CITY OF SOUTH GATE
SPECIAL CITY COUNCIL MEETING
MINUTES
TUESDAY, JUNE 17, 2025
CALL TO ORDER Maria Davila, Mayor called a Special City Council Meeting to order at 6:56 p.m.
ROLL CALL Yodit Glaze, City Clerk
PRESENT Mayor Maria Davila, Vice Mayor Joshua Barron, Council Member Maria del Pilar Avalos, Council Member Gil Hurtado and Council Member Al Rios; City Manager Rob Houston, City Attorney Rail F. Salinas EXCUSED/ABSENT City Treasurer Jose De La Paz
PERSONNEL ADMIN The City Council unanimously approved items A & B by motion of Council MemberAvalos and seconded by Vice Mayor Barron. a. Conducted a public hearing on the City's vacancies; and b. Received and filed the status update report on vacancies in compliance with California Governrnent Code Fp 3502.3.
ROLL CALL: Council MemberAvalos, yes; Council Member Hurtado, yes; Council Member Rios, yes; Vice Mayor Barron, yes; Mayor Davila, yes.
Mayor Davila asked the City Manager to explain the reason for this public hearing item.
Rob Houston, City Manager, stated that every year new laws are passed by the state legislature. The latest bill is a requirement to have a public hearing to present vacancies before a budget session. He will have the Director of Hiunan Resources speak on this item.
Jon Hamilton, Director of Human Resources, stated this law became effective January 1, 2025, and it mandates that cities have a public hearing every fiscal year to report on vacancies before the next budget can be adopted.
Mr. Hamilton stated that for Fiscal Year 2024/25, there are 338 budgeted full-time positions and 55 vacancies. He explained the recruitment process and the challenges the city is facing in filling the vacancies.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 1 PERSONNEL ADMIN
CONT'D Mayor Davila asked the City Council if they had any questions before opening it to the audience.
Council Member Hurtado stated in terms of vacancies, savings are the upside, but the downside is the service level drops. He questioned whether the savings should continue or are there any concerns in any field that need to be filled.
Mr. Houston stated the presentation shows several vacancies are on hold with the tough balance of finding budgetary savings and having a minimal impact on the services.
Council Member Hurtado understands under PEPRA, there's no cap, so why would anyone want to work beyond what they must.
Mr. Hamilton stated that it depends on the contracted formula with CalPERS. The police classic can get 3% at 50 but can't earn more than 90%. For The PEPRA non-sworn are at 2% at 62. That 2% is for every service year when they retire. Multiply the service year by 2%. If they start work at 22 and retire at 62, that's 40 years times 2% at 80% of what their final salary is over the previous three years. There is a cap on that too.
Vice Mayor Barron stated thatAB 2561 was implemented because a lot of cities were using vacancies to balance budgets. He understands this is additional work to do but it provides residents with the city's vacancies and services that could be limited because of these positions.
Mayor Davila asked if anyone in the audience wished to speak on this item.
Lizette Ruiz, Kauffman Ave, did not see any discussion about the impact of training as a tool for retention. She understands that was part of a proposed budget cut.
Brandon Williams, MEA President, asked how many of those positions were MEA. Maybe 25.
Mr. Hamilton had a percentage of them. So, he believes it would have been.
Mr. Williams stated the percentage was 13.7.
Mr. Hamilton stated MEAhas 159 members.
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PERSONNELADMIN
CONT'D Mr. Williams stated the MEA represents a large percentage of members affected. He also mentioned there should be consideration to keeping the dedicated employees. PEPRA members are not that dedicated because they need to go somewhere else.
Jirnmy Ozaeta, South Gate resident, he understands city staff are the most valuable assets to the South Gate team but believes speaking on the vacancy for all other positions would be beneficial for the City Council to consider when making difficult decisions.
EMAILS Mario Dominguez urges the City Council to contract out the city's current vacant positions with outside firms or agencies which would lock in fixed costs and relieve the city from long-term financial obligations tied to traditional hiring. He states that South Gate's ongoing financial deficit makes it unsustainable to continue offering annual salary increases.
Having no one else come forward, Mayor Davila closed the audience portton.
Council Member Rios thanked staff for bringing this item before the City Council. He asked if the city is thinking outside the box.
