Above the ripe yellow citrus pictured on Lemon Grove’s city seal, inscribed in the swash of the capital L, is “Best Climateon Earth.” While the weather may be ideal, the same can’t be said for the political climate in the city of 26,000, the county’s fourth smallest city in population and third smallest in area.

Since 2007, Lemon Grove’s finances have turned sour. General fund revenues have fallen by $2.25 million, a 19 percent drop in expected revenues. In 2009, sales tax revenues were $724,000 less than anticipated. In 2010 came an additional $510,000 decrease in sales tax. To make up for the shortage, the city has tapped into its reserves, using $2.5 million of the $4.3 million it had in 2007; employee positions have been cut, furloughs have been instituted, and the fire department has merged with El Cajon’s and La Mesa’s.

More cuts are to come. Expenditures in fiscal year 2011’s budget are down $784,000, including a 40 percent reduction in part-time help and the loss of one full-time position, as well as reductions in animal control, street sweeping, and law enforcement.

The shortages will continue. By 2019, Lemon Grove’s structural deficit is expected to grow to $2.8 million, reveals the city’s “Ten-Year General Fund Budget Forecast.”

Some residents see the swelling structural deficit, the cuts to public safety and public works, and the recent talk of a half-cent sales tax increase as reasons that residents would be better off if the city were dissolved and the community placed under county stewardship.

“There’s a smoke-and-mirrors operation in city hall to make it look like it should even be a city,” says Lemon Grove resident Jay Cochrane as he sits on a couch inside his home near the intersection of Massachusetts and Central avenues in western Lemon Grove.

“We don’t qualify as a city. You really do need at least 50,000 people to be viable,” Cochrane says.

The 62-year-old Vietnam vet and retired postal worker hides a long, scraggly gray ponytail under a red San Diego State University baseball cap. Gesticulating constantly, he describes city history, divulging political rumors about past city managers and current city council members as though he were spilling family gossip.

Since moving to Lemon Grove in 1985, Cochrane has attended more than 200 city council meetings. He has evidence to prove his involvement. A few feet away from where he sits is a shoebox full of VHS tapes on which he’s recorded the meetings over the years. Next to the box is a stack of manila folders crammed with brittle, yellowing newspaper clippings from the Lemon Grove Review.

“We don’t have a substantial tax base to generate sufficient revenues, and we never will because the city is built out,” he says. “We can’t pay for sidewalks. We don’t have adequate public safety. Businesses are closing left and right in downtown. There is something terribly wrong with this city.” He takes a rare, brief pause and sums up his central thesis. “This city has an inadequate tax base, fails to meet open space requirements, and has substandard police protection. It’s time for the end of Lemon Grove. We need to be disincorporated.”

Graham Mitchell, Lemon Grove’s city manager, admits that the city has been hard-hit by the recession and that he has heard the calls for disincorporation. He says the struggles that Lemon Grove is experiencing are not unique. He agrees that the city is in the midst of a structural deficit but says that most all cities in the state spend more than they earn. He blames the city’s slumping revenues and long-running deficits on its reliance on car sales and the construction industry.

“We are taking a little heat from a minority of residents…however, this is not a Lemon Grove issue,” he says.

Mitchell disagrees that a city must be a certain size to be viable. “There’s no such thing as an ideal-sized city,” he says during a July 20 phone interview. “Our base operational costs are higher on a per capita basis because we are smaller, and as for our revenue sources, we are one of the lower in terms of property tax, but we are in the middle of the pack on sales tax per capita.”

In regards to dissolving the city government, Mitchell says, “Folks have been talking disincorporation since we incorporated. I understand their position. I get it, but it’s more of a political decision, and I have to help the council understand the downfalls and benefits of disincorporation. If we were to disincorporate, we would give up so much.”

Before the recession, Lemon Grove generated a higher per capita sales tax than many other local cities. “The residents would no longer benefit, and those funds would be evenly divided within the county,” explains Mitchell.

Cochrane isn’t the only longtime Lemon Grove resident who supports closing shop at city hall, especially if keeping the lights on means increasing the sales tax.

Sitting in a booth at Anna’s Family Restaurant, located at the eastern end of Broadway a few blocks from the small downtown strip, Jack Moore sips on a chocolate milk shake and discusses Lemon Grove, where he’s lived since 1975. Moore owns several properties in the city and has spent numerous evenings in council chambers and perusing budget documents.

“If we can’t take care of our streets, we should contract that back to the county, as well as other functions,” says Moore. “A strong argument can be made for disincorporation, but the process is formidable.”

