Westminster : Utility Tax Imposed; License Fee Hike Pends

A 5% utility tax imposed this week by the City Council is expected to help stave off impending bankruptcy, according to city officials who will consider a business license tax increase next Tuesday.

The council approved the first tax Tuesday night by a 4-1 margin, with Councilman Elden F. Gillespie dissenting. The tax is an key part of a $28.7-million fiscal 1986-87 budget, up $4.3 million from the previous year.

Residents will begin paying the utility tax Jan. 1, Assistant City Administrator Donald S. Anderson said. The increase is expected to raise about $2.5 million next year. Those over 62 or earning less than $12,000 a year may file for an exemption at City Hall.

Anderson blamed dwindling sales tax revenues for a steady drain on the city’s reserves, especially in the last fiscal year.

He cited a poor year at the Westminster Mall, poor auto sales at the city’s six dealerships and the loss of revenue from a recreational vehicle dealership as major reasons for the drop. The RV dealer, he said, had been processing sales in another city through a Westminster office until state tax officials halted the practice.

Without a utility tax, reserves would have reached a meager $154,000 by next July, compared to buffers of at least $2 million in recent years, Anderson said. One study showed that even if Westminster were to have laid off all non-public-safety employees, another 30 would have had to be cut from police and fire ranks.

“That’s a pretty good swipe in a city this size and people would definitely see a reduction in service,” he said.

Next Tuesday, the council will debate a plan to raise business taxes. All firms now pay a flat rate of $50. Anderson said the proposed increase would set the tax at $50 for businesses with five employees, with $5 added for each additional worker.

Anderson said morale at City Hall has been low as the crisis has heightened. But he said he thinks Westminster is over the hump.

“My personal feeling is that the city has been here since 1957, and it’s had its ups and downs,” he said. “But we’ve got a good location . . . and I think we’re going to come out of this, look back and say, ‘Those were hard times.’ ”