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Is Riverside electricity users tax legal? A lawsuit alleges no

By in Press Enterprise on November 4, 2017

By Ryan Hagen

A lawsuit alleges that Riverside is violating its own rules and the California Constitution by taxing utility customers for the part of their bill used for purposes other than providing electricity.

The suit, filed on behalf of Riverside resident Summer Parada, doesn’t challenge the surcharge itself, which transfers 11.5 percent of Riverside Public Utilities revenue directly to the city for general services such as police, fire, parks and libraries.

That surcharge is the subject of a separate lawsuit filed in 2016, which was dismissed on statute of limitations grounds. The dismissal is being appealed.

Instead, the latest lawsuit instead takes aim at the city’s longstanding practice of taxing customers for that surcharge.

If it succeeds, the lawsuit would reduce the city’s revenue by $2.5 million per year — a fraction of the $350 million generated by the utility each year or the city’s general fund budget of about $250 million per year.

The city’s municipal code states that every person using electrical energy in the city will be taxed 6.5 percent for energy-related charges “excluding any and all surcharges.”

“When the City applies the 6.5 percent EUT (electricity users tax), it applies it against charges for electric service as authorized by (the municipal code) … but it also applies it against the 11.5 percent surcharge which has nothing to do with the provision of electric service,” the lawsuit states. “Thus, the city is imposing the EUT in a manner that violates its own municipal code.”

Riverside City Attorney Gary Guess did not respond to several requests for comment. Riverside Public Utilities General Manager Girish Balachandran declined to comment.

Court records show that the city was served with the lawsuit Oct. 25 and has not yet filed a reply. A hearing is set for Dec. 18.

Several lawsuits in recent years have questioned the city-owned utilities’ practice of paying […]    

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