3.5% Utility Tax Gets Surprising Support at Hearing

Time and time again, Rancho Palos Verdes residents have rejected tax proposals at the ballot box. This week, the City Council held its first public meeting on a plan to impose new taxes without holding a public vote--and the reaction was surprisingly supportive.

The proposal discussed at Tuesday’s hearing calls for a 3.5% utility tax for road repairs, and the extension of an average $52-per-household fee to pay for landscape and lighting maintenance. The plan also includes a 5% to 10% tax on greens fees at private golf courses. But even if approved, the golf levy would raise no revenues immediately because none of the private courses planned for the city have been built.

The tax measures, which still face a formal public hearing and consideration by the council next Tuesday, are designed to eliminate a projected $2.25-million shortfall in the city’s 1994-95 budget. The city has struggled to make ends meet as the state has cut its distribution of property taxes and property values fell with the recession.

Most of the nearly one dozen city residents who spoke Tuesday agreed that new tax revenues are needed.

“Goodness gracious, we are affluent people here,” resident Roy Fulwider told the council. “This is not an exorbitant tax.”

The utility tax funds would be used to pay for fixing potholes in streets, sealing neighborhood roads and repaving major arteries. Already, city officials say, Rancho Palos Verdes has been lagging in maintenance, but problems could become even worse next year without the new revenue, city officials said.

“The reality is, if the city is going to function, we need to function at this level,” Mayor Susan Brooks said.

Some residents sounded a similar alarm.

“If we dare to destroy the underpinning of infrastructure, it will do great damage to our property values,” resident Sharon Hegetschweiler told the council.

Since spring, council members have explained the revenue shortfall at town hall meetings and neighborhood association gatherings, and a consultant was hired to conduct focus groups and survey residents.

The verdict: residents will go for a utility tax, so long as they know that it will fund. Residents also want provisions for periodic review of the taxes to determine if they are still necessary or are grossly unfair.

Even so, the response so far could be just the calm before the storm.

Opponents argue that the city still needs to cut spending in such areas as staff salaries and landscape maintenance. On Tuesday, some residents questioned the need to hire the consultant.

“(The city) needs to actively encourage the development of new sources of revenue,” resident Paul Christensen said. “They need to find more ways to operate more efficiently and cut spending.”

Council members say an anti-tax backlash is possible once residents read their bills.

“Politically, we’re going to take a lot of heat,” Councilwoman Jacki Bacharach predicted.

The council imposed a utility tax in 1986, but it was rescinded three years later after community opposition. And in April, 1992, voters narrowly rejected a parcel tax.

Some residents also protested the council’s decision to create a special district last year that raises about $800,000 a year to maintain parks, median strips, street lights and traffic signals. The council’s proposal would extend the district another year, to 1995.

Brooks, who in 1991 campaigned against imposing taxes without a vote of the people, said that her sentiment changed once she learned more about the city’s fiscal situation.

“I was naive, I was wrong, I acknowledge that,” she said. “. . . But taxation at the local level is probably the most justified tax because you see it at the front door.”

The new utility tax would be collected on water, electric, gas and telephone service bills and passed on to the city treasury. The council backed away from imposing the tax on cable TV after a representative from Dimension Cable argued that the service was not a public utility--even though court decisions have upheld a city’s right to impose such a tax on cable operators.

“I don’t want to get in a fight with them now,” Councilman Steve Kuykendall said. “We don’t need it right now.”

The council also refrained from extending its greens fees levy to the public Los Verdes Country Club golf course and driving range, which is owned by Los Angeles County. When that possibility was discussed earlier this year golf enthusiasts objected and county officials hinted at legal action.