Council Wants Utility Tax Renewal on 2012 Ballot

In response to the imminent “Sunset Clause” for the city’s Utility Users Tax (UUT) that is set to decrease the tax starting in 2014, the Sierra Madre City Council has decided to draft a ballot measure for the 2012 election. The council decided at its Tuesday Oct. 25 meeting to have city staff draft a more complete plan in time for the next city council meeting on Nov. 8. The Utility Users Tax is used to pay for rising costs associated with maintaining the city’s police department.

In 2008, Measure U originally increased the UUT by 2 percent each year until it reached a potential maximum of 12 percent in 2010. Given power to adjust the tax percentage at any time, the City Council voted to keep the tax at 10 percent on July 1, 2010, rather than let it reach the maximum of 12 percent. The tax applies to all utilities, including water, sewage, trash collection and electric.

Measure U’s “Sunset Clause” would automatically begin decreasing the UUT rate by 2 percent per year on June 30, 2014, and eventually down to its original level of 6 percent by 2016.

A report from the Utility Users Oversight Committee indicates that this decrease in tax revenue would significantly impact the General Fund, into which the tax revenue is currently collected before being used on public safety expenses.

The report estimates that the city collects about $260,000 per each 1 percent of utility users tax, meaning that bringing the rate back down to 6 percent would equal a loss of $1 million in funding. This would force a 20-25 percent cut for public safety services.

Full Tax Burden

Council Member Joe Mosca stressed the importance of looking at all the taxes imposed on Sierra Madre residents, saying that although the city’s UUT is one of the highest in the area, surrounding cities have other taxes that add to their revenue.

“I think it’s incumbent upon us when considering this discussion to really look at the full burden on our citizenry when comparing it to other cities,” Mosca said.

Council Member Nancy Walsh agreed, saying that a more complete look at city taxes and revenue would be beneficial.

“I think it’s a good idea if we could find some way to compare that so it makes sense and people can once again visit how important it is, because where else do we really get money to support our public safety services?” Walsh said.

Community members who commented at the meeting expressed the importance of having a “Sunset Clause” and of managing revenue in a responsible manner. Mosca agreed with this community sentiment, saying that the “Sunset Clause” should remain in place and rates should decrease as planned.

“I see the beauty in what was done in [2008], and I think that structure was good,” Mosca said.

All council members agreed that putting a measure up for vote in 2012 was important because it would allow citizens to express their opinion on the issue and also give the council a chance to revise the measure for the 2014 election should it fail to pass.

“We have to make plans and if there is some sentiment that there is not going to be a UUT of in a range of a certain amount, we’ve got to plan for that and we can’t just plan for that in 2014,” Mayor John Buchanan said. “It will get a better result if people are planning for it ahead of time.”