Fullerton puts sales tax measure on the November ballot; allowing commercial cannabis also gains …

If Fullerton voters agree in November, the city expects a $25 million infusion to the city’s coffers from the addition of a local sales tax, funding that could help it, among other needs, get a handle on its inventory of deteriorating streets and infrastructure.

City officials are also looking at easing restrictions on cannabis businesses, from dispensaries to manufacturing facilities, to add future additional sources of revenue and help efforts to clamp down on the illicit market in town, officials said.

The City Council on Tuesday, July 7, decided to ask voters to approve a 1.25% city sales tax, which would increase the rate on purchases made in Fullerton to 9%.

City officials said Fullerton is facing millions of dollars in deficit for years to come given its growing pension obligations and the recent plunge in sales and hotel tax revenue during the coronavirus pandemic. Fullerton also needs to invest tens of millions of dollars more every year in its infrastructure, including its streets, which are ranked among the worst in Orange County, they said.

“Even if we had $150 million today, we couldn’t fix everything tonight,” Mayor Jennifer Fitzgerald said. “But we should start. If we value the city, we have to reinvest.”

The age of the city’s infrastructure isn’t a new problem, but Fullerton doesn’t have a big commercial sector, as some neighboring cities do, and it’s a struggle to generate enough sales tax revenue to cover day-to-day operations and still have enough left over to make headway on updating its streets and such, City Manager Ken Domer said.

A recent study by Fullerton’s infrastructure committee estimates the city needs to invest nearly $25 million more annually to bring its streets, bridges, parks and trails up to par.

The 1.25% city sales tax would generate about that much annually for Fullerton, officials estimate and the city would sock away about half in a fund dedicated to fixing infrastructure. The rest could go to other needs, such as community policing, addressing homelessness and increasing library services and youth programs, Domer said.

Some community members, including from the infrastructure committee, told the council during the meeting they thought a 1% sales tax dedicated entirely to fixing the city’s infrastructure would be a better idea, so voters know exactly where their money will go to. The city should also make reforms and cuts to employees’ salaries and benefits, they said.

“There has to be an active effort to live within your means,” said Councilman Bruce Whitaker, who was the only council member to vote against putting the sales tax measure on the November ballot.

Fitzgerald said the city has gotten cost-saving concessions from its employees. But those aren’t enough, and having fewer police officers in the city, as some suggested, is not an option if residents want faster responses to their calls for help, she said.

And Domer noted having a sales tax dedicated to one purpose would require approval from two-thirds of the voters, compared to just a majority required for a general sales tax.

“My concern is about the entire fiscal condition of the city,” Domer said. “If it was a special tax, you would have beautiful roads, but the rest of the city would be fiscally unstable.”

Leading up to November, Fullerton will pay a contractor up to $125,000 to “educate the residents” about the city’s operations and financial condition, including up to $95,000 for newsletters and mailers.

Fullerton is also exploring commercial cannabis businesses as a way to generate more revenue, although Domer didn’t have an estimate as to how much revenue the city could expect to see. He did say commercial cannabis “is not a massive revenue opportunity,” especially with costs such as hiring more staff to enforce regulations and to clamp down on any increase in drug-related crimes.

Instead of looking at a tax on cannabis activities, businesses would sign a development agreement with the city outlining how much it would get paid, Domer said.

Under the draft proposal, the city would allow cannabis manufacturing, distribution, testing and cultivation businesses and retail shops such as dispensaries. Each segment, except testing, would be capped at five businesses that could get permits. City officials decided on the cap based on their staffing and resources, Community and Economic Development Director Matt Foulkes said.

Much of the council’s discussion focused on where those businesses should go.

As currently proposed, businesses would be allowed in industrial areas, which are concentrated in the southeastern and western portions of the city, and retail shops in areas zoned for commercial use. Businesses would have to be at least 600 feet from schools and parks.

Some council members wanted to increase the 600-foot buffer to 1,000 feet and also include homes. Some parents spoke at the council meeting, expressing concerns about having dispensaries close to where their kids go to schools.

But increasing the buffer could mean pushing all the cannabis businesses south of Commonwealth Avenue near disadvantaged communities, Councilman Jesus Silva said. “That to me is part of the social equity. If we are to do this, everyone needs to share.”

Fitzgerald saying she opposes commercial cannabis activities and Whitaker said the city is moving too quickly on the issue, but the other council members were behind moving forward and next the city will finalize the draft proposal.

“The thing is that marijuana is available in the city,” Councilwoman Jan Flory said. “The city is not receiving any benefit from it whatsoever, yet the cost to our city having to enforce and get rid of the illegal dispensaries has been costly.”

Before city staff sends its proposed rules to the Planning Commission, it will hold an outreach meeting, Foulkes said. He also said staff will consider provisions suggested by council members, such as further capping the number of businesses in certain parts of the city, increasing the buffer and having businesses contribute to a fund to support education.

“It’s not set in stone,” Silva said. “We’re starting to mix the ingredients.”

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