South Pasadena : 5% Utility Tax Approved

The City Council granted final approval Monday to the city’s new utility tax, a 5% levy on telephone, gas, electricity and water bills, effective immediately.

Officials said the levy will add as much as $1 million annually to city coffers, hard hit by budget shortfalls over the past two years.

The threat of severe revenue cuts by the state also played a role in the decision to enact South Pasadena’s second utility tax in the past five years. In 1987, a similar tax was approved to fund construction projects and replace outdated equipment. The levy, phased out in less than two years, resulted in $1.2 million.

The new tax rate is scheduled to remain in effect for at least five years, with a re-evaluation annually during the budget process.

Low-income residents and disabled war veterans are exempt from the tax, which city officials estimate will cost the average household from $10 to $15 per month.

The council approved the tax on a 5-0 vote.