PLACENTIA : Utility Tax Increase Will Be Considered

A 2% increase in the utility tax will be considered at tonight’s City Council meeting as part of the proposed 1993-94 budget.

The $22.6-million proposed budget would increase spending by 14% from the current fiscal year’s budget. Much of that increase is attributed to stepped-up spending for park development, street repairs, storm drain construction and other capital improvement projects.

To pay for the increased spending, the city proposes raising the utility tax to 5%. The tax hike would increase to $2.1 million the amount collected by taxing what residents spend on natural gas, electricity, telephone and cable.

The average household currently pays between $3 to $5.50 a month in utility taxes, and the increase would bring bills to the $5 to $9 range.

About $1.3 million of the utility tax revenue will be transferred to offset an anticipated shortfall of about $2.5 million. The city will also dip into its reserves to pay for the rest of the spending.

Traditionally, revenue collected from the utility tax has been used to pay off the debt incurred when City Hall was built, as well as to buy equipment such as street sweepers and police cars and make street improvements. Transferring the utility tax money to the general fund, which is used for the day-to-day operations of the city, will reduce the amount available for traditional uses.

If passed, the budget will eliminate seven full-time positions, including one police officer. However, layoffs will not be required, as the positions are currently unfilled.

City officials have laid some of the blame for budget woes on the state government, citing the second year of forced payments to the state out of the general fund and Redevelopment Agency fund, and an increase in fees charged to the city by various agencies.

“Between the state of California taking over $1 million . . . and new fees implemented by other agencies, our ability to provide the quality public services . . . was in jeopardy,” City Administrator Robert D’Amato said in a memo to the council.