TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Philippe Eskandar, City Manager
DATE: July 8, 2026
SUBJECT: CONSIDERATION OF RESOLUTION NO. R-26-28 TO PLACE A BALLOT MEASURE ON THE NOVEMBER 3, 2026
GENERAL ELECTION TO RENEW THE CITY’S EXISTING
UTILITY USERS TAX AS ORDINANCE NO. O-26-1427
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Fiscally Responsible and Transparent City Government
Engaged and Connected Residents
Safe Community
Well-Maintained Infrastructure
Efficient, Responsive, and Effective City Services
Inviting and Relevant City Facilities
Attractive, Complementary Business District
Beautiful, Preserved, Single-Family Neighborhoods
BACKGROUND
In 1992, through Ordinance No. O-92-1028, the City Council established the City’s first Utility Users Tax (UUT). A UUT is a local tax, in San Marino’s current iteration, a tax of 5%, imposed by a city or county on the consumption of certain utility services. It is typically paid by utility customers as a percentage of their monthly utility bill, with the utility company collecting the tax and remitting it to the local government. The primary purpose of a UUT is to provide a stable, locally controlled source of General Fund revenue that helps pay for the day-to-day services residents rely on. For example, San Marino services funded by the City’s existing UUT include police, fire, paramedic, emergency preparedness, public works, street and sidewalk repairs, library services, community and recreation program for youth, seniors, and more.
Tony Chou, Mayor
Calvin Lo, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Gretchen Shepherd Romey, Council Member
Following the City Council’s 1992 adoption of San Marino’s UUT, the UUT was placed before the voters of San Marino for renewal three subsequent times and passed by voters each time. The chart below displays the instances in which the UUT was considered by voters and the outcomes:
Election Total # of Ballots Cast For % For Against % Against Nov. 5, 1996 5,500 3,728 67.78% 1,772 32.22%
Nov. 7, 2006 4,315 2,515 58.29% 1,800 41.71%
Nov. 3, 2015 2,939 2,110 71.79% 829 28.21%
San Marino’s UUT has played a vital role in the City’s financial stability since its adoption in 1992. In its current form, the UUT is the City’s third highest revenue stream behind only property taxes and the Public Safety Parcel Tax.
The chart below shows the breakdown of the City’s General Fund Group Revenue categories.
DISCUSSION
San Marino’s UUT will expire on March 31, 2027. As a result, it is now the time for the City Council to consider placing a ballot measure for its renewal on the November 3, 2026 General Election ballot for consideration by San Marino voters.
In Fiscal Year (FY) 2025-26, the City’s amended budget forecast $2,174,200 in revenue from the existing UUT. However, given that the UUT in its current form will not be in effect for the entirety of the upcoming FY 2026-27, only $1,660,300 was budgeted as anticipated UUT revenue. This reduction in anticipated revenue for FY 2026-27 was one of the primary contributing factors to the budget deficit the City Council was forced to address as a part of the budget process. To address this deficit, the City Council authorized the freezing of multiple vacant positions across various departments, authorized a withdrawal from the City’s California Employers’ Pension Prefunding Trust Fund (CEPPT), and approved a variety of spending and programmatic reductions presented by staff among other actions.
Even with these one-time budget reductions, the City’s long-term financial forecast shows that the City faces a structural deficit that will persist at least over the next five years and be exacerbated should the UUT not be renewed.
The chart below demonstrates the five-year forecast for FY 2026-32 for the City’s General and Public Safety funds which support operating expenditures.
These do not include the City’s Capital Improvement or Equipment Funds that are responsible for supporting the construction, maintenance, or purchase of long-term capital assets such as streets, sidewalks, streetlights, heavy machinery, etc. The forecast below assumes that the City’s UUT is not renewed by voters; a growth rate of 4.6% in property tax revenue, a growth rate of 5% in the Public Safety Parcel Tax revenue, and other assumptions used during the FY 2026-27 budget development process.
