Vernon officials will be asking voters Tuesday to approve three taxes they said are crucial to closing a large budget gap caused by bad investments.
Officials are threatening deep cuts to Vernon's police and fire departments if the taxes, expected to net $8 million annually, don't pass. The city faces an $8-million general fund deficit.
It's a shift from previous years, when Vernon's 1,800 businesses benefited from low taxes and cheap electricity. But a series of bad investments made through its Light and Power Department, made worse by the recession, prompted the city to boost its electric rates by about 40% in recent years and move to increase taxes.
Vernon has gone through a number of cost-saving and revenue-generating measures — including a buyout of 35 employees, which saved $8 million over five years, and the sale of 500 acre-feet of the city's water rights to Norwalk's Municipal Water System for $6 million.
Vernon's legal costs have also decreased now that it's no longer fighting disincorporation, said Fred MacFarlane, a city spokesman. It defeated the 2011 disincorporation bill in the state Senate, but only after spending thousands of dollars and agreeing to a ongoing reforms.
Public safety was hardly touched by recent budget cuts that hit the rest of the city, MacFarlane said. The general fund for the 2013 fiscal year was about $49 million; it was approved with an estimated $12-million deficit, which is now at $8 million.
"But there's touching and then there's beheading," MacFarlane said. "These two departments would be the first in line to be slashed because other departments have already taken a substantial hit."
Vernon's 70 registered voters will decide the three measures, which will mostly hit the business community.
Measure K would increase the city's business license tax based on the number of employees by up to $28,450, starting in 2014. It will bring in $4.5 million a year in revenue.
Measure L is a special parcel tax on non-residential lots that will generate $1.9 million annually, starting in the 2014 fiscal year and ending in 2023.
Measure M, the one that would affect residents, would levy a 1% utility users tax on electricity, gas and water It would generate $1.6 million annually and would exempt residents who are blind, disabled or low-income.
Some 50,000 people are employed by Vernon's 1,800 businesses, which bring in about $1.1 billion in taxable sales annually, according to a city-commissioned report.
The city accounted for 15.3% of Los Angeles County's food industry employment, 10.7% of its apparel-related employment and 5.5% of furniture employment.
In a September 2012 special election, a users tax on all utilities was defeated 24 to 16 after it was strongly opposed by Vernon's Chamber of Commerce. It would have had a collective cap of $250,000 for electricity, water and gas.
The chamber declined to comment on the 2013 measures, as did Gavina Coffee and Owens Illinois, two of Vernon's biggest businesses.
Peter Corselli, a manager at a large Vernon cold-storage business who traveled to Sacramento in 2011 to lobby legislators against disincorporating the city, said he was resigned that the latest taxes would pass.
"You can't keep crying over and over and over again," he said, adding that at least the proposed taxes were less "onerous" than initially planned.
"I know some of the other businesses looked at it in a different way than I did. I looked at it as it's going to cost us $100,000 a year, and that's a lot better than $200,000 a year," Corselli said.
The business community is taking a neutral stance on the 2013 taxes, said John Van De Kamp, the city's independent reform monitor and a former California attorney general, because the measures aren't striking them as hard as before and Vernon officials made it clear they are necessary.
"The business community, Chamber of Commerce and the city sat down and wrestled the tax proposal that's on the ballot to the ground," Van De Kamp said. "On the surface it appears to be fair and will generate the income that is needed to close the budget gap."
For years, Vernon's industries turned a blind eye to what was happening at City Hall in terms of taxes and rates, he said.
"City government sort of ran amok and during the recession, for better or worse, decided not to raise rates," Van De Kamp said, "and so we're paying the price right now."