News Details

Utility User Tax Information

Due to the State fiscal “self-bailout”, the City has been forced to raise fees, defer maintenance, deplete reserves, and reduce services. In 1994, the City Council enacted a 3% Utility Users Tax on natural gas, electricity, telephone and cable TV services in order to maintain balanced budgets.  This critical source of revenue supports essential services as police, fire, roads and streets, parks and recreation, environmental programs, job creation and retention efforts, and other City services provided for its citizens.

 

In 1997 and in 2002, the voters of the City of Eureka approved the 3% Utility Users Tax.  These were votes to keep our City safe and maintain a quality of life that members of our community expect and deserve. In November the voters will be asked to consider extending this tax.  Approval of this tax will simply allow the residents to keep in place the services they enjoy today. If the voters say no, it will result in $1.4 million fewer dollars for public services each year.

 

Over the next several months there will be much said about this critical revenue source. The following represents several frequently asked questions about the City’s Utility Users Tax:

 

What is a Utility Users Tax and what is the money used for?  

 

In 1997 and 2002 Eureka voters authorized utilities such as PG&E, telephone and cable TV to add 3% to each monthly bill.  The revenue generated by this tax is used to replace money that has been taken by the State and is placed in the City’s General Fund for essential services. These include police, fire, roads and streets, parks and recreation, environmental programs, job creation and retention efforts, and other essential services provided by the City to its citizens. To assure the public the tax is properly collected and used for essential public services, the City will conduct annual financial audits.

 

Why is the Utility Users Tax being placed on the ballot?

 

In an effort to provide the public with an opportunity to periodically determine the level of public services necessary to keep our City safe and maintain a quality of life that members of our community expect and deserve, the City’s Utility User Tax includes a sunset provision (June 30, 2007) which requires voter approval every four years. In their role as an independent citizen committee, the City’s Finance Advisory Committee has recommended the continuation of the Utility Users Tax through June 30, 2011 as a way to maintain critical City services. 

 

Is any one exempt from paying the tax?

 

The City will continue to exempt citizens from the Utility Users Tax who receive low income rate assistance from a gas/electrical corporation, or a universal lifeline service from a telephone corporation. In addition, if there is a “spike” or dramatic increase in Utility Users Tax revenues, the City Council can lower the tax rate for a twelve-month period to compensate for this increase.

 

What does the Utility User Tax Cost me?

 

The average household pays approximately $6.25 per month to maintain essential public services. Approval of the tax in November will not increase what you are paying now.

 

Why did the City ask the voters to approve a Utility Users Tax in 1997 and 2002? 

 

Prior to 1994 traditional monies used to support local government were returned to the City from the State to balance our General Fund revenues and expenditures.  Since 1994, the State has “taken away” nearly $1.2 million dollars every year from the City.  To continue to provide basic City services, the 3% Utility Users Tax was passed to replace the traditional State money that has been taken away.

 

Isn’t the Utility Users Tax only a temporary tax? 

 

Today the State continues taking away money from the cities and counties in California.  In 1997 and 2002 the tax was extended by the voters in the hope of finding a permanent, stable funding arrangement between the State and Local governments.  Unfortunately this has not happened and the State continues taking more and more funds from local residents.  Over the past two years we lost an additional $720,000 that went to State programs.  The voters are being asked to extend the tax, again for a limited time, until June 2011.

 

Couldn’t the City just use Redevelopment Agency funds to replace the tax?

 

No. The purpose of redevelopment is to eliminate blighting conditions within a community just as Eureka has done in its Oldtown and along the City’s Waterfront. To use redevelopment monies to fund recurring operations as suggested by some would be a violation of the law.

 

Will the level of service I now receive from the City stay the same without the Utility Users Tax?

 

            No.  The total Utility Users Tax revenue generated each year is $1.4 million.  Without this revenue source, services in all General Fund departments will have to be cut back.

 

What types of services may be lost if the Utility Users Tax is not extended?

 

            Deep cuts into each General Fund department will be necessary if the City loses $1.4 million per year.  Examples of cuts could be:

 

·        Funding cuts to the City’s financial support to the Clark Museum, Humboldt Senior Resource Center, RSVP, and tourism promotion services provided by the Eureka Chamber of Commerce and the Humboldt County Convention and Visitors Bureau;

·        Reduction to environmental programs;

·        Funding cuts to the Sequoia Park Zoo;

·        City Hall office hours/public services reduced;

·        Reductions in all youth and adult recreation classes and programs;

·        Reduced park and facility maintenance;

·        Reductions in public safety due to cuts in Police and Fire Budgets;

·        Street and sidewalk maintenance reduced; and

·        Reductions to job creation and retention efforts.

 

The question before Eureka’s citizens in November will be simple; do you wish to maintain the level of public services you currently enjoy? As you prepare to make your own decision on the City’s Utility Users Tax be sure you are informed of the facts. Should you have any questions, please let us know.  We can be reached at (707) 441-4172 or through the City’s website at www.ci.eureka.ca.gov.