Moore is correct. Dissolution of a city government is formidable, and according to Michael Ott, executive officer of the Local Agency Formation Commission, the state regulatory agency responsible for facilitating changes to jurisdictional boundaries, it has never happened in San Diego County.

There are two ways to initiate the disincorporation process. The first is by a resolution of the city council. The second is by a petition signed by 25 percent of the registered voters.

After a resolution is passed or a petition filed, the applicant is required to present the commission with a feasibility study outlining the transfer of municipal responsibilities. The applicant must detail the financial and service impacts that the transfer would cause if disincorporation were to take place.

Staff members from the Local Agency Formation Commission then review the case and conduct an independent analysis. If disincorporation is approved, an election is held in the city, requiring a simple majority vote to pass.

“The last successful disincorporation was [Cabazon] in Riverside County in the early 1970s,” writes Ott in a July email. “Disincorporation is extremely rare and, in most situations, is not a viable or constructive solution. It is usually proposed out of short-term frustration over fiscal and/or political instability.”

Ott says that since 1980, the option of disincorporation has been discussed in two cities in San Diego County: Lemon Grove and Imperial Beach.

“In each case, the disincorporation efforts were abandoned after the cities got back on a stronger fiscal standing,” says Ott. “The big issue with disincorporation is to determine how and to whom responsibility for government services should be transferred. There usually are no willing takers for all the debt and liabilities from the disincorporated city. Successor agencies are typically county government and special districts (if applicable).… If there is debt that cannot be feasibly transferred to a successor, then property owners may also be levied new taxes with voter approval.”

While talk of disincorporation continues, some residents, such as Moore, have been busy fighting an effort to increase the sales tax by a half cent, a move that many in the city thought was dead last March after Mayor Mary Sessom and Councilmember Mary England said they would not support placing the tax measure on the June ballot.

Weeks later, Lemon Grove residents such as Helen Ofield from the Lemon Grove Historical Society and Councilmember George Gastil began knocking on doors and collecting signatures to put the sales tax increase on the November ballot. They entitled the tax measure “Save Lemon Grove Now.”

In the booth at Anna’s restaurant, Moore shifts from talk about disincorporation to the tax measure. “‘Save Lemon Grove Now’ is a euphemism for extortion,” says Moore. “They are basically saying, ‘Give us more money or we’ll perish.’”

Moore believes the city needs to reprioritize the budget instead of raising taxes. “Small, underfunded cities like Lemon Grove often cannot afford the luxury of white-collar overhead,” he says.

The following morning, at a table inside the Starbucks at Broadway and Lemon Grove Avenue, Councilmember Gastil, a former school board member and first-term councilmember, dismisses the push for disincorporation.

“We are going to be incorporated,” says Gastil in between sips of iced coffee. “There are things that we are doing that the county wouldn’t do as well, such as redevelopment and land-use decisions. Our population doesn’t allow us to do everything ourselves, so we make compromises. We’re not a big city, but we’re much larger than one neighborhood.

“It’s going to have to get a lot worse before we really start talking about disincorporation,” he says before changing the topic to his effort to increase the city’s sales tax. “The sales tax increase would allow us to stop using the reserve for the general fund. There’s a chance that we are going to need this more than we realize. The sales tax isn’t such a fix for the immediate future but is really a long-term fix.”

That morning, Gastil appeared confident that the citizens had collected the 1165 valid signatures needed to put the sales tax measure on the November ballot.

He was wrong.

The petition fell 8 signatures shy.

“I was really surprised,” Gastil says recently. “The citizens group had something like a 15 percent error rate. I don’t know how that happened, but they came up short.”

Lemon Grove city councilmembers again discussed the sales tax at an August 3 meeting, three days before the deadline to place the measure on the November ballot. A ballot proposition required the support of four of the five councilmembers. Gastil believed it was a sure thing. “I felt that there was substantial support for the increase. Eight signatures short is a stupid reason to have kept it off the ballot.”

During that meeting, Councilmember Jerry Selby, a supporter of the increase, was absent. When the council voted, Councilmember Mary England cast the sole “no” vote. With only two councilmembers and the mayor in support, the proposal was dead.

“It caught me by surprise. I didn’t know [Selby] was going on vacation,” says Gastil during an August 17 phone interview. “It’s too bad because, unless there’s a special election, the next opportunity to put it on the ballot is February 2012.

“In theory we have enough reserves to go a couple of years without making any major cuts, but in reality we aren’t going to want to spend our reserves.”