Utility Tax Has Outlived Its Usefulness, Activist Says

Twenty years ago, Luci Grismer campaigned in favor of a new utility tax to pay for a much-needed City Hall, police station and library.

Now she wants to get rid of the tax.

Grismer has launched a grass-roots effort to eliminate the levy, primarily because the projects it was intended to pay for were completed long ago.

But city officials say that the 3% tax on cable, electric, gas and phone bills--which generated $1.3 million this fiscal year--has become an important source of revenue for Placentia. The money has been used to pay for a variety of projects and equipment, including street-resurfacing, a fire station and city vehicles.

Ironically, the dispute over the tax comes in a year in which other cities, such as Anaheim and Huntington Beach, imposed similar utility surcharges.

The current debate in Placentia has come about because the council’s resolution establishing the tax said that revenue should be used to finance “capital projects.” Opponents say that covered only the $1.8-million City Hall, police station and library, which have been completed but not yet paid off.

But city officials interpreted the resolution more broadly, using the money to help pay for other projects and equipment. In addition, the revenue has been invested to collect interest instead of being used to pay off the Civic Center debt all at once.

“Imagine my chagrin when I found out that they have collected $12.5 million from the tax,” said Grismer, who has been active on city committees and volunteer organizations in the 27 years that she has lived in Placentia. “Why should they put all that money in the bank? They should knock the debt off.”

Grismer has spoken in vain at almost every council meeting in the past nine months to press for elimination of the tax, but she says she will keep on fighting.

She cites minutes from a 1970 council meeting when then-Mayor Robert Finnell said it would “seem logical to drop the tax when capital improvements were in.”

“Had they followed what they set out to do, those things should have been retired,” said Jack Gomez, a councilman in 1970. “It gives you the feeling, ‘What the heck, we’ve got the money, let’s spend it.’ ”

Of the $1.3 million that the city will collect this year, about $300,000 will go toward the Civic Center debt, expected to be paid off in eight years, according to City Administrator Robert D’Amato. The tax revenue that the city invests generates about $150,000 annually in interest, he said.

But even when the Civic Center is paid off, city officials say that the tax will still be needed. Unlike neighboring cities, Placentia is primarily a residential community and is often short on revenue from retail and industrial businesses.

“I’m against taxes,” Councilman Norman Z. Eckenrode said. “But we need taxes. If we cut $1 million out of the budget, that’s kind of tough.”