Politics & Government
City to Draft Utility Tax Increase Extension for Voters
Mayor John Buchanan intends to ask citizens to vote for an extended increase of the Utility Users Tax during April 2012 elections, but the City Council differs over where to set the UUT cap. It's currently 12 percent, but residents pay 10 percent.
After a heated debate at the meeting Tuesday, Mayor John Buchanan asked that a resolution extending the Utility Users Tax increase be drafted to put before voters in April.
Buchanan said the new UUT extension would include a built-in sunset clause that would drop the tax back down to 6 percent by a certain date.
Councilmembers differed over where to set the UUT cap. It’s currently 12 percent, though residents are paying 10 percent.
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Councilmember MaryAnn MacGillivray said that 12 percent is too high, and residents have already been pushed to the limit with the 10 percent tax. She said city programs have survived on a 10 percent UUT and there are other solutions to funding, such as looking into private funding for the library or introducing a parcel tax.
Buchanan said that city programs (like police, paramedics, fire, library or the aquatic center) would have to be cut if the UUT did not bring in enough money.
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MacGillivray said if cuts were to be made to city programs, the public should decide where.
Buchanan said that having a UUT cap of 12 percent makes more fiscal sense, but 10 percent would be more politically salable to voters.
Buchanan said that though the UUT is “among the highest around,” Sierra Madre keeps certain fees lower and does not collect taxes that other cities do. A property tax assessment that San Marino collects was cited as an example. “We’ve kept certain rates low, but the trade-off is, we have the UUT,” said Buchanan.
Councilmember Josh Moran was in favor of keeping the cap at 12 percent, saying that the difference between 12 percent and 10 percent is minimal and that the extra expense is beneficial for the community. Moran said there should be a low-income exemption to the tax.
Tax Was Intended to Expire?
MacGillivray said that when the 6 percent UUT was approved in the 1990s, it was intended to eventually go away. She said she fears that 12 percent could become the new baseline for the tax instead of the cap.
Money from the UUT goes directly into the city’s general fund. The council said most of the money from the UUT funds public safety programs like the police and fire departments and paramedics.
The current UUT increase was approved by voters in 2008, and the law gives the council authority to raise the tax as high as 12 percent until 2014. After June 2014, a sunset clause will go into effect that decreases the UUT by 2 percent every year until it reaches 6 percent--the rate prior to 2008.
The UUT is currently set at 10 percent and applies to electricity, gas, phone, cable and garbage collection. Water and sewage are taxed at 9 percent.
The city will now draft a resolution which will be presented to the council at the next meeting.
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