HAWTHORNE : Council Delays Vote on Tax Increases

The Hawthorne City Council turned down a proposal to raise the hotel tax and again delayed doubling the city’s utility user tax, prolonging the financially troubled city’s cash-flow problems.

At Monday night’s meeting, City Manager Todd W. Argow, who recommended the increases more than two months ago, told council members that immediate passage of $4 million in tax increases is essential to “stop the hemorrhage” of the city’s finances.

“Every day that goes by, the black hole gets larger and larger,” Argow said.

The council was scheduled to vote on the taxes two weeks ago, but put off the vote until Monday so all council members could be present for the vote. Mayor Larry Guidi was absent from that meeting.

At Monday’s meeting, Councilman Steven Andersen was absent.

“We’ve lost an incredible amount of time on this,” said Councilwoman Ginny Lambert, who supported the utility tax increase.

But Mayor Guidi, unsure of city staff estimates of a $7-million cash shortfall this year, said he wants to see a long-overdue city audit report before imposing any tax increases. The report from auditor Peat Marwick was due in January and officials of the company declined to discuss why it has not been delivered. City officials received a draft of the report last year.

“If I would have supported (the increase) tonight without seeing the auditor’s report, then I’m not doing my job,” Guidi said after the five-hour meeting.

Under the current proposal, the utility tax, which is added to residents’ electric, gas and cable television bills, would increase from 5% to 10% and is expected to raise $3.8 million. The business community, which would be hit hardest by the increase, has supported the tax increase with provisions to remove it in 18 months.

The hotel tax, which failed when council members deadlocked 2 to 2 over the increase, would have added about $67,000 a year to the city treasury, officials said.

The council has rescheduled the vote on the utility tax for Monday.