SEAL BEACH : Hearings to Be Held on Tax-Hike Plan

With Seal Beach’s budget woes continuing to worsen, the City Council has voted to hold public hearings on a plan that could more than double the utility-users tax.

The vote last week marked the council’s first official action on the often-discussed idea, which if approved would increase the tax that residents pay on monthly telephone, gas and electric bills from 5% to as much as 11%.

Though council members were quick to point out that Monday’s unanimous vote in no way means the tax increase is a done deal, some city officials see the proposal as one of the few available ways to balance the budget without making sharp cuts in city services.

Seal Beach faces a budget shortfall of $1.4 million to $1.6 million as a result of state funding cuts coupled with a recent California Supreme Court ruling that requires the city to refund about $500,000 in sales tax revenue to aerospace companies located in the city.

The shortfall is all the worse because it comes after three years of lean budgets that have meant sizable cuts in city spending and personnel. During the last two years, city staffing was reduced by more than 20%. In the 1990-91 fiscal year, the city spent $13 million. In the 1992-93 fiscal year, it is expected to spend $10.6 million.

Some of the officials analyzing next year’s fiscal situation doubt that there is any more fat to be cut from the budget.

“Future reductions in expenses and staff would result in the elimination of some services,” City Manager Jerry L. Bankston said this week.

Hearings on increasing the utility tax will take place during the next few months, but no dates have been set.

The council will have the option of leaving the tax at 5% or increasing it to as much as 11%. Officials said an increase of 5 or 6 percentage points would probably make up for the state cuts and the ruling on the aerospace companies. Any smaller tax hike would probably require further city spending cuts.

But few believe that even a maximum tax increase will offer much solace.

Bankston pointed out that Seal Beach will need additional funds to replace several aging police cars and might also face a $67,000 increase in county fire protection fees for next year.

Council members have had little to say about the possible tax increase so far, though some have reacted negatively to the idea of making radical budget cuts.