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W.V. COUNCIL REJECTS PROPOSAL TO RAISE ELECTRICITY-TAX CAP

After months of sometimes acrimonious debate, the City Council voted Thursday night to reject a proposed lifting of the city's electricity-tax cap.

Hercules officials hailed the decision as an affirmation of the city's pro-economic-development philosophy and said it will help keep the company in business.Dave Nicponski, Hercules government affairs director, also said the debate over the tax cap strengthened rather than strained the company's relationship with the city.

"There are absolutely no ill feelings," Nicponski said. "It was a healthy process that gave our management and staff an opportunity to interface with the city's elected officials."

The issue involved a proposal by former City Manager John D. Newman to raise the limit on electricity taxes from $19,000 to $225,000. The action would have affected Hercules and possibly two other large business in West Valley.

Newman said the additional revenue was necessary to preserve the integrity of bonds issued to establish the West Ridge safety zone around the Hercules Bacchus Works.

Hercules, the city's largest employer and taxpayer, launched a strong lobbying effort against the proposal and was joined by the Valley West Chamber of Commerce, the Utah Manufacturers Association and the Utah Taxpayers Association.

On June 4, Mayor Brent F. Anderson suggested a compromise that would fill the revenue gap from other sources and maintain the electricity cap at $19,000.

City finance officials offered other options, including across-the-board budget cuts and property-tax increases. The City Council adopted the mayor's plan, which draws $100,000 from the workers' compensation fund; $75,000 from one-time tax revenues; and $50,000 from the Community Impact Program fund.

Nicponski said, "The elected officials of West Valley have signaled to Utah businesses and outside industries that the city is committed to economic development."

Hercules reduced its work force by 1,200 employees since last year and has taken other cost-cutting measures. Newman had argued that those actions contributed to the reduction in revenue to West Valley City. Hercules officials responded that the company was being made a scapegoat for broader budgetary problems.

The City Council's vote "assists us in our cost-reduction efforts, which are required of us to stay competitive in the aerospace industry and to keep us here," Nicponski said.