City Council to Take Up Proposed Three-Year Halt to Underground Utility Surtax, Partially Offsetting Electricity Rate Hikes

Published : Monday, June 10, 2019 | 5:40 AM

The Pasadena City Council Monday will consider the Department of Water and Power’s request to temporarily suspend collection of the underground utility surtax that bankrolls the City’s long-term undergrounding project, as a way of offsetting the rates increases it has proposed.

The Department is under pressure to raise rates and has requested that collection of the undergrounding surtax be suspended for a while, as a way of reducing the burden on the City’s ratepayers.

The proposed electrical rate hikes would run between 5.6 percent and 21.9 percent for residents, and betwixt 8.9 percent and 21.3 percent for businesses. They will be taken up by the City Council at the same June 10 meeting.

Suspending collection of the surtax would partially offset the impact of the new price hikes to local customers by about $33 annually, in most cases.

The surtax costs each Pasadenan $44 a year on average and the fund into which it is submitted posts a robust $50 million positive balance which, under the proposal, would continue to finance undergrounding projects.

“In order to accelerate the drawdown of the Underground Surtax Fund balance staff recommends the City Council adopt a resolution suspending collection of [the tax] effective July 1, 2019,” agenda documents stated.

Collection would resume on June 30, 2022, at current rates. The temporary suspension would allow the City to maintain its collection authority, and avoid asking two-thirds of voters to restore it.

The surtax was passed in 1966 to fund the undergrounding of utility lines so as to beautify Pasadena.

According to the agenda documents, the money can be used for the, “construction and extension of underground utility lines; conversion of overhead to underground utilities; street lighting improvements in connection with such conversions; and replacement and repair of underground utility lines in connection with such conversions within the city.”

The overall project has an estimated $2 billion price tag; approximately $10 million per mile. Presently, some 200 miles of power lines still need to be buried.

The drawdown on the fund over the years has been glacial. In fact, without the suspension of surtax collection, staff said it would take 10 years to exhaust.

Some years ago the fund’s consistently healthy balance sheet caught the eye of city employee Danny Wooten, and his accomplice Tyrone Collins, and was looted by the duo of $6 million before anybody noticed.

Wooten was sentenced to a 14-year prison term in January and ordered to repay the City $3.7 million. Collins got a seven-year term.

In February, the City Council balked at a measure to suspend both the surtax and the undergrounding program.

The City Council adjourns the public portion of its meeting tonight in its Chambers at Pasadena City Hall, 100 N. Garfield Avenue at 6:30 p.m.

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