• A run down one story building next to a street

      San Gabriel Chamber of Commerce (Photo – Staff)

      Public records show that since at least 2011 San Gabriel City Hall has been providing an annual subsidy of $31,680 to the San Gabriel Chamber of Commerce (“Chamber”) through the City’s General Fund.

      By Sean McMorris

      Although often controversial, some cities (not most) subsidize their local chambers of commerce. They often justify the cost as “Promotional Services” or “Economic Development,” as San Gabriel has done in its annual budgets over the last decade.

      On Tuesday, May 12, 2020, the San Gabriel City Council will be holding a study session for the City’s proposed budget for fiscal year 2020-21. There likely will be a lot of budget cutting amidst the new COVID-19 economic reality. Talk of excess spending and non-essential expenditures surely will be discussed. City Hall’s subsidization of the Chamber should be part of that discussion.

      Without a Contract: An ongoing gift of public funds?

      San Gabriel’s subsidization of the Chamber is highly unusual in that no actual contract exists, as confirmed by City Hall, even though the City’s budget implies that one does. In an email obtained by ColoradoBoulevard.net, San Gabriel’s previous city attorney, Bob Kress, justified the yearly payments to the Chamber as legal under Government Code 37110, which allows cities to spend general funds on community promotion. It is unclear, however, why Kress does not believe a contract for annual payments to the Chamber is needed. Without a contract, there is no oversight or terms binding the Chamber’s use taxpayer funds. There is no transparency or accountability.

      • Is the Chamber providing a service that City Hall is unable to provide? If so, what is it and is it justified?
      • Does a conflict of interests exist if a City Councilmember financially benefits from a Chamber activity?
      • Are City funds being used by the Chamber in a manner that is political, exclusive, and not beneficial to all residents?

      Without a contract, we do not know these things, and the annual handover of $31,680 to the Chamber just looks like an ongoing gift of public funds.  If that is the case, then it is illegal.

      How is the Chamber using the money?

      Without a contract or City Hall oversight, it is impossible to know for certain how the Chamber is using the $31,680 it receives annually from City Hall. However, a 2016-2017 San Gabriel Chamber of Commerce approved budget report obtained by ColoradoBoulevard.net gives us a clue. The report shows that all income is used for Chamber operations–the sustainability and promotion of the Chamber itself–not “community promotion” as implied by Kress.

      The Chamber’s 2016-2017 budget report shows that City Hall’s $31,680 subsidy accounted for 23.5% of the Chamber’s 2016-2017 budget and was the second largest source of revenue outside of membership dues, which accounted for $58,000 or 43.1% of its budget. The bulk of the Chamber’s budget goes to pay for the Executive Director’s salary ($67,000) and benefits ($3,000 performance bonus, $4,272 in health insurance, and $1,200 auto reimbursement). All other major expenses have to do with Chamber promotion and maintenance, such as rent ($10,200), business insurance ($3,000), dues and subscription printing ($4,000), installation dinner ($6,000), membership promotion ($1,000), and website and internet ($2,000).

      Thus, it appears that the money the Chamber receives annually from the City’s General Fund is a straight subsidization of the Chamber—an exclusive, dues paying business association.

      Is City Hall’s subsidization of the Chamber appropriate?

      Chambers of Commerce certainly have a place in cities and no one is advocating for their demise, but City Hall should at least have to justify whether they should operate at taxpayer expense.

      Those who will defend City Hall’s continued subsidization of the Chamber will surely invoke COVID-19 as the primary reason for doing so. But perspective is needed here.

      If it is a question of City priorities, then the Chamber should not be at the top of the list. The vast majority of San Gabriel residents do not own businesses nor are they members of the Chamber.

      If it is a question of maximum impact, then $31,680 could be put to better use, especially during this time of crisis. The transparency portal, Transparent California, shows that the City of San Gabriel employs an array of workers who are paid less than $31,000 a year, like maintenance workers, custodians, executive assistants, and even some police officers and firefighter paramedics.

      If it is a question of image, then City Hall should be cognizant of how some may view the Chamber’s use of City funds. For example, is City Hall prepared to defend the subsidization of the Chamber Executive Director’s $67,000 salary plus performance bonuses and auto repairs over the salaries of essential city workers like police officers, paramedics, and custodians?

      If it is a question of transparency and propriety, then the Chamber is not in a tenable position. Without a contract, there is no directive or oversight to prevent abuse and conflicts of interest.

      Finally, if it is a question of equity and social justice, then perhaps the Chamber should not even be on a list of City priorities. Chambers of Commerce are exclusive dues paying organizations that are inherently political. The U.S. Chamber of Commerce advocates for policies like deregulation, a low minimum wage, union busting, and tax cuts that are not beneficial—indeed are harmful—to vast segments of society. Although individual Chambers create their own by-laws and have boards that set chapter priorities, they all fall under the purview of the U.S. Chamber of Commerce, which is the largest lobbying group in the United States and has a clear policy platform.

      Let Chambers operate under the principles they advocate

      The benefit of the Chamber to San Gabriel residents at-large is subjective. Regardless of how much the Chamber may benefit its members, it is safe to say that those benefits do not “trickle down” to the rest of the community, at least not in any meaningful or measurable way. The San Gabriel Chamber’s events and services (i.e. “community promotion”) are exclusive to its members. That leaves most of the community out.

      The San Gabriel Chamber of Commerce can and should exist on its merits and in its own capacity, not at taxpayer expense. After all, is this not the laissez faire economic approach for which Chambers across the country advocate?

      Let the Chamber operate as an independent entity for its members. Let government work for all residents.

      > San Gabriel Chamber of Commerce Executive Director, Sandy Rosco, declined to comment for this article.


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