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August 12, 2009 > Utility Users Tax duration reduced to six years

Utility Users Tax duration reduced to six years

By Meenu Gupta

Paying heed to public opposition on the 20 year-long Utility Users Tax (UUT), Newark City Council reduced the life of the proposed Utility Tax to six years at a Special Council Meeting on August 5, 2009.

Council had voted unanimously (5-0) on July 23 to place a UUT on the November 3, 2009, Election Ballot. If approved by a simple majority of voters, the 3.9 percent tax would have been implemented for 20 years starting January 2010.

Many people opposed the length of time and complained that the ballot wording did not explicitly mention the 20-year term. The council voted unanimously (5-0) on August 5 to reduce the time-frame to six years and agreed to mention it on the ballot.

The proposed amended ballot question for November now reads "the City of Newark will establish a 3.9 percent Utility Users Tax for six years exempting low-income seniors..." The termination date has now been changed from June 30, 2030 to June 30, 2016. Arguments in favor of or in opposition to the "City of Newark Vital Services Measure" must be received by 5 p.m. on August 12, 2009. Rebuttal arguments must be received by 5 p.m. on August 19, 2009.

An estimated $3.5M deficit is projected for FY 2009-10 despite the City's persistent efforts to reduce costs and increase revenues in the tough economy. UUT is expected to generate $2.6 million annually.

"This is the way that we can take local control and receive a steady revenue stream for a six-year period, at least," said Mayor David Smith.

Answering public queries, City Manager John Becker clarified that the tax does not include satellite television or internet. It does, however, include cable, cell phones and land line phones.

"If there is self-generated power that does not go through a PG&E meter, such as from solar panels or windmills, then there is no tax on it," he said.

There is no exemption for individual businesses. The tax will be levied on electricity, gas, telecommunications and video services for residents and businesses and cost an average household about $12 per month. The tax will be collected by the utility companies as part of their regular billing procedure and remitted to the City.

Low-income seniors, 65 and older, enrolled in PG&E's California Alternate Rates for Energy (CARE) program will be exempt as will government agencies such as Newark Unified School District and Ohlone College.

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