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February 3, 2010 > Options considered for utility users tax

Options considered for utility users tax

By Shavon Walker

A series of utility user tax-related documents were presented to Council in Union City on January 26. Items included were estimates of how much revenue each percentage of the utility user tax (UUT) is expected to generate, as well as findings to support a declaration of fiscal emergency.

According to the data presented by Deputy City Manager Tony Acosta, a 2.75 percent utility user tax could generate $3.27M in revenue. This would help the city recoup the $2.7M of lost revenue when the 911 fee was invalidated. Other cities, such as Oakland, have imposed a UUT for services such as sewage and gas successfully. Although Union City closed a $6.7M budget gap in June 2009, it foresees continued fiscal challenges.

Council agreed with staff recommendations, as follows:

Many businesses, such as Caravan Foods and General Packaging, use utilities around the clock. UUT large user cap would be set at $15,000 a year for such companies.

Indicators, such as the ones for California Alternative Rates for Energy (CARE) program, would be used to determine the qualifying criteria for low-income exemption. Specific indicators will be determined at another meeting.

The UUT may include electric, gas, telephone, paging, private communications, data streaming services, cable TV and video services. The Council may consider adding water and sewer service as well. Specific utilities will be determined at another meeting.

The Council's preliminary feedback was fairly consistent with the voters' - a November 2010 general election date was well received, as was the 2.75 percent tax rate. The tax would be extant for an average of 6 years, and a low-income exemption was included.

On January 12, Council reviewed the findings of a public opinion poll conducted in November 2009 concerning a potential UUT and key issues.

Voters showed strong support for a UUT with a fairly low rate, i.e. 2.75 percent, and a duration of roughly five years. Voters preferred to vote in November rather than June and wanted to have as much information as possible. Examples include discussing tax affordability, city employee salaries and the city's willingness to use the tax money as promised. The ballot question should include high priority funding needs, such as 911 and paramedic services, police services, after-school programs for youth, emergency and disaster preparedness and programs for special needs youth and adults.

A UUT would help restore police patrols to protect neighborhoods and stabilize the current unstable economic climate. Annual audits would ensure the funds were being used correctly. Low-income seniors and residents would be exempt from the tax, and free recreation programs for children, youth and teens and families would be restored, after having been cut 50 to 75 percent this fiscal year.

To meet the early March 2010 deadline for submitting ballot measures for Alameda County's June 8 Primary Election, Council must make a decision by February 23. A public hearing will be required. The Council may decide to place the tax measure on the November 2nd ballot instead, which would shift the calendar forward 4 months.

June 2010 is a Special Election for Union City, i.e. not a Regular Municipal Election, so a UUT measure would require two-thirds' voter-approval to pass. Alternatively, Council can qualify the UUT as a simple majority-vote tax measure on the June 2010 ballot by declaring a state of fiscal emergency. November 2010 is a regular municipal election requiring a simple majority for a UUT measure to pass.

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