Pico Rivera : City Council to Consider Ordinance on 5% Utility Tax

The City Council this week directed city officials to draw up an ordinance to impose a 5% utility tax on residents and businesses.

If approved later this month, utility users could see the tax on gas, electric and telephone bills by October, said City Manager Dennis Courtemarche. Officials estimate that the tax could generate as much as $2.5 million annually.

Proceeds from the new tax would be used largely to maintain the city’s reserve and to pay for emergency purchases. The money might also be used as part of a court-ordered tax refund the city owes the Northrop Corp., which has been the city’s largest sales tax producer. That refund could total at least $3.5 million over the next several years.

The tax was necessary in part because of sales tax revenues that have declined from $5.7 million to $3.8 million in the last two years, Assistant City Manager David A. Caretto said. The state has also diverted about $800,000 in funds that used to go to cities over that time, he added.

This year’s proposed $15.4-million city budget will be $1.5 million less than last year’s. To save money, officials have ordered a hiring freeze, eliminated five unfilled jobs, rescinded a 4.2% cost-of-living raise for the city’s 137 employees and reduced medical benefits, Courtemarche said. The city is also postponing major equipment purchases and plans no new city-funded improvement projects.

More spending cuts, including reducing sheriff’s services, may be necessary if the Legislature further reduces city funding levels, Courtemarche said.