Arcadia City Council to Vote on Utility Tax Hike Tuesday

The Arcadia City Council will vote Tuesday on a proposal to raise utility taxes in the city in a plan that would increase the average resident's utility bill by nearly $7 per month.

An amendment to the city's utility users tax ordinance would raise the tax rate on water, gas and electric bills to 7 percent, the maximum tax rate allowed under city law. The city currently charges taxes of 5 percent on water and electric bills and zero percent on water, Arcadia City Manager Dominic Lazzaretto said.

The rate hikes are necessary to replenish two key funding sources for the city, Lazzaretto said.

"We're quickly running out of money in our equipment replacement fund and our capital improvement fund," Lazzaretto said.

The rate increase is expected to bring in about $2 million in additional revenue for the city annually, according to a staff report written by Lazzaretto.

Arcadia has collected utility taxes at rates far lower than city law allows since the 1980s. But other funding sources the city has relied on, like revenue from Santa Anita Park, has dropped dramatically over the years and the city can no longer afford to tax at discounted rates, Lazzaretto said.

The ordinance amendment being considered Tuesday would require the council to reconsider the utility tax rates every year, Lazzaretto said.

"We will have given ourselves the obligation to look at it every year and only take the amount we need," he said.

But Lazzaretto said he doesn't anticipate the city finding enough money in the next couple years to lower utility tax rates to their previous levels.