Sierra Madre : 6% Utility Tax Proposed

The City Council is considering a 6% tax on utility bills to replace property tax revenue it expects to lose to the state next year and to cover the cost of pending litigation.

“After four budget study sessions the council members have indicated we’ll use a utility user tax to make up the $855,000 we expect to lose,” City Manager James McRea said.

Based on Gov. Pete Wilson’s budget proposal, the city would lose $655,000 in property tax revenue next year, he said. Meanwhile, the city is facing several lawsuits that could cost $200,000, he said.

City reserves are exhausted, and in the past two years the state has taken more than $300,000 from the city’s $4.5-million operating budget, he said.

McRea said the tax would generate about $600,000. Budget cuts would make up the difference.

Thirteen San Gabriel Valley cities already have adopted a utility tax.

The proposed tax and alternatives will be discussed May 4 at the Sierra Madre Elementary School auditorium, 141 W. Highland Ave. The City Council will probably vote on a utility tax in June, McRea said.