What is a Utility User Tax or UUT?
A Utility Users Tax (UUT) is a tax on certain utility bills. A UUT may be imposed by a city or county on the consumption of utility services. The tax is levied by the city or county on the consumer of the utility services, collected by the utility as a part of its regular billing procedure, and then remitted to the city or county.
Sierra Madre has had a UUT since 1993. Today, Sierra Madre residents and businesses pay an 8% UUT on electricity, gas, telephone (including cell phone and long distance), trash (sanitation/solid waste), cable television, water and sewer.
The UUT is a General Fund revenue source that funds general City services such as police, fire, paramedics, recreation and library services. UUT revenue makes up the second largest source of the City’s General Fund. This fiscal year, the UUT is projected to provide 22% of General Fund revenues.
The existing tax was voted into law in 2008. From July 2009 – June 2015, the tax rate was 10%. This rate decreased July 1, 2015 to 8% and is set to decrease again on July 1, 2016 to a rate of 6%; the combined decreases equal about $1 million in General Fund revenue. This loss of UUT revenue will have significant impacts on the City’s ability to pay for the City’s programs and services, unless an alternative revenue sources is identified.
At the current UUT rate of 8%, the City’s fiscal year 2015-2016 budget estimates a General Fund deficit of $530,000. At a 6% UUT rate, the deficit grows to $944,000. A 6% UUT will require the City Council to cut the current General Fund by 11%, (another $1 million) on top of the $2 million cuts made in the past 5 years.
UUT and the 2016 Municipal Election
On April 12, 2016, voters will consider Measure UUT to increase the UUT to 10% beginning on July 1, 2016. The measure will require 50% + 1 of the “yes” vote to increase the UUT rate to 10%. If the measure fails, the UUT rate will fall to 6%.