Paramedic Tax Snowballs Into An Avalanche Of Deceit.

It’s taken over two weeks to fully digest what was immediately apparent to me as I watched the November 6 Council meeting – my inquiry into what it really cost’s to support and maintain a paramedic service uncovered issues of much greater significance, and staff couldn’t be less pleased.

The snowball downhill became an avalanche of deceit.

I have hunted down and received, via public records requests to the City of Brea and the OC Auditor-Controller, over 200 pages of data, accounting, meeting agendas, staff reports and minutes… and invested over 1,000 hours since mid-November to review and understand them. I have more to come, one question answered always seems to lead to more questions to ask.

Here’s the really short version of what I discovered:

  • The 1978 ballot initiative creating the Paramedic Tax appears to be a fraud. Not a word is mentioned in any minutes, resolutions or the ballot measure language itself that so much as a penny of the taxes collected would be spent on anything other than to create and maintain a mobile intensive care paramedic program.
  • Since the RDA was dissolved in 2011, over 44% of the Paramedic Taxes collected have been used to meet RDA/Successor Agency admin costs, pass through commitments and bond obligations.
  • In FY2016-17 Paramedic Taxes collected was $3.84 million. The total actually reaching the General Fund was only $2.30 million. The budget for paramedic services was $5.05 million. So, what does it really cost to have paramedic services and where did the city come up with the missing $2.75 million to cover the budget?
  • Digging into the whole RDA – Successor Agency – Oversight Committee thing takes us into a completely different discussion. Trust me, we will have that discussion. There is such an egregious lack of a paper trail that we will never know the names of all the guilty parties or the full extent of their complicity.
  • From what little data is available, redevelopment in Brea may have created as much as $300+ million in tax increment financed debt for which we’re still on the hook for $196 million that we’ll be paying off from now to 2036.

Back to the Paramedic Tax.

paramedic taxAt the November 6 meeting, as Administrative Services Director Cindy Russell began to share staff’s budget update, Council member Hupp interjected a simple question to City Manager Gallardo, “Bill, I know you and staff had a meeting with some concerned citizens in regards to the Paramedic Tax… would you just briefly tell those in the audience listening what you’re doing based upon what happened in that meeting.”

Gallardo responded, “We had a meeting, a very cordial meeting, with some residents interested in finding out the history of the Paramedic Tax and what was approved. The Paramedic Tax was approved in 1978 by over 80% of the Brea voters and this tax goes towards the operational needs of the fire department…”

No, historically, an average of 44% of the Paramedic Tax collected from within the RDA areas was siphoned off to meet redevelopment obligations.

paramedic tax“One of the things from that meeting was how can we better account for… how can we better track the Paramedic Tax? Right now it goes into the General Fund in a lump sum through payments we get from the county then we account for the expenses through the General Fund.”

No, only the tax collected from non-RDA areas has been apportioned to the General Fund by the OC Auditor-Controller. There has never been a Special Revenue Fund created to track and manage revenue from the Paramedic Tax – we have no true record of how these monies were spent.

“At the beginning of the fiscal year we’ll establish a Special Revenue Fund to track inflow of the Paramedic Tax and also track the expenses directly to the Paramedic Program and do that on a go forward basis.”

Because we have no way to audit what we’ve done in the past since we failed to keep adequate records. It will remain a mystery.

“It’s probably appropriate to put something on our website that identifies what its use is, its purpose what its intent is. 80% of calls are medical, basic life support or advanced life support.”

Adding to the mountain of propaganda on a website that precious few Breans access on a regular basis is not an answer. How about we elect a City Treasurer who actually has the skills to act as an advocate on our part and audit the city’s finances?

And yes, 80% of calls are medical in nature… but what portion of the total workload addresses these calls? How much time, effort and equipment fulfills the Fire Departments activities including administration, building and apparatus maintenance, emergency (disaster) preparedness, fire suppression operations, fire prevention activities, regular fire ordinance compliance inspections?

Tossing out impressive sound bites, out of context and without substantiation, is a common method of distracting us from the real truth.

Councilman Simonoff joins the fray.

paramedic taxCouncilman Simonoff asked the City Manager, “One of the subjects that came up, and maybe Jim (Markman) you’re a better resource for this question… with regards to how payments are made to the Redevelopment Agency… can that be better explained?”

Thank you Marty for immediately spotting what I did… that the City Manager tried to duck out of answering Council member Hupp’s question.

Gallardo replied, “Let me give it a shot then Markman can clean it up if I don’t say it correctly. A portion of the Paramedic Taxes along with all other taxes paid by anybody that has a property ownership in the Redevelopment Agency project area a portion of those taxes went to the RDA. By operation of law, any taxes paid in the RDA area automatically went to the RDA. That has occurred since 1978.”

