Paramedic Tax Is A Hoax.

Your property tax dollars, approved by ballot initiative 40 years ago “for the specific purpose of establishing and maintaining a mobile intensive care program known as Paramedics within the area of the City of Brea” have been diverted through the Redevelopment Agency/Successor Agency since 1978.

Every Council resolution creating or renewing the Paramedic Program special property tax, for 40 years, incorporated exactly that language. Not a single member of the Brea City Council (save possibly one) had a clue regarding the magnitude of their blunder – the product of a purposeful deception by members of senior staff.

Sounds a hell of a lot like a slush fund to me.

Based upon documents gathered through the California Public Records Act (CPRA), from both the City of Brea and the Orange County Auditor-Controller’s office, it is fair to assume that every City Manager and Finance Director, at minimum, was aware of the fiscal hoax perpetrated upon Council and an unsuspecting public for 40 years.

How much are we talking about?

Over $50 million of your tax dollars. Supposedly, thanks to some obscure directive in State law, these funds have been funneled through the RDA since 1978. Roughly 40% was spent on administrative costs, debt retirement and other expenses – none of which had diddly to do with a paramedic service.

When the state dissolved Redevelopment Agencies in 2011, things didn’t get much better. In fact, they got worse. Originally we did get our hands on 100% of the tax revenues collected.

In 2011 that was cut almost in half – 55% was paid to the Successor Agency letting them do whatever they wished with it. The remaining 45% went into the Brea Redevelopment Trust where the county followed state directions to pay off residual debts of the RDA.

How much longer will we be paying off RDA debt?

Total debt for the Successor Agency is $196 million. A payment plan has been submitted to the state’s Department of Finance, upon which we will be making payments until 2036. That’s 60 years to retire the debts created by the Redevelopment Agency.

The issue in a nut shell.

The people of Brea clearly expressed what we were willing to be taxed for. There was a legitimate attempt in the beginning, by well intentioned members of Council, to fulfill the people’s wishes.

Underneath it all, the covert diversion of tax revenue has continued, virtually unabated, for 40 years.

The good news.

Facts by the ton, discoveries that would light up the eye of Julian Assange, have been dug out of the archives and studied by a “team” including myself, 2 members of Council and 3 long time community leaders.

The details of decades of staff reports, resolutions, budgets, county tax records are being poured over and the revelations emerging out of the data paint a clear picture of the atrocious irresponsibility that ran amok… without restraint, for 40 years.

The gorilla is being drug into the light and the right people, the people we elected to oversee city business, are back in charge.

Undoubtedly more will be learned in the near future. We may be called back into the voting booth to help rescind a failed tax and approve a remedy that will provide us with the sort of paramedic services we thought we were getting 40 years ago.

Stay Tuned.

We’re a long way from knowing the complete truth and from digging ourselves out of a hole 40 years in the making.

tax

25 thoughts on “Paramedic Tax Is A Hoax.

  1. Interesting. Fullerton and Brea have a joint fire department. In Fullerton – so far – we pay a voluntary sum annually (about $100 a year) that includes paramedic service. Those who don’t pay are charged per call. The payment is made by checking the box on one of our water bills each year and including with the water payment.

    • Sharon… Fullerton and Brea share only command staff and beyond that are different organizations in many ways. Every property owner pays a special tax override levied at a rate of $0.045 per $100 Full Taxable Value. Sadly less than half of what has been collected in this “Paramedic Tax” has been spent on intensive care mobile services as the voters approved in 1978. A day of reckoning is coming soon.

      I would be curious to know how much Fullerton collects to subsidize their paramedics. Is it a separate department within the FFD? What is the cost if someone has to pay out-of-pocket?

      (Appreciate your good journalism, publishing the Fullerton Observer.)

  2. I thought I was royally pissed when I read your year end blog. That was nothing compared to this.

    I appreciate that you and those working with you have devoted the time and energy to uncover all of this. I’m at a loss as to how we should proceed. This is overwhelming.

    People should go to jail for this. They should forfeit their pensions at least.

    • Manny… The magnitude is overwhelming. We cannot let that deter us from seeking solutions, holding people accountable and guiding our elected members of Council by consistently making our opinions known.

      To date, over a thousand hours of records review, compilation of data and anecdotal information have been done. Maybe we’re half way to the finish line.

  3. Have been following this on Nextdoor as well.
    I’m too young to remember how this all started but I’m smart enough to know that when voters approve an initiative it’s the law.
    Most initiatives today are written and debated in such a way that most voters fill out their ballot unsure of what they just voted for, or against.
    What is it about “for the specific purpose of establishing and maintaining a mobile intensive care program known as Paramedics” they don’t understand?

