2014-016 - Calling for the Placement of a General Tax Measure

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WHEREAS, several lawsuits have been filed in other jurisdictions challenging the application of the UUT to certain telephone /telecommunication services as a result of outdated ordinance definitions or references to outdated federal laws; and WHEREAS, the different rulings in these cases has caused some ambiguity in the City's application of its UUT to telephone and other telecommunications services which could result in the elimination of 37% or more of the City's UUT revenue, amounting to over $9 million of loss general fund revenue per year; and WHEREAS, a number of telephone companies are applying the City's UUT inconsistently due to outdated definitions and legal uncertainty, exposing the City to refund claims and legal challenges regarding inconsistent application of the City's telephone communications tax; and WHEREAS, without immediate voter approval of the City's telephone communications UUT, the City will increase its exposure to claims for refunds on the City telephone communications UUT that could adversely affect its budget; and WHEREAS, without immediate voter approval of the City's telephone communications UUT, the City's budget could be vulnerable to serious financial shortfalls due to adverse court rulings (existing and /or imminent) regarding the City's telephone communications UUT that cannot be covered by current City reserves or by readily available alternative revenue sources; and WHEREAS, such financial shortfalls may force the reduction of essential municipal services, which will endanger the health, safety and general welfare of the City and its citizens; and there is a need to amend the UUT in order to maintain funding for City services at existing levels for the health, safety and general welfare of the citizens of the City; and WHEREAS, the City desires reasonable certainty in the collection and receipt of its UUT and budgetary planning; consistent application of its telephone communications UUT; and the elimination of current risks associated with its existing telephone communications UUT: and WHEREAS, on November 6, 1996, the voters of the State of California approved Proposition 218 (California Constitution, Article XIIC), an amendment to the State Constitution which requires that all general taxes which are imposed, extended or increased must be approved by a majority vote of the voters; and WHEREAS, the amendments proposed may be characterized as an imposition or extension of the UUT under Proposition 218; and WHEREAS, Proposition 218 permits the City Council to call an election to impose, increase or extend a general tax; and Resolution No. 2014 -016 Page 2 of 5