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Untested and entirely new in 1954, Todd’s “contract plan” did not persuade everyone.
The skeptics predicted failure for the new “contract city,” arguing that it would be safer for residents if older, larger, and wealthier Long Beach were to annex the entire Lakewood area. They argued that Lakewood had no industry and only property taxes to keep city services going. Homeowners might have to pay ever higher taxes, they said, while Long Beach’s treasury was full of revenue from an established commercial district and the city’s oil income.
Supporters of Lakewood's cityhood countered that Long Beach’s downtown was decaying and the city would run out of oil money when the oil was gone. Incorporation supporters also insisted that Lakewood was a community of young people who did not want to be part of Long Beach, which was better known then as a retirement haven for elderly Midwesterners and a destination for sailors on shore leave.
Cityhood, said a majority of Lakewood residents, would preserve the community’s family orientation and give young homeowners control over their future.
Tax cuts by 1955
Incorporation proponents scored other points on the economics of cityhood. Todd pointed out that residents of Lakewood would never benefit from other taxes, including gasoline and cigarette taxes, collected by the state, but shared only with cities and the county. This revenue would be available to Lakewood neighborhoods directly, only if they became a city. Todd argued that Lakewood’s share of state-collected revenue would be enough to keep down the property taxes paid by homeowners.
Todd was right. Lakewood’s tax rate on residential properties went down after incorporation. The Press-Telegram declared in a 1956 editorial, “We doubt any other city in the state has had that experience.” When cities began receiving a share of state-collected retail sales taxes in 1955, Lakewood was able to cut property taxes year after year. By the late 1970s, Lakewood had one of the lowest local property tax rates among comparable California cities, and far lower than the tax rate in Long Beach.
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