Utility Tax Repeal on Hold : Finance: Fullerton council members cite county bond crisis in decision to delay vote. Levy led to recalls.

With about $18 million tied up in Orange County’s troubled investment fund, City Council members decided Tuesday to determine if the money is safe before they repeal the utility tax that led to the recall of the three council members who voted to levy it.

“We just have to see what happens because we have a lot of money” in the investment fund, said Mayor Julie Sa. “I certainly don’t want bad news to hit us. We have to make sure we know what’s happening to the money because if we lose it, we’ll be in big trouble.”

Repeal of the 2% utility tax may be considered on Dec. 20.

“Nothing is as it appears,” said Councilman Peter Godfrey, who recommended postponing the vote. “If somebody wants to restore my confidence, you don’t go resigning and filing for bankruptcy. . . . We need to wait for the county to meet and tell us what our guarantees are.”

Accounting Manager Glenn Steinbrink said he and other city officials plan to meet with county officials on Thursday and the following Tuesday .

“I believe the most prudent thing to do right now is to cooperate with the county,” Steinbrink said. “I don’t believe that anybody can answer what’s going to happen in the future. . . . I cannot make a guarantee that there will not be losses in the future.”

Even though the council postponed a vote Tuesday, a majority of Sa, Godfrey and Councilman Chris Norby assured residents at the meeting that they still are committed to repealing the utility tax.

“You promised us that you were going to repeal this damn tax and you better do it tonight,” resident Marie Whaling said amid cheers from residents at the meeting.

Other residents asked the council to carefully review the city’s $81-million budget before repealing the tax.

The tax on all utilities, levied in October 1993, triggered the recall of council members Don Bankhead, A.B. (Buck) Catlin and Molly McClanahan.

In the recall election two months ago, voters replaced the council members with Jan M. Flory, Godfrey and Conrad DeWitte. But a month later, in the November general election, Bankhead won back a seat, ousting DeWitte, who now holds the record for the shortest council term: five weeks.

Because DeWitte was the only one of three candidates endorsed by the Fullerton Recalls Committee in the October election, his subsequent defeat sent a mixed message.

Residents who favored keeping the tax, which is scheduled to expire in September, 1995, said it meant that the voters would rather pay the tax than lose city services.

Opponents said DeWitte’s short stint in office meant the tax was not wanted and never should have been levied.

Should the council decide to rescind the tax, the city will lose about $2 million, City Manager James L. Armstrong said Tuesday. He said cuts in services would have to make up for the loss.

“We will have to make cuts in the whole organization, but we will survive,” Armstrong said.

If on Dec. 20 the council votes to repeal it, the tax would be lifted effective Feb. 28. “Whatever the council decides, we’ll deal with it,” Armstrong said.

In another action, council members announced their approval of an agreement reached in a lawsuit filed by former Chamber of Commerce President Thomas J. O’Neill over the utility tax. He agreed to drop the suit when the council majority promised to repeal the tax.