Understanding the Budget and Utility Users Tax (UUT)

South Gate operates with a lean budget and has already implemented cost-saving measures. However, several factors are contributing to a growing budget gap:

• Inflation driven cost increases for maintenance and utilities Steep increases for both general and health insurance

• A growing backlog of needed maintenance and repairs to streets, facilities, and equipment

• State mandates and retirement system obligations

Yes. The City has taken steps over the years to control costs, reduce staffing levels, consolidate services, and pursue revenue development opportunities. However, without identifying a new local revenue source, cuts to services may become unavoidable.

The City considered several alternatives, including a parcel tax, business license tax increase, and higher transient occupancy tax, but none would generate enough revenue to close the gap. A parcel tax would burden only property owners, a business license tax would yield limited funds and strain small businesses, and South Gate lacks enough hotels for a TOT increase to make a real impact.

After careful review, the City found that a Utility Users Tax is the most practical and equitable option, providing stable, locally controlled funding from a broad base of users.

The Utility Users Tax (UUT) is a local tax applied to certain utility services, including electricity, gas, water, sewer, cable, and telephone services (landline and mobile). The tax is collected monthly through utility bills and must be approved by local voters.

More than 160 cities and public agencies across California have adopted a UUT to provide locally controlled funding for essential public services. South Gate is among the few cities in Los Angeles County without a UUT. A UUT could provide the City with a dedicated source of local revenue to help support essential services, including public safety, street maintenance, and emergency response.

Nearby cities rely on a UUT to help fund essential services:

• Downey: 5% on electricity and gas, and 4.8% on telecommunications
• Bell: 10% on electricity, gas, water, telephone, and cable
• Bellflower: 5% on electricity, gas, water, telephone, and cable
• Lynwood: 9% on electricity, gas, water, telephone, and cable

If passed, a UUT in South Gate would reflect a similar structure and rate to those already in place in neighboring communities.

South Gate is facing growing budget challenges due to rising costs and maintenance needs. Like many cities in California, South Gate is experiencing structural budget pressures, costs for public safety, infrastructure maintenance, and community services are increasing faster than current revenue streams allow. The City’s General Fund, which pays for most day-to-day services, is under strain.

The UUT is a critical, locally controlled revenue stream that helps South Gate maintain services for our residents.

The Utility Users Tax would help South Gate invest in the services that keep our city safe, clean, and thriving:

• Maintain reliable 911 emergency response and police staffing levels
• Keep our school crossing guards at our schools
• Keep our recreation facilities open and available for youth sports
• Repair and maintain city streets, including pothole repairs
• Maintain senior and youth services

The UUT is paid by anyone who uses taxed utilities in South Gate, this includes both residents and businesses. The tax is included on utility bills and collected by service providers, who then remit it to the City.

The City is in the process of deciding how to offer exemptions to seniors who are on fixed incomes.

Measure SG is a proposed Utility Users Tax (UUT) measure that will appear on the November 3, 2026 ballot. The measure will allow the community to decide if new revenue will be added to the city budget.

The program is part of more than $9 million in City service reductions resulting from the City's ongoing structural budget deficit.

$750,000 annually.

The City of South Gate has historically fully funded the program.

It will remain suspended until additional revenue becomes available.

The City intends to evaluate restoring services, including crossing guards, as part of the budget restoring process.

PUBLIC SAFETY

• Fewer officers per shift causing slower response
• Reduced low-priority call responses
• Crossing guard program eliminated
• Reduced crime prevention programs

MAINTENANCE SERVICES

• Slower graffiti removal
•  Longer streetlight repair times
• Less frequent tree trimming

PARKS & RECREATION

• Reduced recreation programs
• Fewer community events
• Reduced pool operations
• Pool and sports fields scheduled to be closed in November.