  4. Rick, Great wake up call.

    There was a feasibility study presented to the City in 2016 about a joint paramedic and ambulance service with the City of Fullerton that would be self-funded and even profitable. http://www.ci.brea.ca.us/documentcenter/view/3880

    The feasibility study pointed out some legal issues that needed to be resolved such as the ambiguity of Brea’s designation of the provider of ambulance services because of law changes, as currently Brea had designated one private ambulance service as the sole provider without need for competitive bidding, while the City Attorney per the study said that Brea could take back that designation and then the City would have full power over such designation.

    Perhaps we can get two birds with one stone and without Fullerton. Since paramedics have to follow the private ambulance to the hospital, why not have an FD patient transport vehicle in each Brea fire station so patients needing emergency care (especially critical care) that only a doctor in a hospital can provide, provide the EMT services and transport the patient to the hospital.

    Also Brea would outsource billing of paramedic and transport services to insurance companies, Medi-Cal and Medicare who pay for such services, except for the co-pay and/or deductible. If this works, there should be no paramedic tax at all, and less time wasted following ambulances.

    • Tom… Well, you’ve added to my weekend reading substantially. Thanks, I think. While part of me leans towards maintaining local control as much as is feasible, I would be stupid to discount without serious study any possible solution to this Paramedic nightmare.

      I’m hoping, now with Council finally getting on board with all of the facts (no longer are they able to be withheld or obscured from them) that an ad hoc advisory committee will be created to determine the full extent of this fiscal quagmire and to come up with solutions that will:

      1) Honor the original intent of Brea voter’s as expressed in the ’78 ballot initiative.
      2) Understand the full extent of the problems and offer Council legal and sensible options to solve the problems.
      3) To put in place failsafes to ensure this sort of thing does not happen again.

      • Rick, Local control is better, but as you point out there have been and are many problematic local management decisions that have and will adversely affect Brea.

        These issues have not been in focus because Brea’s golden gooses, the Brea Mall and property development have provided a surplus for many years and are now starting to lay goose eggs. With sales and property tax revenues moderating and payroll and related pension costs rapidly rising, the need for managers with good decision making done solely in the best interests of Breans is critical.

        Best practices need to be followed by the City and management. I look at the simple issue of ensuring the fairness of the dismissal of a city commissioner, and how difficult that has become to resolve.

      • Tom… We’re on the same page in so many ways. Redevelopment was, at it’s core, criminal. Yes, Brea received numerous amenities from redevelopment. Some are little more than bangles that contribute nothing to the quality of life… shiney stuff to decorate “the Brea advantage.”

        Redevelopment was manipulated into a money machine, generating massive debt that could be perpetually refinanced and equity extracted with no concern of the multi-generational obligation shouldered by you, me, our kids and grandkids.

        We’ve had our share of felonious managers. They’ve left us stranded in a sea of debt. It’s time to quit hosting local elections based on popularity and start electing folks with the verifiable skills, the hours of dedicated time to do the job right.

        On the last matter, Council member Vargas’ clumsy, inarticulate and fully unwarranted misuse of a minor and illconceived scrap of municipal code should earn him permanent banishment from anything remotely looking like a leadership role… anywhere.

        For well over a year I’ve repeatedly been denied an opportunity to publically expose the facts, seek censure of Council member Vargas and provide the catalyst to amend municipal code… eliminating future infringement of Constitutional rights of due process on others giving service to the community.

        I’m promised that this will, at last, find it’s way onto the general session agenda.

  5. Rick, I may be somewhat off, but I find it troublesome that we are discussing issues that shouldn’t need discussion. Breans pay 6 figure compensations and pensions to supposed experts to take care of these issues.

    So, are some of us nuts to spend countless hours reading and analyzing reams of public records hidden with obscure jargon, creative financial accounting and legalese?

    When I see a 5 year budget with future projections of growing deficits, I see failure of leadership and management. A CEO who dares to present that budget report to the Board would be terminated on the spot. The failure to take proactive action to provide a balanced budget is inexcusable.

    An annual report that lists a multitude of accomplishments including trivial accomplishments is a red flag that serious problems exist. Brea’s official reports are of this ilk. Madrona may have been an easy way and short term fix to shore up property tax revenues, but at a cost too dear.

    • Tom… as one who has spent, literally, over a thousand hours pouring over public records on this issue alone – I hope to hell I’m not nuts. I started Brea Matters as a platform to address political and management issues in Brea and to encourage Brea voters to make better, more considered decisions when the filled out their ballots.

