50A - ORD AND RESO UUT - Laserfiche WebLink

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Resolutions and Other Required Documents to Submit To Voters at the November 4, 2014 Election April 15, 2014 Page 2 In recent years, there have been substantial changes in communication technology and how the industry charges for these services. Telephone service users who may have had a traditional landline telephone may now use new electronic communication technologies (Telecom), such as VOIP (Voice Over Internet Protocol) and prepaid wireless. Where previously charges were based on time and distance, they may now be bundled or use a prepaid format. It is currently estimated that on a statewide basis up to 25% of individuals use prepaid wireless services. In Santa Ana, the estimated percentage is 40 %. In order to ensure proper inclusion of language to capture a changing legislative and technological environment, City staff surveyed all California UUT ballot measures /initiatives from 2006 to present. In addition, staff worked with Muniservices to review the various initiatives in order to capture modern ordinance language. From survey data, it was apparent that all the prominent categories included expanding the UUT language to address the modernization of local agency UUT ordinances. A survey of California UUT rates was also conducted and indicated that rates range from 1% to 11 %. However, the average rate statewide is 5.5 %. As such, staff is recommending a reduction of the City's Utility User Tax rate from 6% to 5.5 %. All thirty nine cities that expanded the UUT language and provided a rate reduction in their ballot initiative were adopted by their electorate. This request for City Council action will initiate the process to modernize the City's UUT, and protect and ensure ongoing receipt of UUT revenue. The recommended ordinance has been developed so that it: (1) is consistent with best practices that have been recommended and adopted by voters in other jurisdictions, (2) is consistent with current law and proposed Federal and State legislation, (3) reflects the continuing evolution of Telecom from telephone service to telecommunications service; and (4) protects a revenue source that is vital in providing much needed programs and services to the Santa Ana community. In addition to the initiative reducing the UUT rate from the current level of 6% to 5.5 %, the proposed UUT ordinance also eliminates the maximum tax cap of $11,000. The cap has not been raised since 2003 and is currently out of date. Most cities do not impose a maximum tax cap. It is estimated that the combined modernization and reduction will result in a revenue neutral impact to the City in FY 2014 -15. The recommended actions comply with California Election Code requirements regarding adoption of certain resolutions to call the election and place the proposed question to the City's voters. FISCAL IMPACT The County Registrar of Voters office has estimated that the additional cost of adding a ballot measure to the City's consolidated general municipal election would be approximately $15,000 based on current voter registration in the City. Funds for these administrative costs will be available in the 2014 -15 fiscal year budget in the Clerk of the Council Other Agency Services Account (no. 01107031- 62300). 50A -2