Long Beach's spending plan proposes 1.04 percent tax increase

Throughout their campaign for City Council last fall, Brendan Finn, Chris Fiumara and Mike Reinhart made it clear to Long Beach residents that they were going to work to prevent taxes from increasing.

That turns out to be easier said than done.

Long Beach’s 219-page proposed budget for fiscal year 2024-25, which was released on the city’s website late last month and presented at Tuesday night’s council meeting by Comptroller Inna Reznik and City Manager Dan Creighton, includes a homestead tax increase of just over 1 percent, and a non-homestead tax of roughly 2 percent.

“Property tax increase for homestead residents is 1.04 percent, or approximately $53, on average,” Creighton said. “We have been challenged by the City Council to reduce this further to zero, and we’re still working on making that a reality. So we’re not done; we’re still making some changes.”

Reznik said the budget’s projected increase in revenue is driven by an increase of more than $900,000 in property taxes resulting from new development and construction in the city, such as the Superblock, as well as an increase in sales and use tax revenue and investment income. The spending plan also has a one-time, $2.4 million reimbursement from the state for past expenses that the city will not be able to count on in future budgets.

The spending plan totals just under $105 million, an increase of about $2.7 million over the current budget. Reznik said that the city had little wiggle room when putting it together.

“When you have a budget that’s comprised of categories of expenses where you have no control, you have to figure out how to control whatever little portion of that budget you have control over,” she said. “There are major categories in a budget. For example, payroll is almost 37 percent of the budget, about $38.5 million.”

In his budget message, Creighton said that the primary factors are increases in collectively bargained salaries, costs related to health insurance, state Local Retirement System payments and the city’s property and liability insurance costs. Long Beach, he added, needs to absorb a $2 million increase in Police Department expenses that arose from the Patrolmen’s Benevolent Association receiving its first new contract in over 20 years.

As well, non-Police Department full-time payroll expenses are projected to increase by approximately $500,000.

The increases are projected to be offset by a combination of savings and increased revenues. The city will save almost $2 million as a result of reduced debt service payments, reflecting recently improved bond ratings.

“The city’s general fund balance right now is the highest it’s probably been in 15 years,” Councilman John Bendo said. “There was a lot of work put into getting that fund balance to where it is today, and some tough decisions had to be made, some ugly decisions. But they needed to be made to get the city back to where it needed to be and where it is today.”

Bendo also credited the city’s upgrades in its Moody’s credit ratings over the past few years for the relatively low tax increase. The city’s bonds were downgraded to just above junk status in 2019, but the ratings have been improving since then, to the current rating of A3.

“We’re going to get more interest from that fund balance this year than this city has had in years,” Bendo said. “Any money we borrow for capital projects, we’re going to pay lower interest rates on because, over the last few years, we got this city three Moody ratings upgrades. Three in a little over a two-year period, which is unheard of in the financial world.”

Creighton said the budget proposal was made “very cautiously and conservatively.”

“Dan, Inna and their team have worked tirelessly to get the proposed budget down to a 1.04 percent increase,” Finn, the council president, said. “If it stood, it would be the lowest increase in recent memory, but we promised a zero percent increase, and we’re going to deliver on that promise. Working with our partners in the (Civil Service Employees Association), I am absolutely confident we’ll get there.”

The next budget hearing will take place at the next council meeting, on May 21. If it is finalized by then, it will be put to a vote. If not, it will be voted on at a special meeting on May 28.