Rancho P.V. OKs 5% Utility Tax but Still Needs More Revenue

The City Council approved a 5% tax on utility bills last week, but officials said it will not provide enough revenue to eliminate the city’s budget deficit and finance its capital improvements program.

The tax, which will raise $2 million a year, takes effect May 1 and will show up on telephone, electricity, water and gas bills this summer, Finance Director Greg Beaubien said. Households with a combined income of less than $11,500 a year are exempt from the tax.

Mayor Douglas Hinchliffe and Council members Mel Hughes and Jacki Bacharach sought a 7% tax because that was the amount that City Manager Don Guluzzy initially said was needed. Later, Guluzzy said 8% was needed to cover an expected $250,000 deficit and finance the city’s 5-year, $17-million capital improvements program, which consists largely of street and drainage improvements.

Councilmen John McTaggart and Robert Ryan pushed for the 5% tax and called for a citizens’ advisory committee to research other ways of augmenting revenues, including a parcel tax on property. Such a tax would require approval of two-thirds of the voters, but unlike the utility tax, it would be deductible on federal income tax returns.

Hughes voted against the final motion to impose the 5% tax because “it’s a farce. We have a real need that needs to be addressed and I think it’s a cop-out. Seven percent, 8%, even 9.5%, doesn’t address the problem.”

Bacharach agreed, although she voted for the 5% tax. Hinchliffe said he voted for it in an effort “to see the council unified on the issue.”