon Grove has not approved recreational cannabis, but Romero said the Council will weigh in on an ordinance to allow such sales in February. Voters first approved medicinal sales in 2016.

Considering the city’s financial position, some people have been critical of the pace at which officials are pursuing revenue-generating marijuana policies.

“I feel like everything is being dragged at a snail’s pace,” said Kathleen Mclean, who lives just outside Lemon Grove and is engaged to Williams. “I would rather see them look at other cities, implement what has already been done – don’t recreate the wheel – and open the city up.”

A lot has to go right for marijuana tax revenue to hit the city’s projections. Across San Diego County, for instance, cities have brought in considerably less money than projected since the start of legalization. Collectively, the projections were millions of dollars short, with revenue that paled in comparison to some of its smaller counterparts around the state.

The Price of Public Safety

Simmonds said conversations about how to avert insolvency need to begin now, and that Lemon Grove should start by assessing the feasibility of offloading fire protection to the county.

The city already contracts out its police services to the San Diego County Sheriff’s Department in an attempt to save money and receives fire services from Heartland Fire & Rescue, which also works with La Mesa and El Cajon. Still, the costs continue to swell.

Lemon Grove currently has 76 percent of its funds for this fiscal year – about $11.4 million – allocated for fire services and police. La Mesa, which has about double the population of Lemon Grove, budgeted about 62 percent of its funds to fire and police this year.

Simmonds said Lemon Grove’s public safety spending is very alarming, and leaves very little funds for other city needs, such as public works.

“Drawing from my own experience in exploring the topic in several California counties, it is reasonable to suggest any time a city is dedicating more than 50 to 60 percent of its general fund to public safety, it merits attention,” Simmonds said. “Once it passes 70 percent it transitions from attention to concern and the need for immediate redirection – however it can be accomplished.”

While the city’s most recent budget shows fire operations and supplies have sustained significant cuts from the year prior, spending on department salaries and benefits has increased by 4 percent.

Simmonds said there may be an opportunity for Lemon Grove to further consolidate its fire services into a larger operation – the San Diego County Fire Protection District serves 42 unincorporated communities – for additional savings.

These kinds of arrangements have become increasingly common around the state as smaller cities struggle to keep up with public safety costs. In Los Angeles County, 60 cities and every unincorporated community contract with a single fire protection agency.

The Reality of Disincorporation

If Lemon Grove isn’t able to secure enough additional revenue, the city would become a rarity: Only 17 cities in California history have faced disincorporation.

It’s an outcome that some residents have welcomed, including Moore.

“The purpose of city government is just public safety and public works, and everything else is just administrative overhead,” he said. “If we were not a city, we would not be paying for a mayor, a council, a city manager.”

Moore helped spearhead the campaign opposing the most recent sales tax hike proposal.

The process of disincorporation would require a petition signed by voters or a resolution from the City Council to be considered by LAFCO. The agency would then have to assess Lemon Grove’s assets and liabilities, all of which would need to be taken on by a successor agency (presumably, the county).

Even if LAFCO finds disincorporation feasible and Lemon Grove passes the initial hurdles, there would still be a process through which citizens and landowners could reverse the effort. Citizens would not only be voting on the future of Lemon Grove’s cityhood, but also whether they are prepared to potentially take on the municipality’s debts in the form of a separate tax.

A report produced by a Bay Area law firm in 2010 about disincorporation in California says such a tax could not be levied without voter approval, and the county cannot legally impose a tax on all its residents. There is currently no precedent for understanding what happens if the city is bankrupt and citizens decide they don’t want to pick up the bill.

Given how uncommon the process is, it’s not yet clear how disincorporation would play out in Lemon Grove. Some citizens look to the examples set by their unincorporated neighbors for clarity.

“We would have a town council,” said Moore about the prospect of an unincorporated Lemon Grove. “Spring Valley has a town council, Fallbrook has a town council, so all these here unincorporated cities still have town councils that can coordinate with the county supervisor.”

The creation of a community services district, as Simmonds explained it, would grant Lemon Grove all the same powers it currently has at city hall, with one major exception: The county would be in charge of making all land use decisions.

Jones, the Council member, said he is fearful of how Lemon Grove would change with the county telling it what to do.

“If we become the only two trolley stops in unincorporated San Diego, where do you think they’re going to put all their low-income housing?” Jones asked. “They’re going to put them on top of the trolley stops.”

Picking the Better Parent

The central question at the heart of disincorporation is one of uncertainty: Would citizens be better served under city governance or county governance?

The rarity of disincorporation makes this a hard question to answer.

Lemon Grove citizens have grown accustomed to public service cuts since the great recession, and recent budget strains brought on by COVID-19 haven’t helped. The budget adopted last June for the current fiscal year included about $800,000 in spending cuts.

As a result, some city streets appear to be largely neglected, marked by cracks and potholes. Citizens who report these kinds of repairs to City Hall can expect to wait up to three weeks for their request to be processed, according to a December budget report to the City Council. Before the city made cuts to its public works staffing, those requests took seven working days.

Jones said those cuts, which saved the city $5,000 this fiscal year, shows that the needs of ordinary citizens take a backseat at City Hall.

“The public will never see the $11,000 we spent on the League of Cities,” Jones said, referring to the statewide municipal lobbying group. “They’ll never see that money. But that $5,000 that we could have spent on public works will definitely affect their lives directly, as soon as they walk out their doors.”

The city has also shed sheriff’s deputies over the years, leaving Lemon Grove with a smaller public safety force. As a result, traffic control has risen close to the top when it comes to citizens’ qualms with city services.

“I live on Madera Street, where people drive 100 miles per hour down the street on their way to Encanto every day,” Lemon Grove resident Brian Rickel said. “I had to build a fence around my yard so my child wouldn’t get killed.”

Williams, the former mayoral candidate, said he regularly avoids certain streets due to potholes and insufficient lighting. Although he is supportive of maintaining Lemon Grove’s cityhood, Williams hasn’t ruled out the possibility of contracting more services out to other entities.

“If we can’t afford the essentials for our community, as much as I would like for the city of Lemon Grove to stay a city, maybe it is better to look at what the county can provide,” Williams said.

As a former resident of La Mesa, Rickel said he witnessed that city transform after it passed its own sales tax in 2008. Despite being critical of cuts to public services, he said it would hurt to see Lemon Grove lose its identity as a city, so he’s prepared to vote in favor of a sales tax to avert that outcome.

“Now we have to beg the City Council for things to get done. Could you imagine having to beg the county for things to get done?” Rickel asked. “Cities fight to be incorporated. Cities don’t fight to be unincorporated, and there’s a reason for that.”

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