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Ballot Measure Aims to Repeal Arcadia’s Utility Tax

Mayor Gary Kovacic described the forthcoming mailer as "informative, nonpartisan ... and factual." Levies on utility usage in Arcadia date back to 1970, when the council established a 5 percent surcharge on all four services. –Photo by Terry Miller

Mayor Gary Kovacic described the forthcoming mailer as “informative, nonpartisan … and factual.” Levies on utility usage in Arcadia date back to 1970, when the council established a 5 percent surcharge on all four services. –Photo by Terry Miller

Officials Warn of Utility Tax Repeal’s Negative Impact on City Services, Infrastructure

By Joe Taglieri

A ballot initiative that recently qualified for Arcadia’s upcoming election seeks to repeal the city’s utility tax, which officials say if approved will significantly downgrade services and infrastructure improvements. Proponents contend the city is overtaxing residents to cover needlessly high employee salaries and inflated program costs.

Currently the tax, which both residential and commercial utility customers pay each month, adds 7 percent to bills for water, electricity and natural gas and 5 percent for telecommunications.

In a presentation at the city council meeting on Oct. 6, City Manager Dominic Lazzaretto cautioned that repealing the tax would eliminate 12.5 percent of Arcadia’s budget. This would lead to staff reductions and cancel infrastructure improvement projects.

“Collectively, [utility taxes] are the third largest revenue source for the City, generating $7 million dollars … each year, paying for many important services that the City provides to its businesses and residents on a daily basis,” Lazzaretto wrote in a report to the council.

Lawrence Papp, an Arcadia resident for more than 50 years, leads the tax repeal effort.

“There’s too much fat in the city budget,” Papp said in an interview. “There’s too much imprudent spending.”

In addition to what he observed were bloated city employee salaries compared with neighboring San Gabriel Valley communities, Papp, 86, also noted his and other ballot measure supporters’ opposition to what he described as Arcadia’s overly abundant taxpayer-funded civic and social programs.

“We believe that those who benefit should pay for what they receive,” Papp said.

“Taxes are too high … [and] too numerous,” Arcadia resident Domenico Tallerico told council members.

“There’s a tremendous burden on all taxpayers, and even those that don’t pay taxes ultimately will suffer from that burden,” he added.

Noting the Arcadia Police Department’s status as the city’s largest budget expenditure – nearly $20 million for the current fiscal year – resident Yamay Christle suggested the council consider outsourcing law enforcement services to the Los Angeles County Sheriff’s Department.

An average Arcadian pays a combined total of less than $10 a month in utility taxes, according to Lazzaretto’s report.

Citing feedback from residents, Papp said the average Arcadian family pays between $200 and $1,500 in utility taxes annually.

“This is serious, it couldn’t be more serious,” Mayor Pro Tem Roger Chandler said. “The effect of this measure taking away $7 million is significant.”

In his presentation to the council, Lazzaretto presented two scenarios to account for the 12.5 percent revenue loss if the tax repeal wins voter approval this spring.

Lazzaretto’s first suggestion for dealing with the budget shortfall was to reduce each city department by 12.5 percent. This would result in the loss of 129 employees, including 29 police jobs and 24 positions from the Arcadia Fire Department, in addition to reducing emergency response times and hindering a wide range of public services the city provides through other departments.

As an alternative to slashing the budgets of all departments, the city manager proposed prioritized reductions.

“Based on what is generally accepted as the community’s highest priority – public safety – and the fact that several functions are legally mandated (City Clerk, Treasurer, and Building Official, for instance), it is possible to illustrate how significant the impacts would be on those departments that fall outside of this group,” Lazzaretto’s report explains.

As an “extreme example,” Lazzaretto posited the idea of completely eliminating the library and recreation departments. This would still leave an additional $520,000 in cuts for remaining departments to absorb.

The city manager also warned against eliminating or reducing revenue-generating activities that may result if voters repeal the utility tax.

“Any program or service cuts would need to be cognizant of the potential additional revenue losses that could occur,” his report states. “The same would be true for grants and other non-General Fund revenues that could be impacted if staffing and service levels did not meet minimum requirements.”

Papp contended that repealing the utility tax would attract businesses to the city, thereby increasing sales tax and other revenue streams.

Council members authorized $10,000 for a citywide mail campaign aimed at educating voters on the consequences of repealing the utility tax.

Mayor Gary Kovacic described the forthcoming mailer as “informative, nonpartisan … and factual.”

Levies on utility usage in Arcadia date back to 1970, when the council established a 5 percent surcharge on all four services.

The council adjusted the rate at several points throughout the two ensuing decades.

