Inglewood’s latest budget indicates the city’s finances are in much better shape than elected officials suggested in early August, when they declared a fiscal emergency and placed two tax increases on the November ballot.
In fact, the City of Champions expects one of its best years of revenue in the past decade, thanks to double-digit leaps in property taxes, proceeds from SoFi Stadium and other fees, according to the 2021-22 fiscal year budget adopted last week. The budget estimates revenues of $152.5 million this year, compared to nearly $130 million received prior to the pandemic in 2018-19. Property taxes alone are up 112% from where they were five years ago.
Though Inglewood still projects a more than $9.8 million deficit by the end of the fiscal year, the red ink appears to come from out-of-the-ordinary spending, rather than from pandemic-related revenue declines, according to the budget.
Inglewood’s 2021-22 budget earmarks $160 million total from the general fund, roughly $21 million more than last year. The largest of the new expenditures include a $5.7 million increase in salary and benefits, an $8.1 million jump in the Police Department budget and $1.6 million for renovations at the long-shuttered Morningside Park Library.
An analysis of 10 years of Inglewood’s budgets showed the city’s expenditures had a median increase of about $10.7 million annually. If the city’s spending had followed the median for 2021-22, Inglewood would have a $5.8 million surplus instead, according to the data.
Asked why voters should support the tax increases in light of the higher-than-usual spending, Inglewood City Manager Artie Fields accused a reporter of having a “racist predisposition.”
“If a budget is $1 out of balance, a fiscal emergency can be declared,” Fields stated. “We are presenting full funding budgets from this point forward.”
In a follow-up email, Fields elaborated that the city’s spending will “complete deferred capital maintenance projects that can no longer be delayed,” including a $4.5 million remodel of the Police Department’s locker rooms and repair of a leaky roof at the maintenance center. The city also plans to fill about $4.3 million in vacant positions, he said.
“With the explosion in sports and entertainment in Inglewood, it is absolutely necessary to fully fund the City workforce in which we held vacancies to balance prior budgets,” Fields said.
He did not respond to a question asking if he still considers the city to be in a fiscal emergency.
‘Overspending and mismanagement’
Inglewood Treasurer Wanda Brown, whose clashes with Mayor James T. Butts Jr. prompted her to file a $10 million lawsuit against the city, alleges the fiscal emergency is just the latest attempt to mislead the public about the state of Inglewood’s finances. Brown said she’s tried to warn officials about overspending for years, but instead of receiving support, she alleges she was ostracized and her salary was cut.
The pandemic gave city officials something else to blame for Inglewood’s deficits, she said. “It’s definitely overspending and mismanagement, there’s no ifs or buts about it,” she said.
Inglewood’s declaration of a fiscal emergency in August allowed the city to bypass the typical time restraints for placing a tax increase — or two in Inglewood’s case — on the ballot.
Ballot measures
Measure H would increase the tax on hotel rooms by 1.5%, bringing Inglewood in line with Santa Monica, Culver City and Los Angeles. Measure I would create a tiered tax on property transfers, with only sales above $1.1 million seeing an increase. Together, the measures will raise about $4.5 million annually.
According to Brown, she’s received calls from residents questioning how that money will be spent. The ballot language broadly states that the measures will “address homelessness,” “ease traffic,” “keep public areas safe/clean” and “increase affordable housing,” among other things.
At the same time, Inglewood is in the process of seeking funding for a $1 billion people mover that would ferry visitors and residents from the Metro Line to Market Street, SoFi Stadium, The Forum and back. Originally, a consultant hired by the city suggested the two tax increases as a possible funding source for the transportation system, records showed. But when Inglewood declared its fiscal emergency and placed the measures on the ballot, the city’s assistant finance director said the money was needed to address “immediate funding issues precipitated by the COVID-19 pandemic” and its “longer term financial planning needs.”
The city argues Measure I, the more controversial of the two, will not impact most homeowners, instead targeting commercial properties and multifamily dwellings, and only at the point of sale.
The measure’s opponents disagree. In a statement, resident Cindy Giardina, a former councilwoman and school board member who filed the argument against Measure I, described the evergreen measure as a “Venus flytrap” that will eventually latch on when residents’ properties inevitably exceed the threshold. Current residents might avoid it, but their heirs will not, she argued.
“With all the development in Inglewood, the Stadium up and running, and major Inglewood companies reporting trillions in income during COVID-19 pandemic, the financial losses of the city are due to faulty decisions,” Giardina said in a statement.
Giardina argues that renters, in particular, may feel the impact sooner if apartment owners pass the cost of the tax onto their tenants.
Pandemic effects overstated
Inglewood’s newly adopted budget aligns with a recent report from the California State Auditor’s Office, which found that the economic doom-and-gloom surrounding the pandemic was overstated. The report predicted Inglewood specifically would only see a $4 million decrease in revenues from 2019 to 2022 attributable to the pandemic. Inglewood, and most other cities, “would receive far more stimulus money than they lost during the pandemic” and should be considering cutting taxes, rather than increasing them, the report found.
The 2021-22 budget does not include the $31 million Inglewood will receive from Uncle Sam, even though $16 million of that stimulus money has been sitting in the city coffers since July. The money was never mentioned during the presentations about Inglewood’s fiscal emergency.
Fields stated the city is still waiting for guidance from the federal government. Yet the U.S. Treasury issued an “Interim Final Rule” outlining how the funds can be spent in May.
Inglewood will receive the second half of the stimulus in July 2022 before the fiscal year ends. The funds must be earmarked by 2024 and spent by 2026, according to the U.S. Treasury.
If the projected deficit still exists at year’s end, Inglewood will cover the gap with $63 million in reserves that the city built up using bond proceeds meant to pay off its pension debt.
