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La Habra Heights council warns city may not be financially viable without new revenue or reforms
Summary
Council staff summarized a series of budget workshops showing expenditures rising faster than revenues and warned the city could face loss of viability absent new, stable revenue sources or structural changes; residents pressed options ranging from increased assessments to permit modernization and potential disincorporation.
La Habra Heights city staff told residents Friday that the city’s long-running pattern of revenues rising slowly while costs — especially for roads, fire services and mandated programs — accelerate could force the city to consider major structural changes if it cannot close the gap.
"If we don't find a way to sort of close that gap in the future, I can't necessarily say that we can be here forever," Rafferty, who oversees city administration and serves as the technical city clerk, said during the workshop. "We may reach a point where we may not be viable economically to stay as a city."
The workshop was the capstone in a series of meetings reviewing the city’s budget, revenue sources and high-cost programs. Staff outlined the two primary constrained funding streams: property taxes (about $3 million a year in total collections, roughly 10 cents of every property-tax dollar flowing to the city) and other operating revenues such as permits and park rentals. Those revenues have generally held steady while costs for roads, fire equipment and services have jumped because of material and labor inflation, staff said.
Why it matters: Council members and staff said the question is not just managing day-to-day shortfalls but finding a stable revenue source to sustain core services — roads maintenance, a local fire service and law-enforcement coverage — without depleting reserves earmarked for catastrophes. Council members stressed reserves are limited protection and not a long-term revenue solution.
Residents and councilors offered possible next steps. Commenters urged the city to break budget planning into clearer "buckets" (roads, fire, administration, law enforcement) and show exact shortfalls and timelines. Suggestions included revising assessment district rates, modernizing permitting to increase development fees, exploring different contracting arrangements for fire or police services, pursuing targeted commercial development, or placing tax or assessment measures before voters with exemptions for low-income residents.
Several residents warned that disincorporation — returning services to the county — would trade local control for broader county support. Council members said contracting or annexation discussions are complex, often irreversible and can be costly; they must be studied carefully.
What’s next: Staff and Council said they will continue detailed revenue projections and department expenditure reviews, and will return to the council with clearer scenarios for addressing shortfalls, including specific revenue measures, assessment adjustments, and service-delivery tradeoffs. The workshop left no formal vote or directive; it was framed as a fact-finding and community-engagement step in the budget calendar.
Ending: The workshop closed with no formal decision; council described the session as part of budget-preparation work that will feed proposals the council reviews this summer.