Vice Mayor Barron was wondering if the city could have an explorer program for other departments or summer program for kids. He sees the success the police explorer program has in bringing in new officers in the cornrnunity.
Council Member Avalos appreciates the report but thinks it would be clearer to see how many vacancies there are in each department. She asked if the city has reached out to the unions about starting an apprenticeship program.
Mayor Davila has attended a couple of meetings with the Gateway Cities COG and the leadership of Hector De La Torre, elected officials, different businesses and colleges regarding a workforce program. She is concerned about police dispatchers leaving.
Council Member Rios is very excited about Gateway Cities receiving the catalyst grant for allied health, logistics, green tech, IT, entry level city jobs.
Jon Hamilton, Director of Human Resources, stated vacancies are a statewide issue amongst all public agencies. The city has made efforts to recruit within the local community with the assistance of Council Member Rios. He and the City Manager have met with staff from ELAC and recently with Gateway COG City Managers' monthly meeting.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 1 PERSONNEL ADMIN
CONT'D Rob Houston, City Manager, stated ELAC presented a pilot project for the City of South Gate and trying to see if other cities would join.
Steve Costley, Director of Parks & Recreation, stated the city does use the Long Beach Conservation Corps as a youth development training. And have hired several hourly and full-time staff for the parks and community development.
Council MemberAvalos brought up cross training because the more skills a person acquires, the more of an asset the person is to the organization.
Mr. Hamilton stated that this past fiscal year he developed a program along with the City Manager that's called the Training and Development Agreement. This agreement is exactly what Council is talking about.
Council Member Rios stated that the community college is receiving workforce money, career tech education money that the governor approved which will help incentivize these kinds of opportunities.
REVENUE & r,=ucarios The City Council discussed options during the workshop pertaining to the Utility Users Tax.
Mayor Davila asked the City Manager to speak on this item.
Rob Houston, City Manager, stated a PowerPoint presentation is coming before the City Council regarding the realities of the city's current budget that was shown at the last meeting. He stated Luis Frausto, Director of Administrative Services, will be taking the lead.
Luis Frausto, Director of Administrative Services, stated that tonight's presentation is to provide an overview of South Gate's local revenue structure, how property taxes, sales taxes, and other funding sources support core services.
Mr. Frausto stated that when a homeowner pays their property taxes bill, only about 6.15 cents of every dollar comes back to the city. The rest goes to LA County, school districts and special districts (water and sanitation).
This limited share restricts the city's ability to invest directly in local priorities such as streets, parks, and public safety.
Mayor Davila stated that Council Member Hurtado has a question.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXATION
CONT'D Council Member Hurtado believes it's important for people to understand when talking about property taxes, and amounts the city receives who determines the property tax.
Mr. Frausto stated that it's state law and there's a table in PowerPoint that shows.
Council Member Rios stated Prop 13.
Mr. Frausto replied yes, in 1973.
Mr. Frausto stated the city receives a little bit more sales tax because the city took some proactive measures allowing us to secure a local portion of sales tax. The city receives 2% and the rest goes to the state. The total combined is 10.75%.
Council Member Hurtado's understanding is that South Gate's Measure P 1% is 100% here, but the Bradley Burns is not 100% here.
Mr. Frausto stated yes, that's correct. There is some O.25% Bradley Burns portion goes back to the County.
Mr. Frausto explained these matters because the city is responsible for funding essential community services, like 911, park maintenance, street repair, and youth programming, yet receives a very small portion of the taxes paid by residents and businesses. South Gate relies on grants and other restricted revenue, which can be unpredictable, competitive, and often restricted to specific uses. For sustainable community driven services, the city needs revenue that is flexible, reliable, and under local control. Together, property and sales taxes form the backbone of our general fund. Property taxes provide a stable and predictable revenue base, while sales taxes rise and fall with local economic activity.
Mr. Frausto explained the Personnel cost, which makes up the largest share of the city's general fund expenditures. Over the past 5 years, cost of living adjustments for employees have averaged 2.97% per year. During that same point the general fund itself in ternns of revenues has grown at an average annual rate of 4.37%. This means that employee salary increases have been modest and consistently below the rate of overall general fund revenue growth. This approach reflects the city's strategy to balance fiscal responsibility with workflow stability, ensuring that we can continue delivering quality services while maintaining flexibility to invest in infrastructure and build reserves.