      In part, the presentation of current budget concerns at the recent Council workshop, was part of a campaign of “firing for effect” to soften up the beachhead. It backfired. It nudged me and several other Brea watchdogs to dig in deeper and helped lead to the discovery of the Paramedic Tax fraud and the chronic diversion of funds for 40 years.

      The annual reports, community report cards and the perpetual propaganda rag known as the Brea Line should take on a distinctively different tone and style from now on. If they don’t it will be a clear indication that the city’s management style has not changed and “transparency and accountability” are still little more than campaign buzzwords.

  6. Hi Rick,

    You mentioned on a NextDoor post that several projects transferred to the Brea Redevelopment Trust are tied to BOUSD projects from the mid-70’s and debts are being paid by the Paramedic Tax revenue. Would you elaborate on this statement?

    Thank you!

    • Connie… two projects tied to the property that is now the Target Center and Hines Brea Place, with 1972 designations, are now in the Brea Redevelopment Trust with current debt obligations being paid by the county.

      There is further mention of this property in a later 70s Council minutes where staff informs Council that BOUSD is considering amending the project to include an elementary school (not named) but no further discussion showed up in later minutes.

  7. Forty years and no one asked why a paramedic tax was funding redevelopment??? Paying taxes is upsetting enough, now it’s revealed we’ve been deceived.

    $50 million is a lot of money!

    Especially when you consider the paramedic income stream has been leveraged, maybe as much as twenty to one, by “bonding” the sale of long term bonds funding redevelopment. No wonder the State eliminated municipal redevelopment!

    However, the deceit continues unabated by our own Successor Agency Oversight Committee. Comprised of County and City member volunteers, who is representing the taxpayer?

    Rick, we appreciate your focus on a solution to this long festering problem. No doubt, researching records of the past forty years has been a lot of work! While discussions on this blog and NextDoor are just now waking all of us to the magnitude of our problem, Breans must act to get this tax rescinded.

    As one of the three involved community members, I can say how heartening it is to see City Staff and at least two Council members taking action to find a solution.

    Rescind this convuluted fraud and let Breans develop funding for our paramedic service. Perhaps shifting the burden to the 100,000+ daily visitors to Brea via an increased sales tax is a possibility?

    • George… The help and guidance I’ve received from you, John Bickel and Dwight Manley… plus the encouragement and reassurance of Council members Hupp and Simonoff, contributed greatly to this being more an investigation than an inquisition. Brea owes you all a debt of gratitude.

      If there was a way in… there will be a way out. It is not okay to dismiss the will of the people. The vision of voters 40 years ago is as valid today as it was then. It must be restored.

  8. The Oversight Board of the Successor Agency to the Brea Redevelopment Agency has prepared and submitted a “Last & Final Recognized Obligation Payment Schedule” (LFROPS) to the State Department of Finance (DOF). Resolution No. OB 2018-04 adopted January 23, 2018.

    We’ve been paying against this debt while repeatedly refinancing and pulling equity, for 47 years. Total debt for the successor agency is $196 million and payments are scheduled out to FY2035-36 before Brea is debt free.

    $196,000,000! About twice what Brea owes in unfunded pension debt.

    Successor Agency DebtThis shows what succumbing to a little greed in 1971 can explode into. Ignorance and an inability to project forward what the consequence might be led to this nightmare.

    Adding insult to injury, in 1978 Brea voters were convinced to approve a Paramedic Tax that only a little more than half ever made it into the General Fund… and the Fire Department budget.

    Staff kept this diversion of funds secret, blocking Council from any possibility of discovering or rectifying the problem.

    Who you gonna call?

  9. Can you break down for me in simple terms; How much total did Brea taxpayers pay in Paramedic Tax in 2017; Of that amount, how much actually went to Brea? How much for redevelopment bonds? (those two numbers should add up to equal the total tax); Of the money that does go to the city, what account(s) is it deposited into?

    Thank you

    • Dwight… As simple as is possible given the discrepancies that exist between city and county accounting records.

      FY2016-17: Staff estimated total revenue from the Paramedic tax of $3.04 million. The county actually levied $3.85 million in taxes.

      Staff presented Council a budget for “Paramedic Services” of $5.08 million. Using the county actual levied tax, the “budget” was SHORT by $1.23 million… using the staff’s estimated revenue the “budget” was SHORT by $2.04 million.

      Public records indicate that Council approved/adopted Resolution No. 2016-047 to renew the Paramedic Tax and expenditures at their regular meeting on June 7, 2016 however there is no record of it on the agenda for that date. I’m informing the City Clerk of this error.

      Since 1993 this annual process has been relegated to the Consent Calendar so staff reports and minutes of any discussion are nil.