Boom! There it is. “By operation of law” means, from the very beginning, revenues generated from tax increment were required by the state to pass through the RDA obligating a portion to meet RDA expenses. This is the genesis of the hoax perpetrated upon Brea’s unwitting voters, 80% of them, in 1978.

Gallardo continues, “The good thing is that the RDA’s were dissolved by the state in 2011 so they don’t exist any more. As we pay down any bond obligations in those project areas, little by little that RDA revenue, I’m sorry, that General Fund revenue lost to the city and also the Paramedic Tax that went to the RDA are slowly but surely coming back to our city for our paramedic services.”

Inside that unfortunate word salad are a truth, dissolution of the RDA was a good thing; a Freudian slip “that RDA revenue, I’m sorry, that General Fund revenue…”; and a complete smokescreen, “slowly but surely coming back to our city…” not until 2036 and we have no guarantee where the “lost revenue” will be spent.

Not to be overlooked, Council member Marick weighs in.

paramedic taxCouncil member Marick then directed a question to City Attorney Jim Markman, “Did the city have any opportunity or any say into whether the Paramedic Tax revenue went to the RDA or is that how the law was set up?” (Asked and answered… as they say).

Brace yourself, here is how Mr. Markman replied, “There are some misconceptions because no one has been here long enough to remember this other than Wayne Wedin, Rex Gaede and me.

Basically, in ’78, this was put on the ballot for two reasons. One, Brea had two redevelopment project areas and whatever property tax that was there was going to be allocated elsewhere and they were facing Prop 13 which most people thought would pass which was going to freeze property taxes in place so there were a number of problems facing the city at the time funding redevelopment where the source of income, which was going to grow, got frozen at the 1% tax rate and that took away projected tax allocation money.

Also, and The City Council knew that the Paramedic (Tax), which they proposed and was passed by 80%, was sized as to what the rate was as a special tax so they would generate enough revenues to fund the paramedics and account for the fact that money generated in the redevelopment project areas was not going to be there for that purpose unless and until essentially redevelopment went away several years later which is exactly what happened.”

Boom! There it is. That sounds like a confession if I ever heard one! And, if any interested prosecutor is reading this, the case for proving intent seems like a slam dunk as well.

paramedic tax“So, if anyone doesn’t believe that discussions occurred, that they had those numbers figured out… they issued bonds, numerous bonds, for the Redevelopment Agency that clearly state and show you the allocation of what would have been a Paramedic Tax if its in the project area going to redevelopment.

So nobody was ever fooled or surprised by that and they sized it because Brea wanted paramedics in 1978. And, they wanted to fund the paramedic program so they had to set a tax rate that accounted for redevelopment allocation.”

Okay, having already made his confession, what does this tell us? Only that the size of the gang, those poor unwitting co-conspirators, was bigger than we thought. Seems the gang included virtually every member of City Council holding office since 1977.

Again… Mr. Markman continues, “And that’s what’s happened ever since, except for two things that happened. Once we reached the cap on how much redevelopment money could be allocated… money over that cap that’s generated by that Paramedic Tax goes to the paramedics and the redevelopment allocations are now way reduced because all they’re doing is paying debt on our Last and Final ROPS which essentially, for the most part, are bond issuances that are being paid off over the years and, as they are paid off, that money would be reallocated to paramedics remembering, however, that there is a lot more people here than the 17 or 18 thousand that were here in 1978 when the Paramedic Tax was enacted.

That Council knew that that number would grow, the city would grow, that was the whole idea of redevelopment and when that was all over the allocation would go back to the Paramedic Tax so none of this was stumbled into or a surprise to anybody.”

If the City Manager’s responses were a word salad, this is a banquet of b*llsh*t. If anyone can extract a single cogent fact or convincing statement within this medley of malarkey please share it in the comments section.

Well, let’s wrap this up.

You can view the meeting’s streaming video on the city website HERE to verify that my transcriptions are faithful.

The specious responses from the City Manager and Attorney underscore the callow and indefensible decisions made by them and their predecessors. They have raised the exclusion of the public to a level of pure artistry.

Issues over the last couple of years have escalated from petty small town personality politics to clearly criminal enterprises that wasted millions of taxpayer dollars to either line someone’s pockets, inflate someone’s pension or fulfill some small mind’s notion of what Brea should be.

Whatcha gonna do?


10 thoughts on “Paramedic Tax Snowballs Into An Avalanche Of Deceit.

  1. I clicked the link to see the video for myself, I never realized the video archives were there. Not that I didn’t trust your transcription skills.

    As I read the responses from Gallardo and Markman it was clear that they got caught flatfooted. For all their education and experience they were really poor at extemporaneous speaking. Getting blindsided by Councilwoman Hupp was priceless.