Mr. Frausto stated that despite the fiscal discipline, upward pressure in key
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXAaIION
CONT'D cost areas, insurance premiums, utilities, technology, infrastructure, material costs have all increased significantly. The total cost for major cost drivers is unfunded liability, unfunded pension liability, health insurance, worker's compensation, general liability, and street lighting and landscape district. The total cost for major cost drivers increased from 11.9 million in fiscal year 2019/20 to 22.7 million in fiscal year 2025/26 proposed budget.
This represents an increase of approximately 10.8 million or 90% growth over a six-year period. The biggest is the unfunded pension liability which grew from 6.1 million in fiscal year 2019/20 to 10.3 million in fiscal year 2025/26. This is an increase of over 70% of about $4.2 million. Pension obligations are expected to continue rising due to changes in CalPERS actuarial assumptions and investment decisions that are outside of our control. Health insurance costs have increased from 3.3 million in fiscal year 2019 to 5.5 million, a growth of 2.2 million approximately 66% in a five-year period. Medical premium inflation and expanded employee participation are contributing factors. Liability insurance costs doubled from 1.7 million in fiscal year 2019 to 5 million in fiscal year 2025/26, a
3.3 million increase or 1 90% increase. Industry-wide increases in insurance claims and litigation risk have driven premium cost upwards.
Street lighting and landscape maintenance, the costs have grown by 952,000 from 627,000 in 2019 to 1.58 million in the current proposed budget.
Council Member Avalos asked what is covered under the general liability insurance.
Jon Hamilton, Director of Human Resources, stated the general liability will cover the lawsuits and claims. Many insurance companies don't want to cover Los Angeles County because California does not have tort cap.
Mr. Frausto stated that the unfunded pension liability is like a credit card.
It's the amount that's owed for past service. It's grown because of past underperformance and CalPERS assumptions. Those are things like investment losses, demographic shi:its, and lower discount rates that have added to liability. The annual pension costs are increasing even if the city chooses not to hire, reduce the count or staffing remains the same. The budget is going towards paying off the pension.
Vice Mayor Barron added some clarity to the street lighting and landscape district fund. This was voted over 30 years ago, and it has not been raised for over 30 years.
Mr. Frausto stated this will require a vote from the people to make any changes. He also mentioned that Mr. Cervantes does a great job of finding alternate funding sources for street work and lighting work.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXATION
CONT'D Council Member Hurtado is asking Mr. Frausto to be more specific in terms of dollar-wise, what is the projection?
Vice Mayor Barron stated that this fund covers maintenance of the landscaping.
Mr. Cervantes stated that this revenue funds all the city's landscape and lighting systems. The street trees and landscape medians can be funded with traffic signals or streetlights.
Council Member Hurtado stated this item has been discussed for quite a few years. Those other sources of revenue can be used for other things.
Mr. Cervantes explained the street lighting and landscape fund.
Mr. Houston asked Mr. Hamilton to explain the difference between California and other states on how the lack of caps plays out compared to other states that may have caps.
Mr. Hamilton's understanding is, for example in the state of Nevada, they have a tort cap. California, it's whatever they can convince a jury that we should pay you for whatever wrong the other person did.
Mr. Frausto recapped on the Fiscal Outlook - Forecast slid that was shown last week. The city has operated with a structural deficit since fiscal year 2019/20. While the financial impacts of this deficit, approximately 18 million in costs, were not visible in recent years because of the ARPA funding that was applied over four years. The ARPA Funds are phasing out, the underlying structural deficit is now exposed, and the general fund is projected to become insolvent by fiscal year 2026/27. By fiscal year 2028/29, the general fund faces a cumulative negative balance of $21.8 million. The city must plan for long-time solutions rather than temporary fixes.
Mr. Houston spoke on Alternative options instead of Utility Users Tax ("UUT").
