Utility User Tax
Detailed information on the City's Utility User Tax, Measure UUT, and the General Fund budget.
What is a Utility User Tax?
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, collected by the utility provider, and then remitted to the City.
Sierra Madre has had a UUT since 1993. Today, residents and businesses pay an 8% UUT on:
- Electricity & Gas
- Telephone (Cell & Landline)
- Trash (Sanitation)
- Cable Television
- Water & Sewer
Do You Qualify for an Exemption?
Households that qualify as "Very-Low-Income" or "Extremely-Low-Income" are 100% EXEMPT from paying the UUT.
- Single Person: Income below $29,050
- Couple / Family of 4: Income below $41,500
*Based on HUD Income Limits (Adjusted Annually).
Need help applying? Call City Hall: (626) 355-7135 ext. 302
Fiscal Impact & General Fund
The "Sunset" Clause (Decreasing Revenue)
The UUT is a General Fund revenue source that funds Police, Fire, Paramedics, Recreation, and Library services. UUT revenue makes up the second largest source of the City’s General Fund (22%).
The existing tax was voted into law in 2008 with a scheduled decrease ("Sunset"):
- July 1, 2015: Rate decreased from 10% to 8%.
- July 1, 2016: Rate scheduled to decrease to 6%.
Impact: This combined decrease equals a $1 million loss in General Fund revenue.
At the current 8% UUT rate, the City estimates a General Fund deficit of $530,000. At a 6% rate, the deficit grows to $944,000. A 6% UUT will require the City Council to cut the General Fund by 11% (another $1 million) on top of the $2 million in cuts made in the past 5 years.
Understanding the General Fund
The General Fund is the City’s unrestricted source of revenues. It pays for:
- Police & Fire Departments (59% of General Fund)
- Elected Officials & Administration
- Community Services (Library, Recreation)
- Planning & Community Preservation
Restricted vs. Unrestricted Funds
Residents often ask why water bills can't pay for police. Restricted funds (Water, Sewer, Gas Tax) can only be used for their specific purpose. Water funds cannot buy a fire engine. The City relies on the General Fund (Property Tax, UUT, Sales Tax) for all other services.
City Comparison
Sierra Madre receives significantly less Sales Tax than its neighbors:
- Sierra Madre: ~$250,000
- Arcadia: ~$11 Million
- Monrovia: ~$7 Million
(Sierra Madre relies on Property Tax and UUT for 83% of General Fund revenue).
Have We Cut Costs?
Yes. Since 2010, the City has cut $2 million in General Fund expenditures, including:
- Contracting park & landscape maintenance
- Outsourcing Youth Activity Center & Pool
- Reductions in Police overtime
- Reducing staff in all departments
- Reduced employee benefits
Measure UUT (April 12, 2016 Election)
Voters will consider "Measure UUT" to increase the UUT to 10% beginning July 1, 2016.
If Measure UUT Passes (10%)
Revenues will allow City services to remain at current levels. It eliminates the projected deficit and stabilizes funding for Police, Fire, and Library.
Ordinance No. 1369 would amend the code to set the rate at 10%.
Read Ordinance No. 1369If Measure UUT Fails (Drops to 6%)
The rate falls to 6% on July 1, 2016. This results in a $1 million loss. The City Council would need to reduce General Fund expenditures by 11% to balance the budget.
Potential impacts: Service reductions, contracting police, and closing facilities.
Estimated Household Cost
Based on sample usage, a typical household will pay an average of $9.78 more per month (approx. 33 cents per day) for each 2% increase.
Frequently Asked Questions
Why not contract with the LA County Sheriff?
A citizen committee reviewed LASD proposals in 2015. While "Proposal A" saved $200,000, it required closing the police station at night. "Proposal B" (comparable service) cost $400,000 MORE than our current police budget. The City cannot save money with the Sheriff without reducing service levels.
What is a Franchise Fee vs. UUT?
A Franchise Fee is "rent" paid by companies (like trash or cable) to use City streets. A UUT is a tax on consumption paid by the user. Franchise fees account for only about 4% of General Fund revenue, whereas UUT accounts for 22%.
Why is the City budget always in deficit?
Historically, costs (inflation, PERS, and healthcare) rise faster than revenue. Additionally, the State dissolved Redevelopment Agencies (CRA) in 2011, costing Sierra Madre $1.3 million annually. The City has responded by reducing staff by 10 positions since 2008.
Contact Us
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
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