The Sun
Sunnyvale's Newspaper

City Council puts utility-tax question to the voters

By Natasha Collins

To compensate for cuts in utility-tax revenue, the City Council voted June 17 to ask residents to make up the difference.

Because of deregulation of electric companies, utility bills in Sunnyvale dropped 10 percent in January and are expected to decrease another 30 percent by the year 2008. Along with lower utility bills comes a decrease in utility-tax revenues of about $300,000 a year.

"I think we need to put it in front of the voters," Vice Mayor Jim Roberts said.

The city receives $3.1 million a year from its 2 percent utility tax, which is the city's third largest source of income. In other words, for every $100 electric bill, the city receives $2. With the 10 percent drop, the bill is reduced to $90, with the city's take pared down to $1.80.

"We need this money to maintain the city's services," said Mary Bradley, the city's director of finance.

The council instructed the city's staff to write two measures for the November ballot. A final draft of the measures will be presented to the council on July 22.

One measure would allow, but not require, the City Council to increase the utility tax for residents by one-quarter of a percent every time the electric company drops its rates by 10 percent. The other measure would allow an increase of 1 percent for commercial utility users if and when a 30 percent decrease in electric bills occurs. A cap of 3 percent will be placed on both measures.

"It will not necessarily increase people's utility bills, but will take a percentage of the savings they will get from their bill's decrease," Bradley said.

Without the tax adjustment, utility customers would save 9.8 percent on their bills if there was a 10 percent decrease in rates. With the adjustment, residents still save 9 percent.

"It will be a small difference to the public," said Councilwoman Pat Vorreiter. "I think the measure requires more exploration, but it is one worth doing."

A public hearing for the measures takes place July 22 at the City Hall Council Chambers at 7 p.m.

[ Back to Contents Page | Sunnyvale Sun Home Page | Archives ]

This article appeared in the Sunnyvale Sun, June 25, 1997.
©1997 Metro Publishing, Inc. All rights reserved.