Santa Ana’s Large Employers Protest Proposed Tax Hike : Budget: An increased utility levy would help balance the city’s finances, but it could also rocket some firms’ bills to $200,000 a year, foes say.

Representatives of the city’s largest employers, including medical, manufacturing and other firms, have united against a proposed utility tax increase that threatens to send some companies into a financial tailspin while helping to balance the city’s $242-million budget.

After a meeting Tuesday at Western Medical Center-Santa Ana with City Manager David N. Ream, about 40 business representatives voted to oppose removing the cap on the utility tax, which protects each of about 50 companies from paying more than $6,000 a year.

Some representatives said if the cap is lifted, their firms’ utility tax bills could rocket to $200,000 annually.

The group also opposed the city’s plans to raise the utility tax for all other customers--both residential and smaller business--from 4% to 5%. The tax covers gas, electricity, telephone service and, for the first time, long-distance telephone calls and water.

“This is not the year to be looking for taxes from Orange County manufacturers,” ITT Cannon spokeswoman Sandra Wood said after the meeting.

ITT, an electronic components firm with 2,000 workers, would see its utility tax increase to at least $150,000 and would “definitely feel that impact” because of the downturn in the economy, Wood said.

Although city officials estimated that removing the cap would raise about $1 million, Santa Ana Chamber of Commerce President Michael Metzler said the figure was closer to $3 million and would affect about 50 firms.

“That’s a pretty severe step to take at this time,” said Tanya Thomas, general manager of MainPlace/Santa Ana mall.

If the tax increase is approved by the City Council next month, Thomas said, the mall’s utility taxes would rise to nearly $100,000, with the increase passed on to the mall’s 190 tenants.

Some members of the business group held out hope for a compromise.

Ream later said he needs more time to review the issue.

“I did assure the members present that (the city staff) would not be recommending an increase that would force anyone to pay in excess of $100,000,” Ream said. “It was not our intention to increase it so significantly.”

City officials have blamed state and county governments for the crunch because they balanced their own budgets last year by taking away city revenue and increasing fees for county services. In Santa Ana’s case, the result was a $5-million shortfall.

While trying to avoid conflict with city government and support its programs, said Metzler of the Chamber of Commerce, businesses are concerned because the tax revenue--once specifically designated for public safety improvements--is now scheduled to go into the city’s general fund.

“The business community is tired of being the whipping boy between governments trying to balance their respective budgets,” Metzler said.

None of the firms have threatened to leave the city because of the proposed tax increase, Metzler said, but they will analyze the cost of doing business elsewhere. Such states as Arizona, Texas and Utah offer incentives to lure companies away from California.

The group’s opposition to the utility tax increase, to be forwarded to the Chamber of Commerce next week, also recommends that city officials and business leaders form a committee to work jointly on future city budgets and share ideas on how to cut costs and raise money.

Metzler said companies were upset by the last-minute notification of the proposed utility tax increase and want more advance warning before future tax or fee increases are proposed.