Rancho Palos Verdes to Put Extension of Utility Users Tax Up for Vote

Within four years, Rancho Palos Verdes officials hope to complete 46 projects that officials say are necessary to keep aging and deteriorating streets from falling apart. The price tag is just over $18 million.

The need for the work is not an issue on the June 7 ballot.

But how to pay for some of it is.

In ballot Proposition H, the city is asking voters to approve a five-year extension of a utility users tax, which the City Council enacted in May, 1986, to pay for a long-term capital improvement program for streets and storm drains. The 5% levy brings in about $1.8 million a year.

Making a case for the tax, city Finance Director Kevin N. Smith said it already is in place, utility companies collect it at no charge to the city, the money is received on a monthly basis and it affects everyone in the city--business people, homeowners and renters.

But Citizens Against the Utility Tax, which is made up of five residents, one of them a former member of the city Traffic Committee, argue that the utility tax is not the right way to raise the money.

Richard M. Grotz, a city resident since 1973 and chairman of the group, said that because the utility tax is not deductible on federal or state income taxes, it amounts to a tax on money that already has been taxed.

Special Parcel Tax

Contending that most Rancho Palos Verdes incomes “are in the highest bracket,” Grotz argues that one must earn as much as $1.73 to pay $1 in utility taxes because a combined maximum federal and state tax rates take 73 cents of every $1.73 earned. He acknowledges that the federal rate will go down next year.

The city says the utility tax averages $10 a month, but Grotz contends that it is higher based on his tax charges, which he said came to a total of $265 last year.

Grotz said that the city should have proposed a tax-deductible special parcel tax earmarked for street and storm-drain maintenance, similar to the two voter-approved measures that neighboring Palos Verdes Estates uses to pay for such services as police, fire, paramedics and parkland and street maintenance.

Although such measures require two-thirds votes, they have won handily in Palos Verdes Estates.

A simple majority of voters is necessary to extend the utility users tax.

Grotz’s group is not actively campaigning against the tax but wrote the ballot argument against it. The five council members are speaking on its behalf to homeowner groups and other organizations.

City officials assert that the parcel tax has built-in flaws--Los Angeles County charges the city to collect it and money comes in only twice a year. They say that in a survey of 400 randomly selected residents, a utility tax was preferred over a parcel tax.

“People said, ‘Don’t increase the property tax, which is a large bill once a year,’ ” said Councilwoman Jacki Bacharach. “It’s easier to pay a monthly utility tax.”

The tax is on the ballot as a result of Proposition 62, which was approved by California voters six months after the council passed the utility tax. Under that measure, the tax automatically expires this November unless voters approve an extension.

Cutoff Date

According to a legal analysis of Proposition H by City Atty. Steven L. Dorsey, approval would authorize the council to extend the 5% tax to June 30, 1993. The council could not increase the tax or extend it beyond the cutoff date, although it could lower the rate or cease collections prior to the cutoff.

In a statement, the five council members assert that utility tax revenue is essential for street and storm drain work because “revenues are not keeping up with the cost to maintain and repair our aging facilities.”

They said expected revenues from the hotel-conference center development on the old Marineland site should make the tax unnecessary by 1993.

Public Works Director George Wentz said that about $5 million in utility taxes has been collected so far and regardless of the outcome June 7, the city will be able to complete about 26 street resurfacing or reconstruction projects by the end of June, 1989.

The total cost is $11.8 million--$5 million from the utility tax and the remainder from such sources as developer fees and federal and state road funds. Some projects have been completed, some are under way, and others are scheduled.

Wentz said failure of Proposition H would jeopardize 20 other road projects, totaling $6.5 million, that have not been funded. Two storm drain reconstructions also would be affected.

“We would be faced with deteriorating streets and no way to fix them,” Wentz said.

Utility tax opponent Grotz said that even though the council says utility tax money will be used only for streets and storm drains, the money goes into the general fund and could be spent on other things. Bacharach said this is true, but reiterated that it is “unanimous council policy” to use the money only for streets and drains.

She called the situation a Catch 22, explaining that if the city designated the money for specific uses, the proposition would require a two-thirds vote--something she considers too risky.

‘Future Costs’

“The hardest problem with this tax is that we’re not talking about stopping the police,” she said. “We’re talking about future costs we want to prevent by doing preventive maintenance. . . . It is not a crisis people will see. . . . It will show up in a couple of years when it costs more to fix a road.”

Grotz said the city could win a two-thirds majority “if it sold” the proposal. He criticized the city for not putting a parcel tax to a vote earlier. “The timing for defeat is the city’s own,” he said.