SANTA ANA : Residents Get Break on Utility Taxes

The City Council on Monday gave low-income residents a tax break by unanimously approving higher exemption levels for household utility bills.

The new exemption levels, which are consistent with the levels set by the state Public Utilities Commission, will now be based on family size.

Exemptions on utility taxes on electricity, water, gas and telephone bills will be granted to two-member families earning less than $14,300 a year, three-member families earning less than $16,900, four-member families with income below $20,000, five-member families earning less than $23,500 and six-member families at less than $26,800.

Before the council’s action, the city’s taxpayers were not eligible for an exemption on utility taxes unless the combined gross income of all members of the household was less than $10,000.

The change was proposed by Councilwoman Patricia A. McGuigan, who suggested boosting the exemption level this summer when the council approved a utility tax increase from 4% to 5%.

When the council approved that increase, they struck up a compromise with the business community by adjusting the maximum that businesses could be charged. McGuigan reasoned that because the council was giving industries a break, low-income residents who are “at the other end of the spectrum should also be given a break.”

“A lot of people are going to benefit from this,” said Councilman John Acosta, who said he has been in favor of such a proposal for several years and applauded McGuigan for her efforts.

With the council’s approval of the ordinance, city staff estimates that the city will suffer an annual revenue loss of $50,000 to $75,000.