Sunnyvale; Measure L

	Sunnyvale; Measure L

"Shall the City of Sunnyvale, in order to maintain essential services such
as police and fire protection, librariesm parks, and road maintenance, be
authorized to increase the small commercial / residential electric utility
tax rate from the present 2% to 2.33% in 1998, to 2.66% in 2002, and to 3%
in 2008, to partially restore City revenues when electric rates for these
users are reduced, in 10% increments up to 30%, due to government
deregulation of the electric utility industry?"

CITY ATTORNEY'S IMPARTIAL ANALYSIS OF MEASURE L


Measure L is intended to prevent the anticipated decline in utility tax revenues
received by the City of Sunnyvale from residential and small commercial
businesses which is expected to occur as a result of state government
deregulation of the electric utility industry. Small commercial businesses are
defined as those with a maximum peak demand less than 20 kilowatts.

Electric rates for residential and small commercial businesses are supposed to
be reduced by approximately 30%, in 10% increments, between 1998 and 2008. If
the rates are reduced, and if Measure L passes, then the City Council will be
authorized to hold one or more public hearings each time the electric rates
decrease 10% to consider raising the electric utility tax rate by one-third
percent. Since 1975 the City's electric utility tax rate on all electric utility
users has been 2%. The potential increases would be from 2% to 2.33% no earlier
than January 1, 1998, to 2.66% no earlier than April 1, 2002, and to 3% no
earlier than January 1, 2008. There would be an absolute cap at 3%. The tax rate
could not be increased without the Council holding at least one public hearing
and adopting an ordinance by at least four affirmative votes. Measure L does not
require the Council to increase the tax rate at all or to the full 3%. Measure L
simply authorizes the City Council to consider and possibly adopt tax rate 
increases in stages.

With deregulation of electric rates, an increase in the tax rate will not result
in an overall increase to any utility bill. For example, a resident that now
uses $50 worth of electricity pays $1 in utility users tax, for a total bill of
$51. If there is both deregulation in electric rates and an increase in the tax
rate, that same resident would anticipate paying $45 for electricity and $1.05
in taxes at the 2.33% rate, for a total bill of $46.04; $40.50 for electricity
and $1.08 in taxes at the 2.66% rate, for a total bill of $41.58; and $36.45 for
electricity and $1.09 in taxes at the 3% rate, for a total bill of $37.54.

The money generated by the utility users tax goes into the City's general fund. 
General fund money pays for a wide variety of basic City services, including
public safety, parks, libraries and road maintenance. Measure L is a companion
measure to Measure K, but Measure L should be considered and acted upon
separately from Measure K since neither measure is dependent upon the other.

A "yes" vote on Measure L will authorize the City Council to consider and adopt
one or more increases from 2% to a maximum of 3% in the utility users tax on
residential and small commercial businesses.

A "no" vote on Measure L will preclude the City Council from considering or
adopting any increase in utility users tax on residential and small commercial
businesses.


VALERIE J. ARMENTO
City Attorney


COMPLETE TEXT OF MEASURE L



Chapter 3.12 shall be amended as follows:

3.12.030. Definitions.

Add new (7) "Residential/Small commercial ratepayer" shall mean electric
customers who have a maximum peak demand of less than 20 kilowatts.

Existing (6) and (7) renumbered (8) and (9)


COMPLETE TEXT OF MEASURE L - Continued


3.12.060. Taxes--Effective date.

The taxes initially imposed by this chapter at the rate of one percent became
operative as of July 1, 1969. The taxes at the rate of two percent imposed by
this chapter as amended by Ordinance No. 1774-75 shall become 
became operative
as of August 1, 1975.  The increases in utility user tax rates authorized by the
voters on November 4, 1997 will become effective only if there are reductions in
the electrical utility rates charged to customers and if, after public hearings
are held, the increases are subsequently adopted by the city council by
ordinance.

3.12.110. Electricity user tax--Imposition--Rate.

There is hereby imposed a tax upon every person in the city, other than an
electrical corporation or a gas corporation, using electrical energy in the
city. The tax imposed by this section and Sections 3.12.120 and 3.12.130 shall
be at the rate of two percent of the charges made for such energy, including
minimum charges for service but excluding charges for electrical energy supplied
to street lights, and shall be paid by the person paying for such energy, unless
the city council by ordinance increases the rates to offset decreased charges
resulting from electrical rate deregulation to no more than the amounts
specified below, with an overall rate cap for all ratepayers of three 
percent.


