7% Utility Tax in Huntington Park Hits Legal Snag

City officials thought they had solved their financial problems and provided money for more police with a 7% utility tax. But a recent court decision probably will prevent the city from imposing the tax without a public vote, they said.

The tax was to have generated $2.74 million a year for 22 new police positions, employee raises, tree trimming and other services in 1989-90.

“We’re hurting,” Mayor William P. Cunningham said. “There’s no doubt about it.”

The City Council relied on a recent appellate court decision when it approved the tax May 15 without putting the matter before city voters.

City Seeks Reversal

Three days later, the state Supreme Court severely limited the scope of the decision and undercut the City Council action. City Atty. Steven N. Skolnik has asked the state Supreme Court to reverse its action.

But short of that, the City Council must schedule an election to win voter approval of the tax, seek other revenue sources or live with proposed cutbacks and without additional police officers, officials said. The council is scheduled to consider the issue at its June 5 meeting.

“After we took all the heat and the pressure, then the worst thing in the world happened,” Cunningham said. “We’ll probably have to go to a vote of the people. I don’t think we have any other choice.”

Proposition 62, which was approved by California voters in November, 1986, says that a city may not impose a tax to fund general governmental services without the support of local voters.

The City Council approved the tax on electricity, gas, water and telephone after a March 7 state Court of Appeal decision. The appellate court decided, in a Sonoma County case, that several provisions in the measure were unconstitutional. The decision appeared to clear the way for cities to impose utility and other taxes without a vote of residents.

But on May 18, the state Supreme Court ordered that the case not be published. The action lets the appellate court decision stand in the Sonoma County case, but prevents the ruling from being used as precedent, Skolnik said.

Huntington Park would be more vulnerable to a lawsuit if it were to impose the tax without that precedent.

“At this point, our ordinance (that imposed the tax) is probably null and void,” Chief Administrative Officer Donald L. Jeffers said. “We’re evaluating our options.”

The City Council said it intended to use the $2.74 million to pay for 22 Police Department positions, including two sergeants and 13 officers. The department has 59 sworn employees. The tax was also expected to provide money for employee raises, tree trimming, maintenance and other services. The council was to make a final decision on how to spend the money during budget deliberations this summer.

But city officials are again facing the austere, but nearly balanced, preliminary budget for the 1989-90 fiscal year recently presented by Jeffers.

The spending plan includes no raises for city employees. Huntington Park employees received a 4.2% raise this year at a cost to the city of about $300,000 annually.

The preliminary budget proposes more than $200,000 in cuts for tree trimming and other city maintenance. It also reduces spending for items such as Christmas decorations for Pacific Boulevard and a subsidy for the Huntington Park Symphony Assn.

No Increase in Revenues

Jeffers said the city is feeling the full impact of Proposition 13 now that state and federal subsidies have been reduced or eliminated. Revenues flowing into the city’s general fund, which pays for most city services such as law enforcement and fire protection, have not increased.

The city’s general fund revenues in 1989-90 will be about $9.7 million without the utility tax, about the same as 1987-88 revenues, according to the preliminary budget. The preliminary budget projects overall revenues and expenditures of $27.7 million. That includes money to pay for public transportation, the city retirement plan and other items in addition to direct daily operating cost.

Jeffers said the state Supreme Court decision represents a major setback that will be difficult to overcome.

“We were looking for $2.7 million in additional revenue,” Jeffers said. “There’re just not many sources available. Local government is very restricted in the way we can raise revenue.”