Voters defeat AES vendor tax

Mary Beth P. Adomaitis

HUNTINGTON BEACH -- Voters decided Tuesday that AES Corp. should not

have to pay the same 5% vendor tax as other private businesses and

residents in the city.

Measure Q was defeated by 54%, with 33,431 votes.

If it had been approved, the city would have received about $1.2

million in additional tax revenue each year.

“We went into the race with our hands tied behind our backs,” said

Councilman Dave Sullivan, an opponent of the measure who added that

proponents raised about $170,000 in campaign contributions. “Considering

that, it’s amazing it did that well.”

However, measure opponents said it would double tax residents who

already pay a tariff for electricity.

Ed Blackford, president of AES Huntington Beach, could not be reached

for comment Wednesday.

Chris St. Hilaire, a consultant for the No on Q campaign, said the

defeat was a win for the taxpayers of the city.

“They won’t be taxed twice for electricity,” he said. “Everyone now

realizes that businesses in Huntington Beach have a responsibility to the

community, and AES is working to make Huntington Beach better.”

AES Corp. took over the local plant from Southern California Edison in

May 1998, and it was bought under the existing municipal code, which

excluded utility companies that produce electricity from paying the

vendor tax.

But city officials still say the tax revenue is needed to upgrade

aging infrastructure.

“Unfortunately, there is a private enterprise that is going to get a

free ride on the backs of the residents of Huntington Beach,” Sullivan

said.

However, the city cannot enforce a vendor tax on the utility company.

Because of Proposition 13, which was passed in 1978, taxes raised by

local governments for a designated or special purpose need to be approved

by two-thirds of the voters.

“Obviously, the revenue would have been very beneficial,” said Clay

Martin, the city’s acting director of administrative services.

St. Hilaire agreed.

“The city clearly needs updated infrastructure, but more efficient

spending is the answer not higher taxes on residents,” he said.

Martin said the city’s infrastructure committee will begin to look at

ways to pay for the needed improvements, and he expects a report to be

submitted to the City Council in about six months.

“This would have been a positive step that the infrastructure needs,”

he said. “Now we’re faced with a somewhat bigger challenge.”

Residents overwhelmingly approved Measure R, a companion to Measure Q

that was an advisory proposition only.

If Measure R had been approved, the council would have been able to

use the proceeds from the utility tax on the AES plant to improve the

city’s infrastructure.