El Segundo Measures Seek Raises in Property, Utility User Tax Rates

In what was described as a compromise, the El Segundo City Council has placed two measures on a special election ballot that would increase taxes for both homeowners and businesses and bring more than $6 million a year to the city’s coffers.

The measures, which will go before voters March 7, will require a simple majority to pass.

The first measure, what the city describes as an excise tax on property, would impose a $60 per unit tax on residential development. Owners of non-residential property of less than 5,000 square feet would pay a flat rate of $200 per year. Larger businesses, such as the Chevron refinery and the city’s aerospace plants, would be taxed according to floor space.

For example, a Rockwell Engineering building at 201 N. Douglas St. with 346,000 square feet of floor space would be taxed an additional $45,672 a year, said Don Harrison, assistant to the city manager. Hughes would pay an additional $131,769 a year for a building at 2100 El Segundo Blvd. that has nearly 2 million square feet of floor area.

Although Ron Spackman, spokesman for Chevron, did not know exactly how much the proposal would cost his company, he said the measure would be a “significant increase.”

“From the business community’s perspective, we feel we already pay a fair share of the city’s revenues,” Spackman said. Businesses pay an employee head tax and a utility users tax that residents do not pay.

The second ballot measure would raise the utility user tax to 4% and make it permanent. The current 2% utility tax, imposed on water, gas and electricity, is due to expire in 1991. The tax would still apply only to businesses.

While council members agree that more revenue is needed, they do not agree on where the money should come from.

And until Monday, a 3-to-2 split hampered the council’s efforts to find new money sources. Revenue-raising measures cannot be placed before the voters without a two-thirds council majority, or four of the five members.

Councilman Alan West, who has been against increasing taxes on businesses, said Tuesday that he supports both measures. West and Councilman Bob Anderson had favored requiring residents to pay more in taxes or fees while Jim Clutter, Scot Dannen and Mayor Carl Jacobson believed businesses should pay more.

Anderson was recovering from heart surgery and did not vote Monday.

“This is a real nice, well-kept community and to keep it that way costs money,” West said. “I’d like to see both measures pass.”

West warned that the measures “don’t have a chance” of passing without the support of the full council. Other city officials, including City Manager Fred Sorsabal and Jacobson, said they are fairly optimistic the measures will pass.

Harrison said it is a “near certainty” that voters will support the utility user tax increase since it does not apply to residents, and said there is a “good chance” that they will approve the property tax.

He said the property tax “is not an onerous tax. It comes out to just $5 a month for each residential unit, which is probably less than what a resident would pay in another city to have their trash collected.” El Segundo does not charge for residential trash collection.

Harrison said 15% of the proposed property tax would come from residential land and 85% from businesses or other non-residential property.

If the measures do not pass, Jacobson said, “we start cutting, from all sections of the city budget.”

Although once flush with money, El Segundo has been borrowing from reserves since 1982, when the local Chevron refinery lost a major contract, cutting the city’s sales tax revenue.

City officials have said that the reserves have dwindled to about $3 million, which will cover a general operating budget shortfall of $1.6 million in the 1989-1990 fiscal year. But if capital improvement projects scheduled for the same year are included in the budget, the deficit would be $8.2 million without a revenue increase.