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.

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.

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Vargas: Liar Liar… Pants On Fire!

On Tuesday, September 5, Council finally had an opportunity to address the Constitutional Due Process issues in the Brea Municipal Code but, thanks to inadequate staff input and a major distraction from Council member Vargas, they were thwarted.

After a year of sidestepping the issue, City Manager Gallardo and City Attorney Markman continued trying to wriggling out of honestly facing the music by submitting conflicting statements to launch Council’s discussion.

Gallardo said he believed the Brea Municipal Code and Code of Conduct were in conflict (not the root issue), Markman disagreed completely… denying that any contradiction existed and doubling down on his assertion that there was no threat of Constitutional violation because termination of Commissioners and Committee members is made without cause.

The greatest roadblock to Council having an intelligent discussion was the almost incoherent ranting by Council member Vargas. He not only derailed the discussion, he added to his list of “causes” for dismissal which crushed Markman’s position. In addition, claims made by Vargas were fabrications… figments of his imagination.

Everyone in the room must have recognized that, especially Vargas. Assuming he hadn’t forgotten the truth, he must have known just how far he stretched it.

Ultimately, thanks to Council’s unwillingness to be intimidated and the Mayor’s taking control of the discussion, the decision was to continue the item until staff could provide additional information. Hopefully staff will also make some attempt to get on the same page with each other.

I’ll leave follow-up on the real issues until they hit Council’s agenda again and turn my attention now to poking holes in the spurious allegations and remarks being tossed about by Mr. Vargas.

The Letter of Dismissal

I’ll work my way through the “causes” cited by Vargas in the letter.

  1. “… our initial agreement was a two year assignment” – No such agreement was ever made. No member of Council has the authority to make such an agreement and, if they were authorized, the BMC would state so and the “deal” would obviously have to be disclosed when the nomination is made. Never happened.
  2. “… allow you some closure from past experiences as a Commissioner, unfortunately I am not in a position to continue the redemption any further” – A complete non sequitur. My seven year history as a Cultural Arts Commissioner, as Chair of this Commission and it’s representative on Art in Public Places and the Senior Citizen Advisory Board is extolled at length in the commendation I received from Mayor Roy Moore in 2011. I needed redemption for nothing.
  3. “… (for) 3 months, I have attempted to communicate with you on numerous occasions via text and phone calls” – Hogwash. Once or twice a month Vargas would call me as he headed home from work at Port Hueneme and we would talk about various matters until he typically said, “Well Clark, you got me home safe and sound again.”

The last time we spoke we discussed his plans to put Term Limits on the ballot as a proposition. He refused to consider discussing his plans with Council. I told him it was a stupid idea, that it was an obvious attack aimed solely at Council member Simonoff. Finally, he agreed to drop the idea and the discussion ended.

Four days later the City Council meeting erupted in heated, angry exchanges with Vargas when he announced his intention to collect signatures via a third party contractor for a ballot initiative on Term Limits. When Vargas called me after the meeting I was too angry to take the call and let it go to voicemail. I did the same with the other half dozen attempts Vargas made over the next hour or so.

He texted me once the next day asking why I was dodging his calls. I texted back that I hated getting lied to and would need a few days to let my anger subside. I never heard from him again until I received the letter of dismissal… 36 hours after almost everyone in Brea seemed to get it. Must have been a massive BCC list.

  1. “…your reluctance to keep me informed of pending issues does not allow me to provide effective service as a council member.” – So, Breans have been under represented for almost a year now. Good to know. Don’t cross your fingers for the Mayor Pro Tem’s seat and we all know what to do when the 2018 elections come around.

During the first year of Vargas’ current term, as I would come across articles online relevant to current or impending city matters, I would email a link to Vargas… who seemed to have neither the time nor skills to do his own research. I did this maybe once or twice a week. I was surprised to hear he was unable to “provide effective service” without my help.

Fast Forward Almost a Year.

I mentioned the rants Vargas inflicted on everyone at last week’s study session, that they were laced with the same sort of groundless statements as are found in the dismissal letter.

  1. Only after repeated badgering by members of Council and City Staff did he feel forced to dismiss me. – Vargas was immediately challenged on this by the Mayor as being complete nonsense. Never happened.
  2. Vargas claimed to have “cleared it with” Gallardo and Markman before he sent the dismissal letter… a weak attempt to imply their approval. Gallardo and Markman preserved their “plausible deniability” by answering Vargas’ email inquiry by phone. A common practice down at city hall. However, Gallardo told me later that he attempted to talk Vargas out of the dismissal but failed and that Markman merely confirmed the appropriate BMC reference.
  3. Vargas said he discussed health issues with me, asking me to resign, and was compelled to terminate me because I would not resign. A year ago my health was not an issue, we never had such a conversation. This is total b*llsh*t.
  4. Vargas stated that he appointed me because of my experience with affordable housing while working for Quaker City Bank. (No Steve, that was Ron Garcia, your first appointment to the Planning Commission in 1998.) We never discussed housing of any type prior to or following my appointment to the Planning Commission. I have never worked for Quaker City Bank, or any bank, but did handle branding and advertising for Landmark Bank in La Habra when it launched in 1979… 38 years ago.
  5. Vargas protested my use of the California Public Records Act (CPRA) to obtain information leading to my “due process” probe and aggressively demanded “cost accounting” from the City Clerk, City Manager, City Attorney and Director of Development for the staff time required to respond to my inquiries. He was summarily put in his place by Council member Simonoff who reminded him that it was wrong to chastise the public for the cost of complying with a public records request.
  6. Vargas accused Council of wasting time on an issue that only a “blogger” cared about. Really? Council’s oath of office swears to uphold State and Federal Constitutions! If there is even the slightest possibility that the BMC is in conflict they are bound to investigate regardless of where the challenge came from.

Council does what’s right.

Given all that occurred last Tuesday, Council did what was right. I trusted that they would and they didn’t let me down. They continued the item and tasked staff with bringing them additional relevant information.

This is far from over folks and no loose canon is going to dissuade me from pursuing the truth or bully Council into sweeping this under the rug.

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