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May 25, 2010 > Utility User Tax follow-up coming soon

Utility User Tax follow-up coming soon

By Shavon Walker

A potential 2010 Utility User Tax (UUT) will be debated before any decision to place it on the November 2010 ballot is taken. The City of Union City has authorized an agreement, not to exceed $20,000, with Godbe Research for follow-up surveys of community opinion on a utility users tax.

The utility tax may include electricity and gas, telephone, paging, private communications, data streaming services, cable TV and video services. The council may consider adding water and sewer service. Specific utilities will be determined at another meeting.

In Fall 2009, City Council contracted with Godbe Research for an initial set of polls regarding the UUT as a potential revenue enhancement. By November 2009, the poll was completed and results presented in January 2010. Sixty percent of voters preferred a low tax of 2.75 percent; 54 percent support a duration of no more than six years. If the UUT appears on the ballot, it would require a simple majority vote to pass but the purpose of the second poll is to decide if the UUT should be on the ballot at all.

The city faces a $1.8M budget deficit this fiscal year (FY 2009-10) and a $2.8M deficit next year. This is due to the loss of revenue following the city's inability to collect 911 fees, effective in Fall 2008. The city must replenish these funds, which is why the UUT was suggested.

Many businesses, such as Caravan Foods and General Packaging, are heavy users of utilities. A UUT cap would be set at $15,000 per annum for such companies. Individual caps have not yet been established; there may be exemptions for low-income users but qualifying criteria have yet to be decided. The 2.75 percent UUT could generate $3.27M of desperately-needed revenue to prevent cuts to essential public services and possibly restore services that have already disappeared or been reduced.

The state cannot appropriate UUT funds, which would stabilize funding for the city. It would also secure them for various city-based needs. Neighborhoods would have police patrols; annual audits would ensure correct use of funds; many children, youth and teen programs could be restored; these have already been cut by 50 - 75 percent.

Godbe Research has an excellent relationship with the city. They also have a great deal of polling experience around UUTs. They have had contracts with Hayward and Newark. Hayward's UUT passed in May 2009, while Newark's lost by a marginal 11 votes. Of the 25 tax and bond measures, for which they have provided polling services, more than 90 percent have passed. The fees for a second poll would be less than the $19,300 for that in November 2009 mainly because the questionnaires are already available. The General Fund Reserve will pay the $20,000 for Godbe Research's polling services.

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