UUT Debate Heats Up; Arguments For, Against Filed with City

Opposing arguments were filed with South Pasadena  recently, extolling the pros and cons for repealing the Utility Users Tax (UUT) on the November ballot.

The UUT provides funds for public safety, fire, senior programs, a school resource officer, crossing guards, street and sidewalk repairs, public library services, the July 4th parade, and summer concerts, among other items.

The repealing of the UUT is on the November ballot, and, if passed, would require significant cuts to the services provided to South Pasadena residents, according to Ed Donnelly, co-chair of a recently formed committee, South Pasadena Public Service Committee 2018. The committee is against repealing the UUT.

However, the opposing side to that argument paints an entirely different picture claiming the city is “on the verge of bankruptcy.” Moreover, the statement filed with the city last Friday goes on to say that “the fiscal emergency that initially justified the Utility Tax no longer exists, but as revenues increased, so did spending.”

The arguments for repeal and not to repeal have been filed with the city. Each side now has 10 days until Aug. 27 to rebut the arguments. The arguments for and against repeal along with the rebuttals will appear on the written ballot.

Edward A. Ristow is one of the official signers on the argument in favor of repealing the UUT. Ristow, who did not return phone calls seeking comment for this story, was the South Pasadena City Treasurer from 1972 to 1995. The other co-signer on the argument in favor of repealing the UUT is Guillermo Guzman, who says he’s been a South Pasadena resident since 1994.

“Since 2011, the city’s general fund has grown by $4.4 million, but general fund spending increased by $9.5 million (49 percent),” the argument filed with city states. “And though total revenues increased by $16.3 million (50 percent), new spending consumed $15 million of that. The city has a spending problem, not a revenue problem.”

The offender to all of this, the statement proposes, is intumescent salaries. The median pay and benefits for city employees was $96,119 and many retirees receive more than $100,000 annually for life. The statement attributes this data to www.transparentcalifornia.com.

“The Stanford Institute for Economic Policy Research estimates that the city’s pension debt – just through 2015 – was at least $26.8 million but likely as much as $108 million [www.pensiontracker.org] when realistic pension fund investment returns are factored in,” the statement says. “The city has grossly underestimated how much money it will have to set aside for pensions. Pension debt, rather than losing the Utility Tax, is the real threat to our city’s survival.”

The argument that opposes the repeal does not take on those issues directly but cites those that endorse not repealing the UUT. Those indorsements include firefighters, police, seniors, parents, students and community leaders.

“South Pasadena’s community leaders are voting no…This misguided initiative was forced on the ballot by an out-of-town group that does not know our city or our community. (It) would cause $3.4 million in annual cuts to city services and programs that South Pasadena residents rely on every day. It would slow down our emergency response times and slash funding for resources like our police and fire departments, library, parks, the senior center and street repair services.”

If the UUT is eliminated on the November ballot, the city would lose about $3.5 million or 12 percent of its $27.5 million budget according to Donnelly.

The UUT repeal is being pushed by a Tea Party faction known as the California Tax Limitation Committee, according to Donnelly. If a person wants to keep the utility tax, they vote “no.” If they want to repeal the tax, they vote “yes.”

The tax is on water, power, cell phone bills, cable, electricity and gas, among other utilities.

The UUT was first passed by So Pas voters in 1983, and was renewed by voters again in 2011, ostensibly for a 10-year term. The last time the UUT faced the voters, it barely passed with just about 53 percent of the vote.

The Tea Party faction collected the necessary 360 South Pasadena signatures to place the repeal on the November ballot. This group has attempted the repeal of the same tax in Glendale, Arcadia and Sierra Madre. All attempts have failed.

The revenue from the UUT, which is the second largest revenue stream for the city behind property taxes, stays 100 percent within the city.

The committee has hired TBWB Strategies to guide the effort. TBWB has successful helped Glendale fight the repeal of their UUT as well as helped the South Pasadena School District win voter approval for Measure S and Measure SP. The strategy and communications consulting firm specializes in public finance ballot measures.

Recently, UUT proponents got a boost when a community survey with a five percent margin of error indicated 70 percent of South Pasadena residents wanted to keep the UUT.

The community survey, designed to gauge how South Pasadena residents feel about city services, had a break-out section for the UUT, which indicated the 70 percent favorability.

“We were very heartened by those results,” Donnelly said. “But we are taking nothing for granted. We are going to make sure the UUT is not repealed. The city needs it. The city deserves it. And when people understand what it pays for, they will also vote to keep it.”