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OUTLINE OF ISSUES - UTILITY USER'S TAX
l.) Why are we discussing this now?
• Litigation threat — urgent! — Could result in decisions as early as Spring, 2009. Adverse ruling
could put all long distance Telecom UUT revenue at risk - loss of — $750,000 per year.
Federal Excise Tax (FET) Exemption
"Land Mobile" Exemption
The fix: Amendment to Section 2671 of UUT Code to remove these outdated exemptions.
PROP. 218 VOTE REQUIRED
• General/Legislative threat — critical to deal with now! — Outdated Telecom UUT language
(last amended in 1993) cannot handle emerging technologies like Internet phone, text messaging,
etc. = Lots of new potential loopholes to avoid paying UUT. "Land lines" end up paying more
than newer technologies — tax fairness issue.
Loopholes could result in new litigation (like with the FET exemption).
HR 5793 — "Cell Tax Fairness Act" - Federal 5 year moratorium on new wireless taxes. A modern voter -
approved ordinance will avoid moratorium.
The fix: Amendments to Telecom UUT Code and related sections (ie: definitions, bundling rules,
nexus to tax, etc.) to update language for 21s' Century.
PROP. 218 VOTE REQUIRED
• Other Outdated Exemptions from UUT — important to deal with now — other outdated
exemptions from payment of UUT should be revised (ie: "head of household" exemption).
Other exemptions appear OK (ie: low income exemption).
The fix: Amendments to Section 2672.1 of UUT Code (Exemptions) to update language.
PROP. 218 VOTE REQUIRED
• Outdated Gas, Electric and Water UUT provisions — good to do now, but not urgently
needed — outdated provisions for gas, electric and water are starting to create loophole problems
(ie: UUT taxation of solar /electric power)
The fix.- Amendments to various sections of UUT Code (Exemptions) to update this language.
PROP. 218 VOTE REQUIRED
• Outdated Procedural Rules — nice to do now, but can get to this later — outdated
administrative provisions (ie: statute of limitations, claims filing, refunds, etc.) not up to 21'
Century standards.
The fix: Amendments to administrative provisions in UUT Code to update language.
PROP. 218 VOTE NOT REQUIRED
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2.) Action Options (minimum to maximum)
Amend Telecom provisions only (remove FET /Land Mobile exemptions and update Telecom
language).
• Amend Telecom and substantive exemptions (ie: head of household ").
• Amend Telecom, exemptions and UUT provisions on other utilities (gas, electric and water).
• Amend the entire UUT ordinance.
• Variations on the theme. (Do some now, some later)
• Amendment to Rate? Removal of "suspensions "? Is it within grandfathered 7% rate structure ?.
3.) Special Election Issues
• Recent results in other cities.
• Council may call a Special Election anytime in 2009 by unanimous resolution 88 adopted days
before election date. Must also make special Prop. 218 emergency findings (ie: litigation threat).
• Consolidate with Arcadia USD Election? - April 21, 2009.
t` Deadline to call = January 20, 2009 Council meeting.
• Other election dates?
• Cost Issues? Retain an election consultant?
4.) Other Issues
• Form a subcommittee?
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