Huntington Beach will soon have a choice to update and lower a long-standing utility tax, but officials warn not passing the new measure will take away nearly $6 million annually in revenue that would normally go to public services.
The City Council approved July 6 putting changes to the Utility User Tax on the November ballot to update the tax’s language while lowering it slightly. If approved, the Utility User Tax would be reduced from 5% to 4.9%.
The updated measure lowers the tax and fixes issues with the current ordinance’s language that could lead to litigation, said Mayor Cathy Green.
“For me, it made more sense,” she said. “Why not do it properly … and secondly, why not lower the fee?”
Residents are paying a 5% tax on electricity, gas, water, cable television and telephone services, which amounted to more than $20 million in 2008-09. The city first enacted the tax in 1980 to pay for public services and has used it to help fund police, fire, libraries and beach operations through the years.
The city has to update the language on the telecommunications portion of the ordinance to comply with federal law.
If residents don’t approve the measure, the city will maintain the current 5% tax, but could be susceptible to litigation, said spokeswoman Laurie Payne. The city will lose out on an estimated $6 million in annual revenue, officials said.
Voting for the updated ordinance is a “win-win,” Green said.
The measure must get a simple majority to be approved.