Politics & Government
Council Clashes Over Utility Users Tax Increase Extension
The Sierra Madre City Council has yet to reach a decision over the proposed extension of the Utility Users Tax.
At last week’s meeting, the Sierra Madre City Council did not come to a conclusion regarding the extension of the Utility Users Tax increase.
Mayor John Buchanan announced previously that the Council intends to put the proposed UUT increase extension before voters in April. However, the Council has yet to approve a resolution to send to the ballot.
Councilmembers clashed over two major points: 1) Whether there should be a built-in ordinance stating that the money collected would be used exclusively for public safety programs (police, fire and paramedic services) and 2) Whether the extension should cap the UUT rate at 12 percent or 10 percent.
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Should the Resolution Have a Mandatory Ordinance Stating Where the UUT Money is Spent?
There is currently no law that says UUT money has to be spent on public safety. All monies go into the city’s general fund, which is used for “all non-restricted fund activities in the city.” However, city officials say that all of the UUT money collected thus far has gone to public safety.
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Councilmember Mary Ann MacGillivray suggested an ordinance be built in to the resolution that UUT money could only be spent on public safety.
But Councilmember Josh Moran disagreed, citing that if an ordinance were to be built in, a two-thirds majority vote would be needed for the resolution to pass. Moran was concerned that a two-thirds vote might not be possible, and thought it would be easier to pass the extension with just a majority vote.
“You can't push this through with a mandatory expenditure,” said Moran. “Do you want to go to a two-third vote in this town?”
Mayor Buchanan said that the majority vote should rule, and that an advisory attached to the resolution would suffice. He said he trusted future councils would use the money only for public safety.
The original UUT increase passed with a 64% approval, said Mayor Buchanan.
Should the UUT Increase Extension be Capped at 10 or 12 percent?
As for whether the UUT cap should be 12 percent or 10 percent, the council is divided.
Mayor Buchanan has stated that authorizing future councils to raise the UUT to 12 percent is more fiscally responsible, and will be needed to fund the rising cost of public safety. However, Buchanan has said that a 10 percent UUT will be easier to sell to voters.
Councilmembers Josh Moran and Nancy Walsh agree that future councils should have the option of raising the UUT to 12 percent.
“These are the costs we have to pay to live in a great town. Instead of doing parcel taxes like they do in other towns, instead of having incredible property taxes, our property taxes are low. The only way we have to increase revenue in our town is through the UUT,” said Moran.
Councilmember Mary Ann MacGillivray has said that 12 percent is too high and citizens are already feeling the burden of a 10 percent UUT. She is pushing for a 10 percent UUT cap.
Under current law, the City Council has the authority to collect a UUT as high as 12 percent until June 30, 2014. The council opted not to collect a 12 percent tax this fiscal year because the city had an excess of $400,000 due to unfulfilled positions in the police and fire department and money that was budgeted for but unspent. It's currently collected at 10 percent.
What Happens Now?
If voters do not approve a UUT increase extension in April, the rate will decrease or “sunset” starting July 2014 until it reaches six percent in 2016.
If voters were to approve a UUT increase extension, they would be taxed at a higher rate for a longer period of time. The sunset clause would still kick in, but five years later than originally planned.
City staff will produce a resolution for the Council in December. The council has until January 21, 2012 to submit a final draft for the ballot for April elections.
More info on the UUT: