Why have local revenue trends slowed?

The City is experiencing concerning revenue trends as the cost of doing business continues to rise. There are a number of contributing factors, including:

  • Limited local property tax return – Of 88 Los Angeles County cities, Diamond Bar was incorporated with the lowest general levy share of property tax revenue return. The City receives just 5.19 cents per dollar of property tax generated – the rest goes to the County and other regional agencies.  
  • Limited local sales tax return - The current countywide sales tax rate is 9.5% – or 9.5 cents per dollar. Only one cent of the 9.5 cents is dedicated to Diamond Bar for local use. 
  • Original Community Design & Land Use Character – When Diamond Bar was conceptualized in the late-1960s, the vision was to build a predominantly residential community with limited commercial and retail uses. The thought was that future residents would turn to their nearest shopping center for basic goods and services, and commute elsewhere for appliances and other major purchases. This concept drove the design of the City’s retail areas which still today largely operate as neighborhood shopping centers with relatively low sales tax generators such as anchor grocery stores, small goods-and service-oriented tenants and quick-service restaurants.  Absent are high sales tax generators such as auto dealerships and those found in regional shopping malls with big-box stores, entertainment and dining establishments.  
  • Changing retail markets - The rise of e-commerce and the convenience of online shopping have impacted local sales tax revenues in both Diamond Bar and cities across the state. People simply aren’t shopping locally as much as they used to. 
  • Increasing Maintenance & Operational Costs – As the City’s facilities age, maintenance and operation becomes more expensive. The City is now 30 years old, much of its infrastructure even older.  As these facilities age more resources are necessary to ensure that Diamond Bar’s streets and facilities like the Diamond Bar Center and City Hall building, which also houses the Diamond Bar Library, remain safe, reliable and of high quality.
  • Increasing Public Safety Costs – The City’s Law enforcement contract with the Los Angeles County Sheriff’s Department has increased about 5.2% annually since fiscal year 2015-16, from $5.7 million to an estimated $6.9 million in fiscal year 2019-2020. Costs are expected to exceed approximately $7.2 million annually beginning in fiscal year 2020-21. 
  • Pension Costs - The City participates in the CalPERS pension plan and has a current estimated unfunded liability of approximately $6.8 million. CalPERS has implemented a mandatory 30-year payment plan similar to a mortgage to pay off the unfunded liability. The City’s estimated FY 2019-20 payment is approximately $600,000. The City Council directed that the City reduce the long-term interest costs associated with the 30-year payment plan by paying off the unfunded liability in 15 years.  While this increased the annual cost to approximately $600,000 for FY 2019-20, it is anticipated that it will ultimately save the City approximately $1.9 million in the long term.

Show All Answers

1. What type of measure is being considered?
2. Why have local revenue trends slowed?
3. How much would the measure generate?
4. How would the funding be used?
5. Can the State or County divert the funds from Diamond Bar?
6. If Diamond Bar voters were to not approve a City sales tax measure, could the sales tax rate in Diamond Bar increase anyway?
7. Would there be accountability/transparency protections in place for this measure?
8. Have other local Cities adopted a sales tax increase?
9. What has the City done to proactively manage costs?