In 1996, “California voters passed Proposition 218, requiring voter approval for the introduction or increase of taxes, assessments, and certain property-related fees,” Lazzaretto’s report states.

Arcadia voters overwhelmingly approved a measure in 2009 establishing the current utility tax rates amid an intensifying nationwide recession. The ballot initiative “authorized the City Council to adjust the rate as part of the annual budgeting process without voter approval, provided the rate does not exceed the voter-approved maximums,” according to the report.

In 2013 the council reinstated the 7 percent rate for water, gas and electricity as well as the 5 percent tax on telecommunications.

Based on Proposition 218 rules, Papp needed at least 460 signatures of local registered voters to qualify his initiative for the upcoming election. According to the city manager’s report, Papp submitted a petition in August that totaled 558 signatures.

The initiative calling for repeal of the utility tax will appear on Arcadia’s April 12 election ballot.

October 14, 2015

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5 COMMENTS ON THIS POST To “Ballot Measure Aims to Repeal Arcadia’s Utility Tax”

  1. mark samarin says:

    FAT, DUMB and HAPPY, that’s Arcadia.

    Typical city government. FAT on the backs of local taxes, property taxes, sales taxes, special bond measures to increase taxes, and the UUT. DUMB because they don’t know what to do but tax. HAPPY because they don’t see a problem.

    In fact, many in city government don’t live in Arcadia! They are completely disconnected from the impacts of the decisions they make every day.

    In the late 1980’s the UUT was zero in Arcadia for all services except telephone (5%). How did the city manage without this UUT “manna from heaven”?

    City property taxes are at record levels. How did the city manage before without these “gifts”.

    Arcadia did just fine in the 80’s and 90’s. It was safe and clean with the best police and fire service, the best schools and great recreation, parks and community events.

    City government spending is wasteful, bloated and unchallenged. It’s time for Arcadia to tighten it’s belt and return money back to the residents.

    If money is needed for the library, have a campaign to fund it. Businesses and residents will be glad to support it.

    Same for parks and community programs.

    The city can ask for more bond measures to fund school construction programs. But don’t expect it like it’s YOUR money. No, its OUR money until we chose to spend it.

    Keep the police and fire departments staffed adequately, but make due with vehicles that are a little older. Arcadia just spent $500,000 for only a few new vehicles and upgrades. The decision to spend the money wasn’t even debated. It was on the consent calendar for automatic approval. This is just one example.

    If the City Manager and City Council don’t see fit to question expenditures, they’re not fit to run the city.

    C’mon Arcadia. Challenge the status quo. Ask city leaders to tighten their belts, cut out fat and waste. In other words, expect them to do more with less, just as everyone else does.

    Budget control is a good thing. It’s one of the few checks residents can place on their government.

    In Arcadia it’s long overdue.

  2. Raymond Cheung says:

    One of the few maxims in life that I’ve found to be nearly universally true: you get what you pay for. As for me and my family, we’ve been here since the 80s because Arcadia is and remains a high quality city. Back when we moved here, a lot of tax revenue came from the Race Track. Unfortunately, in person wagering has gone down dramatically and it isn’t coming back. That revenue needs to come from somewhere else.

    I expect to live in Arcadia for many more decades and I certainly don’t want to live in a city without a library or any parks. I also want well staffed AND well equipped police and fire departments. And at the end of the day, we appreciate and expect premium city services and are happy to pay for them.

  3. Andrew says:

    We’re always trying to balance our personal budgets and we should expect the same from our elected officials.

    I’m not necessarily against or for the proposed elimination of the utility tax but take serious issue with the first reaction is to cut police and fire when these would one of the primary service that the city would provide it’s citizens.

    If I was to (God forbid) suffer a major financial set back, the first thing I would cut back on are the not essential, not the food and water I would need to survive.

    Because they are tying to use fear rather than logic and reason, I’m leaning toward supporting the initiative.

    Businesses are always assessing new technology to new processes to create efficiencies and cost cutting measures. The only way to force the hand is to cut taxes and enact incentives for them to do the same.

    Where else can you work where annual increase are guaranteed, essentially.

  4. Karen says:

    I just cant help but think of all the revenue Arcadia is generating on building permits alone!!! It seems like every other house in my immediate neighborhood is being torn down and “remodeled”, which translates to $$$$$ for the city.
    Repeal the utility tax and place a tax on water wasters instead. Many homes still water EVERYDAY, rain or shine.

  5. John says:

    Failed to mention that 54 of the city’s employee’s earn salaries over $200,000, with:

    – the police chief Robert Guthrie earning $312,576.15
    – fire chief Kurt Norwood earning $296,721.32
    – city manager Dominic Lazzaretto earning $290,362.91

    in 2014 according to Transparent California.

    No data reported for 2015.


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