SEAL BEACH : Utility Tax Cut Weighed by Council

City officials on Monday will consider cutting the highly unpopular 11% utility-users tax.

The City Council more than doubled the tax two years ago to help close a $1.7-million budget shortfall but vowed to review the tax each year. Council members say it is the highest utility tax of any Orange County city.

“There’s going to be some people who come down to our meeting and throw that utility tax right in our faces,” said Councilman William J. Doane, who represents the Leisure World retirement community. He was the only council member to vote against the tax increase in May, 1993.

The tax was raised after years of painful budget cuts, including a 22% reduction in city staff. To save money, some officials had proposed turning over operation of local beaches to the state and contracting with the Orange County Sheriff’s Department for police services. Both ideas were rejected in favor of the tax increase.

Doane said the high utility tax keeps new business from locating in the city, which could increase revenue and eliminate the need for the tax at all.

Any reduction in revenue from lowering the utility tax would be offset by applying it to water bills, which are now excluded. The tax is charged on monthly electric, telephone and natural gas bills.

At a session Monday to review the 1995-96 city budget, officials will consider a proposal to trim the tax to 9%. But if it is applied to water bills, Doane said, it could translate into an overall tax increase for some residents. He is pushing for a reduction to 8%.

The utility tax generates about $1.5 million a year in revenue to the city.

“What it boils down to is you would get about the same amount in revenue, or close to it,” Councilman Frank Laszlo said. “I personally feel that the tax is too high.”

But Laszlo also said the city cannot afford to make a big reduction in the levy because of losses from last year’s collapse of Orange County’s investment pool.