    The attempts to dodge questions and manufacture answers, when you watch the video, comes across like two career criminals fabricating alibis.

    • George… glad you took the initiative to view the video. I hope others who weren’t at the meeting or watching it on cable do too.

  2. I am not surprised that Gallardo and Markman would dodge the point of diverting the tax. Also, prior City Manager Tim O’Donnell is also guilty of this as he knew of it. It always seem like City management is really running the City and feeding our representatives only half truths so that approvals can be obtained where needed to meet their needs. I guess we like this approach as Counsel was considering approving a new five year contact with Gallardo as he is doing such a great job for us. Really?? Maybe, that is being reconsidered as his new contract was pulled from the consent calendar.

    While state law caused this diversion, special legislation could have been sought at any time by the City to stop that diversion. That could be attempted now but management is not offering that. Such legislation was obtained for the Joint Powers Authority arrangement between Brea and Fullerton to obtain a pension exception for Fire so it can be done. In my mind all executive management were fine with the money going to redevelopment for projects.

    As to redevelopment debt, yes that is substantial; however, our community did benefit from it. Those proceeds funded large portions of our high school relocation, substantial downtown development, Sports Park, fire station, rails to trails, new housing developments, etc. All of these make our community what it is and the public favored these improvements. As to paying for them, future property taxes will do that and our City’s portion of those is small (probably less than 20%) as the largest share is the State and County.

    The real problem is that the Paramedic Tax which was approved for a program has been utilized by the City to fund as much as possible of the Fire Department. Fire protection is a general city service and this tax was for additional services not to replace the City’s obligation to provide basic services from the City’s other revenues. However, allowing it to go into the General Fund is another way management has hidden what it is doing and avoiding accountability to its residents.

    • I’m a little lost here Don. It seems like you have a lot of insider information. I agree about Gallardo, Markman and O’Donnell railroading council but don’t see the connection to the city manager’s contract. Obviously it was pulled for a reason, just not sure how it is connected.

      I don’t understand what you mean about the state and county paying for our bonds. Doesn’t that come out of property taxes paid by Breans?

      And what if we’ve paid 2, 3 or 4 times more than what we should have for these amenities with all of the debt created? How fair is that? How come we didn’t get to vote on it? Isn’t that the law?

      How much of this tax increment the blog talks about comes from all of these public projects? I’m thinking zero. Theres no property tax on public property is there?

      I agree with Rick and others who are calling to rescind this tax. It wasn’t right in 1978. It isn’t right today.

      • Bill… Don is an insider, sort of. He’s one of the Oversight Committee members. He’s known to have strong opinions and is unafraid of sharing them. I’ll be interested to see how he answers your questions. Thanks for chiming in.

      • Bill, when you pay your property tax, the county collects it and divides it up as follows: 13% to the city, 62% to BOUSD, 25% to county entities and NOCCCD.

        If you live in a redevelopment area, some of your property tax goes to paying off RDA bonds instead of being divided up as mentioned above. So the county loses the money they would have gotten from the portion of property tax that is instead paying off bonds, and the state backfills funding for the school district so the schools don’t lose any funding.

        As RDA usage spread this backfill funding wrecked the state’s budget, which is why RDAs were dissolved.

      • Jason, thanks… that’s sort of it in a nutshell. I would add, communities that misused redevelopment did so as a means of avoiding the requirement for voter approval of all taxes.

        By piggybacking upon the existing authority (think loophole) provided by state law, redevelopment could be conducted by a very limited number of individuals, in relative secrecy and without public oversight or approval.

        The vision of a very few of folks, all of whom believed they were much smarter than we were, was the basis upon which an almost Ponsi-like cascade of debt upon debt resulted in fewer than a dozen worthwhile but horribly overpriced amenities.

  3. Comparing the discussion here and over at Nextdoor it seems like hijacking is a regular occurrence there and people stick to the topic here. I like the focused discussion and the more informed debate here.

    I hope this idea of yours, Rock The Boat, gains the momentum it deserves. It will raise the bar for anyone running for Council. We desperately need better choices than we’ve had for the last dozen years or more.

    • Alexandra… Moderators on Nextdoor have little or no control over hijacking unless it becomes an egregious problem from a single member. Here, I am the boss. When a hijacking comment shows up I email the one commenting, giving them an opportunity to restate their thought consistent with the thread’s topic. A few have done so, most don’t.

      I’m hoping Rock The Boat catches on like Clean Sweep did and that Brea voters reboot city hall with a Council worthy of their job.

      • The last 24 hours on Nextdoor have been ridiculous. That Livingston guy needs some serious help. Does he work for the city or what?

        And the whiners! Nothing will ever be good enough for them. I’ll bet there isn’t a registered voter in the bunch.

        Keep rockin’ the boat!

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