SEAL BEACH : City Considering Utilities Tax Hike

Faced with a $1.7-million shortfall, some city officials are pinning their hopes on a proposed tax increase on utilities as the least painful way of closing the budget gap.

But even if the City Council approves the tax hike next month, Seal Beach’s fiscal situation will remain uncertain into the fall, when the U.S. Supreme Court is expected to rule on a complex tax rebate that could force a new round of budget cuts at City Hall.

City Manager Jerry L. Bankston warned that the Supreme Court ruling could add as much as $500,000 to the city’s deficit and might cause reductions in some city services.

At issue in the case are sales taxes that California aerospace companies charged the federal government as a contract expense.

Seal Beach officials propose to close the city’s budget deficit by as much by doubling the city utility user’s tax that residents pay on their telephone, gas and electric bills.

Already, the city’s staff has been reduced by 22% during the past two years and operating expenses have seen similar cuts.

This year’s shortfall is also blamed on expected cuts in state funding.