For residential/small commercial ratepayers:

  Earliest Effective
       Date
  January 1, 1998
  April 1, 2002
  January 1, 2008

  Maximum   Maximum       
Rate IncreaseTotal Tax Rate    
   .33%2.33%         
   .33%2.66%         
   .33%3.00%         



ARGUMENT IN FAVOR OF MEASURE L


Sunnyvale is a secure city with one of the nation's lowest crime rates. We enjoy
excellent parks, well-maintained streets, and an outstanding library. Sunnyvale
has earned a national reputation for high quality services at very low cost to
taxpayers, and recent surveys show that residents give the city excellent
ratings. This is the result of a remarkable system for long-term financial
planning and effective public management that is highly accountable to the
public.

Measure L will allow Sunnyvale citizens and businesses to continue receiving
these benefits by restoring a source of City revenue that otherwise will be
lost, beginning next year. Because of State-mandated electric utility
deregulation, residential electric customers in California will get a 10%
reduction in their bills in January. By 2O08, all residents will receive a total
reduction of 30%.

This is good news for local electric customers who will save nearly $100 million
over the next 20 years. However, the City of Sunnyvale forecasts it will lose
approximately $1 million a year in utility tax revenue needed to provide basic
city services. Measure L will partially restore utility tax revenue to current
levels to assure the quality of essential public services such as police and
fire protection, library, parks, and street maintenance. The taxes that
Sunnyvale residential utility users now pay will not be increased. Furthermore,
Sunnyvale's utility tax is almost 2/3 lower than the average utility tax
electric customers pay in California Cities.


ARGUMENT IN FAVOR OF MEASURE L - Continued


Although Sunnyvale businesses and industries pay 70% of the City's utility tax,
they have strongly endorsed this tax proposal. They recognize the value of
supporting excellent City services to maintain a high quality of life and a
healthy economy for all Sunnyvale residents. We urge you to join these community
leaders and vote yes on Measure L.


LESLIE B. LAWTON, Small Business Owner

JIM ROBERTS, Vice Mayor, City of Sunnyvale

RAY MONTALVO, Board Member, Sunnyvale Chamber of Commerce

JAMES W. DAVIS, President, Sunnyvale Public Safety Officers' Assn.

ROBERTA "JACKIE" HARRISON,  Former Chair, Library Board and Housing & Human
Services Commission


ARGUMENT AGAINST MEASURE L


Please do not be misled. Measure L, like Measure K, is simply a slick attempt to
INCREASE city revenues.  If the city merely wanted to stabilize revenues, it
would have drafted both of these measures so as to provide for a steady
inflation-indexed stream of income comparable to the current stream of income
from the electricity tax. That means that if, as the law of supply and demand
indicates, consumption of electricity INCREASES after deregulation, the tax rate
would be lowered to a level producing the same inflation-adjusted tax revenue as
before deregulation.   Instead, these measures provide only for an INCREASE in
taxes on the spurious assumption that deregulating the market and cutting prices
will have no effect on consumption levels. History, as well as the law of supply
and demand, teaches us that when the price of a commodity is decreased, more of
it is used. The likely consequence of a cut in electricity prices of 30% will be
increased usage by commercial users.  Increased home consumption is less 
certain, but it is certainly possible that a 30% cut in electricity costs 
will cause some PG&E customers to consider airconditioning and other uses 
that may be considered too expensive at current prices. There is absolutely 
NO evidence that city revenues will be lost when utility rates are cut. The 
city should not be given authority to raise taxes, even with hearings, based 
on such an incomplete investigation of the consequences of price cuts. What is 
the connection between lower U.S. per-capita electricity costs and higher U.S. 
per-capita usage? Sunnyvale citizens should get an answer to that question. 
Until they do, they should vote NO on K and L!

Santa Clara County Taxpayers' Association Website -
http://www.webpage.com/taxpayer


DAVID K. SCHUMANN, Director, Santa Clara County Taxpayers' Association

ELIZABETH A. SCHUMANN, Sunnyvale

FRANCES ROWE, former Mayor of Sunnyvale
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