FULLERTON : City Sued Over Utility Tax Hike

The former head of the Chamber of Commerce has sued the city and three council members, alleging that the 2% utility users tax approved in July was illegal.

Accountant Thomas J. O’Neill led a protest of the tax, which was approved by a 3-2 council vote after hours of testimony from angry residents and business people.

In the suit, O’Neill argues that the tax should have been put on the ballot. He seeks to have the court invalidate the tax, which covers telephone, electricity, water, natural gas and cable television bills. The tax will begin appearing on bills in October, according to the city.

Council members Don Bankhead, A.B. (Buck) Catlin and Molly McClanahan were named in the lawsuit, which was filed last week in Orange County Superior Court. The three voted to approve the tax.

The law firm of Rutan & Tucker was hired to defend the city against the suit, according to City Manager James L. Armstrong.

Len Hampel, an attorney for the city, said a legal precedent was set in Woodlake, Calif., in 1991, when residents sued that city in Tulare County over a utility tax. The residents charged that the tax must be put on the ballot, Hampel said, but an appeals court decided against them.

Hampel said he expects quick victory for the city in the Fullerton case.

O’Neill said he is determined to fight the tax, which he said will weaken local businesses. The city has estimated the tax will cost the average user about $4.40 each month. But O’Neill argued that a tax could make businesses leave the city, taking their property taxes and other payments away from the city.