SANTA ANA : Council to Consider Utility Tax Break

Low-income residents could get a break on utility taxes if the City Council approves higher exemption levels for household utility users at its meeting tonight.

The new exemption levels proposed by city staff would be based on family size and are consistent with those set by the state Public Utilities Commission.

Currently, Santa Ana taxpayers are not eligible for an exemption unless the combined gross income of all members of the household is less than $10,000.

Under the proposal, a two-member family could earn $14,300 before having to pay the tax on telephone, electric, gas and water services. A family of six could earn up to $26,800.

The increase in the exemption level for low-income residents was proposed by Councilwoman Patricia A. McGuigan earlier this summer, when the council approved an increase in the utility tax from 4% to 5%. As part of that vote, the council compromised with the business community by raising the maximum limit that businesses can be charged. The city had initially proposed removing the cap entirely.

“It seems to me that it would be appropriate, since we are giving a break to industries, that those at the other end of the spectrum also be given a break,” she said.

The exemption level has not been adjusted since 1982, and McGuigan pointed to the unfairness of the tax for low-income residents, given the increasing poverty level.

“People who are making $12,000, $13,000, $14,000 are still not able to deal with the situation of paying the additional utility tax,” she said.

If the council approves the ordinance, the city staff estimates the revenue loss will total between $50,000 and $75,000 annually.