Utility Tax Repealed by Local Vote

Rejecting the argument that a local utility tax is necessary to close the city’s widening budget gap, voters have rescinded the controversial levy.

The tax lost 53.1% to 46.9% Tuesday in an election that drew one-quarter of the city’s 12,392 registered voters.

Approved in 1994, the tax on gas, electricity and phone service added 4% to monthly bills for residents and 3.5% for businesses. City officials maintained that the tax was justified to close a $1-million annual budget gap created when Sacramento began to take a greater share of local sales-tax revenues during the recession of the early ‘90s.

The tax, which generated $2.4 million since it was enacted, recently accounted for nearly 25% of the budget, said Agoura Hills City Manager Dave Adams.

City officials said the vote will result in delays for projects such as road and sidewalk repairs. In anticipation of the vote, the city had collected, but not spent, about $900,000 in utility taxes to create a fund to fall back on if the levy was repealed.

From the beginning, the tax has generated heat from local residents who believe the city could balance its budget by cutting spending. One group, Citizens Against New Local Taxes, mounted an unsuccessful recall drive against the five City Council members who approved the tax two years ago without a public vote.

City officials called for Tuesday’s election after the state Supreme Court upheld Proposition 62, a 1986 ballot measure requiring local voter approval of specific taxes. Before the September decision, some cities in California had ignored the proposition, leading to the legal challenge and the subsequent ruling.

In March, 14 municipalities conducted elections to comply with the terms of Proposition 62, according to the California Debt Advisory Commission. Ten were approved, the commission said.

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The Agoura Hills vote came amid mounting criticism of tax measures in Los Angeles. The Los Angeles Community College District board was criticized for approving an annual assessment on tens of thousands of county homeowners. Opponents also complained that the government was asking more money from residents via bond measures for police, and most recently, parks and recreation programs.

Amid the controversy over taxes, particularly special assessments, the Howard Jarvis Taxpayers Assn. qualified a constitutional amendment for the November ballot that would require approval by two-thirds of the voters to institute any new taxes, property-related assessments, fees or charges. The state’s legislative analyst and director of finance have said that annual revenue losses could exceed $100 million.