FULLERTON : County May Act to Offset Utility Tax

The county may withhold up to $1.6 million in property taxes from the city to offset money raised by the recently approved 2% utility users tax, according to Steven E. Lewis, the county’s auditor.

Lewis said Tuesday that he is considering a Fullerton Chamber of Commerce complaint that the tax is illegal.

Chamber President Carl Camp argued in a July letter to Lewis that the tax proposal had required a yes vote by at least four council members. Three council members supported the tax, which is due to take effect Oct. 1.

In his letter, Camp told the auditor he would be personally liable if he did not impound property taxes from the city.

In response, Lewis wrote in a letter to the city: “We will impound these property taxes until your city can obtain a court ruling invalidating our action or otherwise declaring the legality of your utility users’ tax.”

But after city lawyers protested, Lewis decided to double-check with the county counsel, who had originally recommended the withholding.

“We’re not sure now,” Lewis said Tuesday.

“We’re trying to decide what we’re going to do,” said Deputy County Counsel Bob Austin, who is working on the case. Austin said the county is required to withhold property taxes if the utility tax is found illegal.

Austin said he intends to advise Lewis by the end of the week whether to withhold the property taxes.

City Manager James L. Armstrong said the city expects to raise about $1.6 million from the utility tax this fiscal year. The cost of the tax for the average household is estimated at $4.40 per month, according to the city.

“We’re really surprised that the county would get involved in this local issue,” Armstrong said.

Resident Thomas J. O’Neill has filed a suit against the city challenging the tax.