Fountain Valley creates Measure HH reserve fund

In the interest of accountability and transparency, the Fountain Valley City Council on Tuesday approved the creation of a separate reserve for Measure HH funds.

Fountain Valley voters passed Measure HH, a 1% transaction tax, in 2016 for a 20-year term. The additional funds could be used on essential city services, including public safety, public works projects and recreational programming. It could also go toward replenishing reserves and paying down debt and unfunded pension liability.

The city began collecting Measure HH revenue in April 2017, and the transaction tax produced $71.1 million in additional revenue for the city through fiscal year 2021-22. Approximately $30.2 million has been spent on essential city services, capital improvement projects and pension payments.

City staffers believe that separating the Measure HH and general fund reserves will keep the public informed regarding how money generated by the ballot initiative is spent. There will be $23.2 million placed in the new Measure HH reserve, leaving $12.3 million in the general fund capital projects reserve.

“I think this is … a good first step in sort of moving towards more transparency and making sure that we’re adhering to the responsible spending pledge, as well as the language that Measure HH was intended to be spent for,” Councilman Patrick Harper said.

Adopted by resolution in October of 2016, the city’s responsible spending pledge reaffirmed many of the spending guidelines outlined in Measure HH in an effort to bring about long-term financial sustainability.

Mayor Pro Tem Glenn Grandis referred to the need to create separate line items on the city’s balance sheet as a good problem to have, noting that Measure HH has raised “a lot more money than expected.”

“We’ve been spending $3 million extra a year paying down the pension liability using [Measure] HH funds,” Grandis said. “Let’s not forget we have been doing that every year in additional funding.

“I think by doing this, it meets all the requirements of what you’re asking for in terms of we don’t want to co-mingle funds all into [the general fund] because if we mingle it all there, then when we spend it in the future, who’s going to know what we spent it on,” Grandis said. “This makes sure that we’re spending it on what our prior council pledged to do and we agree to.”