As shown in the chart above, the City’s projected operating deficit is expected to range from a low of $2,132,275 to a high of $2,804,101 absent revenue from the City’s longstanding UUT. Were the City’s existing UUT to be renewed by voters at 5%, it would be anticipated to generate $2,190,000 in annual revenue. However, while that additional revenue may bridge the deficit in FY 2027-28, the City will remain in a growing deficit in the following years. Since surpluses from the City’s General Fund are used as one of the primary sources of funding for the City’s Capital Construction and Equipment needs, there would be no such funding generated annually. Therefore, there would be no new funding for the currently $50.7 million in known capital needs over the next five years such as new street or sidewalk repairs, playground repairs, or other capital construction needs.
In light of the growing deficit even in the face of the many cost reduction measures implemented over the past several years, now is an appropriate time to consider placing the renewal of the UUT at a higher rate before the voters. The chart below shows the UUT rates of some nearby cities relative to the current 5% in San Marino, which is the lowest in the region among cities with UUTs. The data set is from 2024, the most current year available from the California State Controller’s Office1.
City UUT % Rate
San Marino 5
Alhambra 5
Burbank 7
Glendale 7
Arcadia 7
South Pasadena 7.5
San Gabriel 8
Pasadena 8.28
Sierra Madre 10
Los Angeles 10
Historically, voters had enacted a UUT of 6%; however, for reasons unknown to current staff, the last iteration of the UUT placed before San Marino voters in 2015 lowered the UUT rate from 6% to 5%. This reduction in generally stable and structural revenue has played a direct role in the City’s long term fiscal instability and the deficits the City has been navigating over the past several years.
As such, staff are recommending that the City Council consider raising the rate of the UUT to no less than 6%. For every 1% the City’s UUT is raised beyond the current 5%, it would be expected to generate an additional 1 https://sandbox.data.ca.gov/dataset/city-utility-users-tax-uut-for-fiscalyears-2017-to-2024/c8849afe-d475-4254-abb4-f574c1b4daed $430,000 in revenue. At a rate of 6%, the UUT would be anticipated to generate approximately $2,620,000 in revenue. At a rate of 7%, the UUT would be anticipated to generate $3,050,000 in revenue.
Based on the table above, the average UUT rate of the listed cities is 7.5%. A rate of 6% would mean that San Marino’s UUT is still among the lowest of cities in the region with UUTs in place. Lastly, staff recommend that the renewal of the UUT be considered such that it is effective until ended by voters.
This will allow the City to avoid the tens of thousands of dollars in costs associated with placing the ballot measure on the ballot every few years.
Additionally, beyond greater fiscal stability, it will provide the City with a variety of additional benefits such as more accurate long-term forecasting and a greater ability to plan for the City’s capital needs among others.
FISCAL IMPACT & PROCUREMENT REVIEW
The FY 2026-27 adopted budget includes $60,150 under Account # 101-09- 4290-0000 to cover the cost of the election.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommend that the City Council: 1) adopt Resolution No. R-26-28 to place a measure on the November 3, 2026 General Election to renew the City’s Utility Users Tax at a rate of 6%; 2) approve Ordinance No. O-26-1427; and 3) approve the argument in favor of renewing the Utility Users Tax to be signed by the City Council or the Mayor, Vice-Mayor and members of the San Marino ballot measure support committee (as determined in the Mayor’s discretion). If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to 1) adopt Resolution No. R-26-28 to place a measure on the November 3, 2026 General Election to renew the City’s Utility Users Tax at a rate of 6%; 2) approve Ordinance No. O-26-1427; and 3) approve the argument in favor of renewing the Utility Users Tax to be signed by the City Council or the Mayor, Vice-Mayor and members of the San Marino ballot measure support committee (as determined in the Mayor’s discretion).”
ATTACHMENTS
1. Resolution No. R-26-28
2. Ordinance No. O-26-1427
3. Argument in Favor Of Renewing San Marino’s UUT