Stanton Worries About Impact of Tax Decision

A few years ago, the tiny city of Stanton was faced with a huge problem: It was running out of money.

No funds to sweep the streets, remove the garbage and pay the police officers.

So two years ago it did what most cash-starved governments do. It decided to tax its citizens, levying fees on electric, water and phone bills that produced $1.4 million a year and helped balance its $9.4-million operating budget.

Now the utility tax, described by some council members as the city’s lifeline, may be in jeopardy.

A recent California Supreme Court decision threatens to strip cities of their ability to raise funds through special taxes. And Stanton officials are worried that they will have to resort to making unpopular moves such as cutting services to offset the lost tax revenue.

Other cities face the same crisis, but its impact may be especially painful in smaller, less developed cities such as Stanton, which depend on utility taxes.

With no major amusement park, big mall, automobile dealership or other attractions, the city of 30,000 has never been among Orange County’s popular destinations. Its only sales tax revenue--a key source of funds for larger cities--comes from mostly mom-and-pop shops that line the few commercial areas of the 3.5-square-mile city.

“If they make that tax unconstitutional, we will die on the vine,” said Councilman Sal Sapien.

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The court upheld the constitutionality of Proposition 62, ratified by voters in 1986, which requires that taxes levied for general purposes be approved by the majority of the voters, and taxes for special purposes be passed by a two-thirds majority. Stanton’s utility tax, as in other cities, was put into effect by a majority vote of the council.

Lawyers for the League of California Cities continue to study whether the decision will mean that cities with utility and other special taxes will have to repeal them immediately. The league said it hopes to have a clear understanding of the decision within the next few weeks.

Stanton City Manager Terry Matz said city officials will study the court’s decision in the next few weeks to determine exactly how the city will be affected.

Though sales tax generates more money than the utility tax, the mostly blue-collar population has been shopping less frequently in the city, steadily reducing sales tax revenue.

Signs of the grim state of shopping in Stanton are everywhere. The major tenant at one of the largest strip malls in the city, the 99-Cent Store, burned more than a year ago and has yet to be rebuilt.

Sapien said declining sales tax revenue forced the council to try to balance the budget in previous years by reducing the number of police officers. But as crime became commonplace, the council backed the utility tax as a way to put more cops on the streets.

“We had major problems with drug dealing and prostitution and assaults,” he said. “But we were still having to reduce the police because we had no money.”

Sapien said the number of crimes reported in Stanton has fallen by 23% in the past two years.

Now, city officials said they fear that without the utility tax they will have to reduce the safety budget again.

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Since it faced a $1-million budget shortfall in the late 1980s, the city has done everything in its power to save money. The city bureaucracy was reduced, city services were privatized and the Police and Fire departments were disbanded (the Orange County Sheriff’s Department and Orange County Fire Authority now serve the city).

Despite the belt-tightening, Matz said the council has had to put important projects, such as street repairs and park improvements, on hold.

“We have done everything we could in terms of reducing budgets over the years,” said Matz. “We are just about as lean as we can be.”

Sapien was among the early supporters of the 6% tax on utility bills that goes to the city. But even the council members opposed to the tax eventually changed their minds about it.

Brian Donahue, who won a seat on the council last year by promising to repeal the unpopular utility tax, said he still favors reducing the tax, but only when the city is restored to financial health.

Likewise, Mayor Harry Dotson said he dislikes taxing the citizens but sees few options. “I voted against the tax,” he said. “But I have seen the necessity of having it to protect the community.”