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Long Beach Residents Vote to Cut Municipal Utility Tax Rate in Half

Energy: City's annual revenue will eventually fall $30 million unless other funds are found. A bid to reduce the levy 25% loses.


In a rebuke to Long Beach city officials, voters have approved a hotly contested ballot initiative to cut the municipal utility tax rate by half over the next five years.

Final election results released Wednesday show that Measure J passed despite attempts by City Hall to derail the popular initiative with a compromise ballot measure and with political mailings that were eventually banned by a court order.

"The public does not like the way the city is spending its money," said Norm Ryan, an investment banker who spearheaded the drive for Measure J. "Now the city has an incentive to reform the way it does business."

Long Beach--the state's fifth largest city--collects about $60 million a year from the assessment. The 10% tax is assessed on city bills for gas, water, electricity and phone service. It costs the average resident about $200 a year.

The Long Beach tax cut could set the stage for similar utility tax challenges in other cities, including Los Angeles, which has utility tax rates of 10% to 12.5%, depending on the service. At least eight other cities in the county have utility taxes equal to or greater than Long Beach's.

Measure J, which received 71,472 "yes" votes, calls for the Long Beach rate to be reduced from 10% to 5% in annual increments of 1 percentage point for the next five years. The cut will pare about $30 million a year from the city budget, if no other sources of funding are found.

Measure J beat Measure I, a city-backed compromise that earned only 61,214 "yes" votes. Measure I would have offered the public a 25% reduction over the next five years.

Supporters of Measure J said the larger cut is necessary to improve the economic efficiency of local government and create a more business-friendly atmosphere. They estimate that the city's largest industrial and commercial users pay more than $1 million a year in utility taxes.

The opponents, including many city officials, contended that Measure J would severely reduce city revenue and threaten municipal services such as public safety and those at parks and libraries.

"There is going to be some pain," said Mayor Beverly O'Neill. "We were slowly coming out of the downturn in the economy and beginning to see some light at the end of the tunnel. Now we need to take a hard look at how we are going to cope."

During the election, a Los Angeles Superior Court judge ordered the city to stop sending out political mailers at government expense that addressed the competing tax cuts. The judge held that the mailings were neither fair nor balanced presentations of the issues.

Ryan, who says he has aspirations to run for City Council in March 2002, filed suit last month, alleging that the city had misused municipal funds to influence the outcome of the election. He said Wednesday that he wants a trial to determine if city official should be held liable for the mailers.

Meanwhile, local election results show that Dee Andrews, a youth counselor and former schoolteacher, failed in his second bid to win a City Council seat. In August, he got the rare opportunity to run again after irregularities were uncovered in the first election, held June 6.

Laura Richardson-Batts won that contest by a mere six votes after a recount. Subsequent investigations found that eight people had voted twice and 69 others had been directed to vote in the wrong election.

In Tuesday's rematch, Richardson-Batts, a marketing consultant and wife of the city's deputy police chief, received 2,626 votes. Andrews received 2,188 votes.

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