Revenue - (1) the Street Lighting and Landscape Maintenance District Tax would need to go before the voters to approve a new rate to cover the existing costs, plus include a CIP% annual increase. (2> Increase fees and fines for all permits, services, and citations. A study needs to be conducted. (3) A study is being done on impact fees for new development and this revenue would be restricted to specific use, not general fiinds. (4) Increasing Economic Development to encourage more sales tax- generating businesses. (5) Investigate contracted services will require significant study, CalPERS review. Limited projected savings due to
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXATION
CONT'D prevailing wage niles and CalPERS limitations. (6) Cutting $4.5 million expenditure for next fiscal year by freezing, eliminating and/or canceling the following positions/programs:
two Crime Scene Forensic Investigators
five Police Officer Positions
National Night Out
Family Day in the Park
Station Tours
Etch and Cath Catalytic Converter Program
Halloween Trunk or Treat
Red Ribbon Week
skip Azalea Festival
move full-time hours into transportation account
close swim stadium one day a week (Fridays)
close golf course two days a week (Mondays & Tuesdays) no free play at sports center during summer
change fee waiver program
youth sports second session (baseball/softball, basketball, AYSO) no field lights for November through February
4'h of July FY 26/27
pool closed for three months (November/December/January) all park facilities closed for holidays and holiday breaks subscription to NEOGOV perform, onboard learn
remove budget for extra recruitment advertising costs ERC events
South Gate will no longer offer to host LCW Harassment training, HR staff forums, and workshops
employee benevolent fund
HR staff training and Leadership academy for supervisors & managers Senior Secretary
Management Analyst
Memberships to LAEDC, CALED, APA
Economic Development Meetings/Roundtables
Agreement with South Gate Chamber of Commerce and Home Recognition Program
Legal Services
Special Supplies
Publications/subscriptions
Training for Planners and code enforcement
Deputy City Engineer
Principal Civil Engineer
Promote Engineering Technician to Assistant Engineer Underfill Associate Engineering with an Assistant Engineer Fund 35% of Associate Engineer's salary with Water Funds, and assign to Water Resources Section
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CONT'D 50% of Senior Engineer's salary with Water Funds, and assign to Water Resources Section and Development Services
Replace Electrician I and II with a Journey Electrician. Fund Journeyman with $39,608 general fund and $90,000 Gas Tax.
Management Assistant to be fully funded with Water Funds Fund 25% of Senior Management Analyst Salary with Water Funds Replacement of Executive Secretary position
Reduce Graffiti Removal to Monday through Thursday and eliminate two part-time positions
Facilities Maintenance Technician II
Office Assistant
Overtime associated with any events cancelled
Change the 4-Years Tree Maintenance Cycle to 5-Years Remove tree lights from Tweedy Mile Street trees Earth Day overtime
Family Day in the Park overtime
One Information Systems Technician
Mr. Houston stated the following cities have the Utility User Tax (UUT):
Bellflower
Carson
Downey
Gardena
Huntington Park
Lynwood
Norwalk
Paramount
Pico Rivera
Whittier
Mr. Houston explained what a UUT is, how it is added to the bills, and how the revenue stays in the city. He also explained what is needed to move forward with the UUT.
Councilwoman Avalos asked the cost to place the UUT on this November's ballot.
Mr. Houston stated $1.2 million and in June $275,000 Vice Mayor Barron stated residents inquiring about the total cost of taxes.
He used as an example his own bills to show the residents. The residents keep asking about Downey. He informed the residents that Downey has had their UUT since 1990 and updated it in 2012.
Mayor Davila inquired about the city's fees.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXATION
CONT'D Mr. Frausto stated about four years, but for this fiscal year's budget, a master fee and charges schedule update with the current CPI increase in July.
Council Member Hurtado stated that he too looked at the surrounding cities that have a UUT.
Council Member Rios stated that it is important to be educated on the UUT so everyone can understand it more thoroughly. This was a great presentation. He also explained that if the UUT does pass, it would probably be a year before the city can see any revenue. The city would need to be very strategic in terms of cuts, and minimal impact on the community and our employees too.
Mr. Houston stated on the revenue expectation, the consultant mentioned it's probably four to six months from the time of approval to when the city starts getting those payments.
Councilwoman Avalos asked if the voters would have a choice on what utilities get charged.
Mr. Houston stated the ballot measure picks the percentage, picks excluded members, including what utilities are charged.
