ANAHEIM : Battle Shaping Up Over Utility Tax

In what could become a showdown between Mayor Tom Daly and the city’s top appointed officials, the city administration is warning that $8 million will have to be cut from the upcoming municipal budget unless an unpopular utility tax is renewed before its September expiration.

In a report given to the City Council this week, City Manager James D. Ruth said that without the tax--adopted two years ago at an angry council meeting attended by 1,800 people--the city’s deficit will worsen to $10 million within three years and the city will not be able to begin restoring services to current levels until at least 1997.

Even if the tax is renewed, Ruth said, the city still faces shortfalls of more than $1 million in fiscal years 1993-94 and 1994-95. The city budget this fiscal year is $132 million.

Renewing the tax could run into stiff opposition from Daly, who voted against it as a councilman and promised to push for its abolition during his successful mayoral campaign this past fall.

Daly and Councilman Frank Feldhaus said this week that they plan to oppose any proposal to renew the tax, while Councilmen Fred Hunter and Bob D. Simpson said they will vote to renew the tax. That would leave the decision up to Councilman Irv Pickler, who reluctantly voted to impose the tax two years ago.

“I’m willing to listen to both sides, but we’ll need to find other dollars and cents to replace the dollars and cents we’ll lose if we don’t have the tax,” Pickler said. “But for now, I’m hanging right in the middle.”

The tax is a 2% levy on all telephone, water, electric and gas bills. City officials say it costs the average resident $3 a month, with low-income families exempt.

Even with the tax, the city has eliminated about 180 positions from the 2,000-employee work force it had in 1991. Most of the positions were cut through attrition and an early retirement offer; fewer than 10 employees were actually laid off.

“We cannot absorb the loss of $8 million to $10 million without a substantial drop in services,” Ruth said this week. “The council sets the policy for the city, so I’ll do whatever they decide. But they need to know that if the tax is eliminated, they’ll have to make some tough decisions about what services to cut. I want them to have all of the facts.”

Ruth said that without the tax, even the Police and Fire departments could face cutbacks. He blames the problems on a 5% annual growth rate in the city’s population.

Daly did not return phone calls this week, but at Tuesday night’s council meeting he said he wants to see the city’s budget cut by allowing private industry to lease and operate certain city-owned facilities. He named the two municipal golf courses and the Anaheim Convention Center as prime candidates for privatization.

“There are no sacred cows,” Daly said. In the past, Daly has called threats of police and fire reductions “scare tactics.”

Even without the utility tax, the city’s income will increase from $132 million this fiscal year to $148 million in fiscal 1996-97, but that 3% annual increase will only keep up with inflation, according to administration projections.

Continuing the tax would add $8 million to $10 million in revenue annually, the report says.

During that time, the projected cost to keep city services at current levels will rise from $132 million this year to $157 million in 1996-97, the report says. The city’s fiscal year runs from July 1 to June 30.