      • Using the OC official figures of a secured tax roll total of $8.612 billion for FY 16-17, the expected paramedic taxes would be $3.87 million which is basically your figure as well. Then using data from one of your posts, the RDA tax roll to total tax roll is 43.5%, which would mean $1.69 million of paramedic taxes would be expected to be diverted to the Redevelopment Trust and $2.19 million expected to go directly to the general fund or subfund for paramedic services.

        In that the City budget figure for paramedic taxes for FY 16-17 is $3.04 million, there is maybe a leakage or set offs of 22% of total expected taxes, possibly due to tax sharing agreements or other agreements that reduce the property taxes or require return of the property taxes collected to the property owners under such agreements. Curious about that leakage.

        Curious, if the OC Auditor-Controller can be requested by the City to no longer divert the paramedic taxes to the Redevelopment Trust, or if legal action is required. Also, the Successor Agency refinancing bond indentures which were not included in full with the Official Statement may require the City to not seek redirection of the paramedic taxes back to the City to provide extra collateral for the bond debt.

      • Tom… beyond dissecting numbers until my eyes bleed, here is the simple explanation (think Occam’s Razor).

        From 1978 to 2011 ALL revenue from the Paramedic Tax was passed on to the Redevelopment Agency. State law required the distribution of “tax increment” revenue generated in this manner to be “processed” through agencies floating bonds to be repaid with tax increment. The law has not changed.

        With the dissolution of RDAs in 2011, Successor Agencies were created to take over the bond obligations. Redevelopment Trusts, managed by the OC Auditor-Controller, were created to capture revenue collected from RDA areas and funds used to retire debt. Brea never touched these funds.

        The balance of the tax collected, from non-RDA areas, was sent to the Successor Agency. Remember, the state law had not changed. (Which is also why the OC A-C has no authority to alter the conduct of their duties.) The Successor Agency spent some of that money to cover administrative costs and passed the remainder to the General Fund where all accounting stopped.

        A portion of the General Fund was budgeted for the Fire Department but no line item accounting of actual expenses ever clarified the real cost of providing paramedic services.

        As has been previously reported, Chief Knabe estimated roughly $350K for 21 firefighters certified as paramedics (see Dwight’s comment above)… liberal supporters would agree to a budget twice that size, still below $1 million.

        To the issue of return of property tax, there is a statute of limitations and only the last four years might be applicable. I don’t know the process needed to create refunds, nor do I care. I am more concerned about stopping the bleeding and creating a revenue stream to meet actual, verifiable, realtime obligations.

        Finally, I’ve been told that Prop 218 includes a provision allowing cities to rescind taxes. Redirecting revenue is not a solution, the source needs to be cut off. Period.

  10. I’m not concerned with what the city thanks we should pay, only what we actually are taxed. So you’re saying we paid $3.85 million above and beyond the prop 13 limits , which was only authorized by a city wide vote in the 70’s, to pay ONLY for paramedic services.

    And based on our discussion with the fire chief and city manager, those costs are 21 firefighters x 15,000 each + 1 ems overseer and supplies, or $700,000 to be safe.

    This means that Brea property tax payers are paying 5.5 times more than the cost for the service. And to add insult to injury, of the excess 3.1 million we overpay, 1.75 million of it does not even come back to Brea, instead going to pay for redevelopment bonds that have been refinanced with no clear records of where that money went?

    So in plain Brea speak, we have been going to the Brea gas station, paying for a fill up, but only getting a 1/5 tankful, and of the money the Brea station ripped us off, they send most of the money back out of town for who knows what.

    The next question is “why would a city manager(s) and complicit staff do such a thing? If decades of annual financial reports were just pure fiction, and pay raises, fat benefits, and job security were based on these glowing reports, it would explain all of this.

    In private industry, they have something called a “clawback” when illegal acts of self enrichment are discovered . This sounds like that….

    • Dwight… In plain Brea speak… yes to all of the above.

      No one still alive today with knowledge of what occurred in the mid-seventies is about to ‘fess up. I suspect greed combined with a complete lack of vision or concern for consequences formed the basis for their motives.

  11. Good grief, Rick. This is an absolute behemoth undertaking on your part! Congratulations for bringing so much to light. You have shined a light into the darkness of what has been hidden for so very long.

    I truly have confidence in the people of Brea to willingly listen, heed and become involved in helping solve these problems. These problems affect every one of us in Brea. We are Brea and no one should be allowed to destroy us from within.

    Rick, thank you for working tirelessly in an attempt to correct such a terrible wrong. I sincerely hope the rest of Brea will thank you for the unremitting work you do without compensation.

    • Judy… You’re too kind. Thanks. I do hope a growing number of our friends and neighbors will hear this as a wakeup call and use the power of their vote to help turn things around.

Comments are closed.