Councilwoman Avalos would like to exclude the seniors and moderate to low-income families.
Mr. Salinas stated that this subject has an educational overview. We are not at the point where there's any action taken tonight nor action requested.
Vice Mayor Barron is recommending an exit survey at the workshops.
Mayor Davila asked City Clerk Glaze to read City Treasurer De La Paz's email.
Mr. De La Paz was unable to attend tonight's meeting. He informed the City Manager six months ago and continued to provide reminders over the past several months. Tonight's workshop marks the begiru'iing of what could become a significant change and how the city funds its services. As the City Council consider the potential introduction of a UUT, he urges the City Council to approach this topic with transparency, accountability, and commitment to truly engage the public. He believes the city is overtaxed at the federal and state level. He opposes the creation of new taxes. He understands the financial deficit the city is facing and difficult choices ahead. It is up to the voters to decide how the measure should take.
SPECIAL CITY COUNCIL MEETING MINUTES OF JUNE 17, 2025 2 REVENUE & TAXATION
CONT'D The UUT is a regressive tax that impacts all residents equally regardless of the income and would directly affect essential monthly utility bills.
Mayor Davila asked if anyone in the audience wished to speak on this item.
Nelson Hermosillo, 10135 Dorothy, stated the city is overtaxed federally, state, and local. The president has this Big Beautiful Bill that's going to take us into the ground. The state, county and city are facing a deficit. This UUT has to pass in order to get out of the hole, but whatever the percentage is, the county, state and federal are probably going to tack on another tax. He suggested the city fix inefficiencies.
Edgar Pelayo, longtime resident of South Gate, proposes the UUT election should be in November of 2125. He stated the city is overtaxed and now the residents are being asked to approve another tax. He opposes the tax.
Lizette Ruiz, Kauffman Ave, was appointed with the lack of attention given to the budget. She hasn't been able to locate any information related to these workshops. She believes the UUT would be a challenge for the community.
Brandon Williams, MEA President stated one of the things he hears is corruption. He implores residents and MEA members if there is corniption to show the evidence and not just make allegations. He agrees South Gate has fallen behind. He implores the city to look at the budget.
Jirnmy Ozaeta, South Gate resident, thanked everyone for their service.
It's a big responsibility to be in your roles. He stated the city should have had conversations regarding the deficit since 2019.
Having no one else come forward, Mayor Davila closed the audience portton.
EMAILS Maria Chavez expressing strong opposition to the proposed utility tax.
This new tax would place an undue burden on the already struggling community. She criticized the city leadership for lack of transparency, referencing their recent disclosure of the city's significant financial deficit and how such information was not previously known.
Robert Sanchez requesting an update on the survey related to the proposed Utility Users Tax. He expressed disappointment over the city's $8 million deficit, stating the financial iSsueS appear to have been developing for some time. He criticized the oversight of city leadership and opposes the proposed utility tax.
Page II of 12
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CONT'D Mario Dominguez opposes the proposed Utility Users Tax revenue for city hall employee salary increases. The tax should be used to raise the general fund to pay city obligations and fund major projects. l---,
Councilwoman Avalos asked for clarification for the benefit of the community, if the {JUT was in the election cycle of this November 2025, the cost would be $1.2 million. If it's in June 2026, what would be the cost?
Mr. Houston stated $275,000.
Councilwoman Avalos asked if it's in November 2026? Mr. Houston stated that estimated is unla'iown at this time. But it will be looked into it.
Councilwoman Avalos asked City Clerk Glaze the cost for the regular election in November 2026.
City Clerk Glaze stated the cost would be approximately the same as the June election.
Councilwoman Avalos stated adding the UUT to the November 2026 election would not add additional funding.
Mayor Davila thanked staff for the presentation and everyone that attended tonight's meeting.
Council Member Avalos unanimously motioned to receive & file and seconded by Council Member Hurtado.
ADJOURNMENT Council Member Avalos unanimously adjourned the meeting in favor of our community and immigrant community at 9:40 p.m. and seconded by Council Member Rios.
PASSED and APPROVED on this 22nd day of July 2025.
ATTEST:
Maria Davila, Mayor Yodit City Clerk
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