Santa Ana Raises Taxes, Cuts Jobs--and Grants Staff Pay Increases

Minutes after approving a $242.4-million budget that includes increases in the utility tax and cuts in staff positions, the City Council on Monday handed out pay raises for City Manager David N. Ream and other city employees.

The pay increase for the city manager is his fourth since Jan. 1, 1990, and the second since mid-April, when the council raised his annual salary to $135,996.

Under the pay plan discussed by the council in executive session and later unanimously approved, Ream’s pay will rise by 7.5% in three consecutive years, bringing his annual salary to $146,195 in the first year.

After the pay raise approved in April, Ream said it was the first he had requested since taking over the city’s top administrative post five years ago. Other raises, like the one approved Monday, were automatic cost-of-living increases.

Other department heads, including the city attorney and city clerk, will also receive 7.5% salary increases over the next three years, and other members of the city work force will receive raises of 23% spread out over the next three years.

The pay increases for the general work force will be issued in three installments of 10% immediately, 10% the second year, and 3% the third year.

Ream limited his comments on the pay raises, and the council approved them without comment.

However, during an earlier vote on whether to raise the tax on utilities from 4% to 5%, Councilman John Acosta said he was voting against the tax increase because of the downturn in the city’s economy. He then criticized Ream’s pay raise in April.

“The timing is bad,” Acosta said of the tax increase. “Mr. Ream’s raise was bad timing. Give him a raise and he says, ‘Raise taxes,’ so that he can cover it. It’s bad timing.”

Councilman Richards L. Norton also voted against the utility tax increase, which would raise the average residential bill by at least $1.50 per month. The tax applies to electricity, gas, and telephone services, and, for the first time, to long-distance telephone calls and water service.

As part of a compromise reached with the Santa Ana Chamber of Commerce, the current $6,000 cap on annual utility tax bills paid by the city’s largest businesses will be increased by increments of $1,000 over the next five years. The city had initially proposed to remove the cap, but that was met with strong opposition from about 40 firms, which complained that some tax bills would increase to $200,000 a year.

The $242.4-million budget for the fiscal year that began Monday cuts 21 city staff positions, forgoes planned increases in police staffing and delays improvements in the code enforcement unit. The city does, however, plan to complete the fifth year of a five-year capital improvements program that includes sidewalk and street repairs.

In the first of the votes related to the budget, Acosta said he opposed the spending plan because he disagreed with the way staff cuts would be handled. Norton, who also voted no, cited the need for increased public safety as the reason for his dissent.

The council also approved plans for two water rates for this budget year; one took effect Monday, and the other will begin next January. Under the structure, the average monthly water bill will rise from $15.94 to $17.41 next year.

As council members discussed the budget, officials also warned that further belt-tightening would be necessary.

“We are going to have to get more and more efficient each year as an organization, not only raising additional revenues, but also streamlining the city staff,” Ream said.

Ream predicted that the city staff will be reduced further in the future. During the last four years, 100 positions have been eliminated, although 60 people have been added in the public safety departments, he told the council.

Councilwoman Patricia A. McGuigan asked the staff to consider increasing the income ceiling for poor families exempt from paying utility taxes.

McGuigan said after the meeting that families with incomes of less than $10,000 do not have to pay the utility tax.

“That was fine in 1982,” she said, referring to when the exemption was approved, “but we don’t know what it should be now.”