El Segundo Tries to Bail Itself Out

One week after voters overwhelmingly defeated two tax proposals, El Segundo City Council members Tuesday moved ahead with their own measures to bail the city out of its financial crisis.

In addition to postponing indefinitely the expansion of the city’s senior center, the council instructed the city staff to draw up three ordinances that would allow the city to collect more money from its utility tax.

The staff was also told to determine how the city could create an assessment district to make the businesses that cover most of the city’s east side pay for a new fire station.

Finally, council members asked for a report on procedures they would have to follow should they decide to fire any department heads.

“I would call it cut and slash,” Councilman Scot Dannen said Wednesday.

City Manager Resigns

The council’s actions came only hours after it learned that it had another task before it--finding a new city manager.

On Tuesday morning, City Manager Fred Sorsabal informed the council that he was resigning to take a similar job with the new city of Mission Viejo in Orange County. Sorsabal, who became El Segundo’s city manager less than a year ago, told the council that the challenges of managing a year-old city were irresistible.

Council members, surprised by Sorsabal’s decision, picked Police Chief Frank Meehan to act as interim city manager after Sorsabal leaves April 20. The city will then look for a permanent replacement.

Until he departs, the 51-year-old Sorsabal told council members that he will continue looking for ways to eliminate an anticipated $1.6-million deficit in the city’s 1989-90 budget. The city’s annual operating budget is about $20 million, and in recent years reserves have been used to balance the books.

Ballot Measures Lost

“For the five or six weeks I’m going to be here, we’re going to work out this mess we are in,” Sorsabal said.

Last week, voters said no to two ballot measures that the council had proposed to deal with the city’s fiscal woes. One measure would have doubled to 4% the utility tax paid by business, while the other would have imposed a property excise tax of $60 a year for homes and a varying amount for businesses.

City officials estimated that the measures would have raised about $7 million a year and ended the city’s money problems.

Of the five council members, only Alan West opposed the decision Tuesday night to postpone the senior center expansion project, saying he wanted more time to study the proposal. The council’s decision is expected to save the city at least $200,000.

However, the action means that the city will lose $147,000 in state matching funds it would have received if construction had started by June 30.

The proposed ordinances that would boost the amount the city receives from its utility tax all involve removing existing exemptions.

Strong Debate Likely

Because council members typically split 3-2 on revenue matters, the ordinances, which will come before the council next week, are likely to provoke strong debate. West and Councilman Bob Anderson have generally favored having residents pay more to solve the city’s money problems, while Mayor Carl Jacobson and Councilmen Dannen and Jim Clutter have insisted that businesses pay more.

One ordinance would remove the exemption from the tax presently enjoyed by the Southern California Edison Co., which operates a plant in the city that uses natural gas to produce electricity. If Edison is forced to pay the tax, the city stands to collect $840,000 a year, city officials estimate.

Edison has indicated that it would seek permission from the state Public Utilities Commission to pass along the cost of the tax to its El Segundo customers.

A second ordinance would bring $360,000 or more annually into the city’s coffers. It would force the local Chevron refinery, which channels some of the heat it produces to a small power plant, to pay a utility tax on that electricity.

A third ordinance would impose the utility tax on telephone calls. City officials said they do not know how much new revenue that would generate.

Growing Concern

The idea to form an assessment district and have business pay to build a new fire station on the city’s east side comes amid growing concern among some council members that the area’s station needs to be replaced.

Not only is the present fire station antiquated, but it is located too close to a light-rail line that will be built as part of the Century Freeway project, they maintain. A new fire station is expected to cost $2.5 million.

Council members declined to say what department heads--if any--could be fired as part of any cost-cutting move. Nevertheless, “the whole issue has to be explored” in light of the city’s fiscal predicament, Clutter said.