Burbank, a city known for its rich history and vibrant culture, faces a unique challenge in the wake of shifting national demographics and burgeoning financial obligations. A report released by the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, on January 31, 2023, revealed a significant decline in live births and general fertility rates from 1970-2021 across America. This development, coupled with the passage of Measure P – a local sales tax increase – has raised concerns about the long-term sustainability of municipal budgets, particularly in regards to pension liabilities and the increasing size of city government.
According to the California Department of Tax and Fee Administration (CDTFA), as recently as 1991, the sales tax rate was only 4.75%. However, this rate has more than doubled over the decades. The passage of Measure P in 2018 raised Burbank’s combined state and county sales tax from 9.5% to 10.25%, a rate higher than that of Los Angeles. The government’s share of a sale has continued to rise over the decades, leading to concerns about the implications of such fiscal policies.
Ralph Persinger, the former owner of Burbank Antiques, was one of the local merchants critical of Measure P. He argued that the tax hike might spell doom for many mom-and-pop stores in the neighborhood. His own store, Burbank Antiques, went out of business subsequently. He believes city officials should have focused on reducing the number of city employees to save money instead of increasing the sales tax. Some residents and companies have echoed Persinger’s sentiments, complaining that the government has become a partner in business, a departure from practices not too long in the past.
The challenge of balancing the city’s financial commitments and management structure, especially in light of Measure P, is not unique to Burbank but gains particular salience here. As the city’s pension obligations grow alongside an expanding city government, balancing these demands with a potentially shrinking tax base becomes increasingly complex.
Under the stewardship of former City Manager Ronald Davis, a Burbank resident, the city appeared to navigate these turbulent waters successfully, according to a person familiar with the matter. However, since his departure and the introduction of Measure P, some Burbank residents have voiced concerns about what they perceive as ‘runaway overtime‘ and the impact of the increased sales tax on local businesses.
Justin Hess, the current City Manager, has had to navigate these challenging terrains amidst the changing demographic landscape. According to public property tax records, Hess resides in Sun Valley, a fact that has raised some contention among Burbank residents who believe a city’s leader should live within the community they serve.
The question now facing Burbank is whether a change in its governance structure is warranted. Should the city manager position be an elected role, held directly accountable to Burbank’s citizens? Or, should the city opt for an elected mayor, replacing the city manager entirely?
Dr. Jane Pearson, a public administration scholar at the University of Southern California, notes, “An elected official, whether a mayor or a city manager, brings a level of democratic accountability. They are directly answerable to the public. However, it’s essential to remember that city management requires a specific skill set and expertise. Turning it into an elected position could inadvertently prioritize political savvy over administrative competence.”
As Burbank grapples with these challenges, it must also consider the potential impact of demographic shifts and fiscal measures like Measure P on the city’s fiscal health. A shrinking and aging population could strain the city’s resources. Fewer births, as indicated by the CDC report, may result in less demand for certain public services, potentially offsetting some of the financial burdens. As people age, they retire and also spend less money. A local government that is dependent on revenues from spending, for example, a local sales tax; would seem a perilous predicament in light of the current state of allegedly runaway overtime.
Yet, these demographic trends are far from certain. Their effects on Burbank’s fiscal health will be influenced by a myriad of factors, including changes in immigration, economic conditions, and state and federal policies. Sacramento and the City both have made public statements on their policies to promote more accommodations for low-income persons including requirements for mandatory low-income housing on multi-family housing projects. Some argue that an influx of low-income residents would result in lower revenues for the City under their current schema for sales-based taxation revenue dependency. “It’s a house of cards and will eventually fall over. The City and Sacramento both are pushing out, by design, the wealthy residents with over-taxation and that means more low-income people coming into Burbank who will expect the same level of services that were once paid for by the wealthy residents who are now starting to leave. That means more people chasing fewer resources. This will only result in one of two scenarios, either tax rate increases which no one wants to see, or the cutting of services.” Said a resident who prefers to remain anonymous.
Chairman of Disney Parks, Experiences and Products Division Josh D’Amaro informed that by 2026, Disney will complete a new regional facility in Central Florida to relocate most of Disney’s Southern California-based jobs not fully dedicated to Disneyland in its Parks, Experiences and Products Division. High-paying jobs leaving Burbank may spell doom and gloom for the current revenues the City is depending on based on their current tax scheme.
In the face of these uncertainties, it becomes even more critical for Burbank to ensure effective, accountable leadership capable of making tough decisions and guiding the city toward a sustainable future.
As Burbank stands at this crossroads, its decisions will shape not just its own future but could also serve as a blueprint for other cities grappling with similar challenges. How it navigates these uncharted waters may well be a lesson for all, in the delicate art of city management amidst shifting sands.