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LWV League of Women Voters of California Education Fund
Smart Voter
Riverside County, CA November 4, 2008 Election
Measure P
Utility Users' Tax
City of Moreno Valley

Majority Approval Required

Pass: 36,080 / 79.19% Yes votes ...... 9,481 / 20.81% No votes

See Also: Index of all Measures

Results as of December 2 11:01am, 100.00%% of Precincts Reporting (69/69)
Information shown below: Yes/No Meaning | Impartial Analysis | Arguments |

Shall the City of Moreno Valley adopt a new Utility Users Tax of 5.75% ?

Meaning of Voting Yes/No
A YES vote on this measure means:
The voters want to adopt the new UUT ordinance to replace the existing UUT.

A NO vote on this measure means:
The voters want to reject the new UUT ordinance and keep the existing UUT.

Impartial Analysis from the City Attorney
LEGAL IMPACT

Background. The City has imposed a Utility Users Tax ("UUT") since 1991. The voters approved the UUT at a maximum rate of 6% in November of 1996. There are cross-references in the existing UUT to certain federal laws. Because of recent changes in those federal laws, some cellular telephone companies are challenging in court similar UUT ordinances in other cities. They claim that these federal changes should, in effect, remove the local UUT on most telephone calls. Also, new technologies for telephone and video services are evolving. These technologies didn't exist at the time the UUT was adopted and therefore were not included in the existing ordinance. As users move to the new technology, UUT revenue from telecommunications and video services will decline. Users who cannot, or do not choose to use the new technology will be taxed while others receiving the same service through newer technology will not.

Effect. In substance, Measure "P" would do the following:

  • replace the existing telephone and video provisions of the UUT with new ones that would not be affected by changes in federal law and would apply equally to all telecommunication and video services regardless of the technology used.
  • reduce the maximum rate of the tax from 6% to 5.75% on all taxed utility services (water, gas, electricity, telephone, cellular telephone, sewer, cable television and wireless pay television).
  • clarify the City's UUT collection and appeals procedures.
  • require annual outside expert audits to assure that the UUT has been properly collected and accounted for.

The existing exemption for low income residents would continue. Like the existing tax, the new tax would be a general tax, with all proceeds deposited into the City's General Fund. It requires a simple majority vote to pass.

A "YES" vote is a vote to adopt the new UUT ordinance to replace the existing UUT.

A "NO" vote is a vote to reject the new UUT ordinance and keep the existing UUT.

FISCAL IMPACT

The legal and technology issues could reduce the City's projected General Fund revenues by as much as $5 Million per year. The General Fund pays for most of the City's police, fire, animal control, public works, community and economic development, financial and administrative services, and some library and parks and recreation services. Some or all of these services could be affected by the lost revenue. Measure "P" would prevent the loss of those revenues.

Measure "P's" decrease in the tax rate from 6% to 5.75% is designed to offset any increase in tax revenue from recapturing the revenue already lost because of new technologies that are not currently taxed. It is projected to result in a decrease of approximately $170,000 in total UUT revenue to the City in the first year.

Respectfully submitted,

Robert D. Herrick
City Attorney

The above statement is an impartial analysis of Measure "P." If you desire a copy of the ordinance or measure, please call the City Clerk's office at (951)413-3001 and a copy will be mailed at no cost to you.

  Official Information

City of Moreno Valley

City Municipal Code
News and Analysis

Google News Search

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Arguments For Measure P Arguments Against Measure P
Measure "P" will not increase taxes. It will:

  • Lower the current utility user's tax (UUT) on all utility services by one-quarter percent (1/4%) from 6% to 5.75%;
  • Modernize the City's UUT ordinance to treat all taxpayers who use telecommunications services fairly and equitably; and
  • Remove the risk of the City losing nearly $5 million in revenue that provides funding for vital City services.

In 2006 the IRS repealed the FET and directed all telephone companies to discontinue collecting the FET on long distance calls, including wired and wireless phones, voice over internet protocol (VoIP) and prepaid cards. The IRS ruling has now resulted in lawsuits against some city UUT ordinances claiming that the local taxes on those calls are no longer valid.

In addition to legal challenges to UUT ordinances, there are technological ones as well. Since 1996 when Moreno Valley voters approved the UUT ordinance, telecommunications services have changed dramatically. There is a vast array of telecommunications services being provided. Some are using private communications systems and the Internet protocol with high speed, broadband services, none of which are covered in the City's current UUT ordinance. As more people use new technology, UUT revenue will decline. Worse, people who can afford the new technology escape the UUT while those who must use the older technology are taxed. That's not fair.

The City cannot afford to lose $5 million in tax revenue that is used for funding public safety and other vital services. Like many other California cities that have placed similar measures on the ballot and received overwhelming approval,it's time to fix our City's outdated UUT ordinance and treat all taxpayers equitably.

We urge your "YES" vote on Measure "P."

By: William H. Batey II, Mayor
     Frank West, Mayor Pro Tem
     Bonnie Flickinger, Council Member
     Richard A. Stewart, Council Member
     Charles R. White, Council Member

Rebuttal to Arguments For
Utility Taxes (UUT) are regressive taxes because they fall on life's necessities such as water, cooling, heating, lights, communication, etc.).

The UUT:

Adopted in 1991 a temporary tax with a 3-year sunset clause.

Special Election June 1996 to make tax permanent, Voters voted NO.

The utility tax was voted into law November 1996 after the City Council put it back onto the ballot this time with additional items to be taxed: cell phones, wireless pay television.

UUT revenues the city collects have grown over 100% since the 1991 inception.

The Council can cut this tax any time with NO ballot measure.

Under Proposition 218, Right to Vote on Taxes Act, a ballot measure is necessary for tax increases. Measure "P" is a tax increase on previously untaxed telecommunication services.

Our Council has budgeted up to $90,000 of our tax money to convince us to raise our taxes.

With fewer jobs being created, home foreclosures, mounting bills, higher gas prices, higher health care costs, climbing food costs, raising utility costs, residents falling behind on paying utilities, and skyrocketing debt, Moreno Valley taxpaying families need less taxation not more.

TO PREVENT A TAX INCREASE, VOTE NO ON MEASURE "P."

By: Marcia Amino, Homeowner
     Ted T. Amino, Ret. Homeowner

Measure "P" is misleading to Moreno Valley Taxpayers. If the Utility User's Tax was only being reduced a ballot measure is unnecessary. The City Council wants to impose the UUT on heretofore-untaxed telecommunication services. Because Proposition 218 says no government may increase any general tax unless that tax is submitted to the voters and approved by a majority vote, Moreno Valley must put this measure on the ballot.

With the economic difficulties faced by families, at the very least, there should have been more than a token cut in this regressive tax. Using the carrot and stick method on we taxpayers is disingenuous and to disguise a tax increase on heretofore untaxed services.

The Utility User's Tax is a general tax and goes directly into Moreno Valley`s General Fund. In 2006 the UUT collected $13,812,000 and in 2007 $15,463,000 was collected (City CAFR 2007). This City Council could have, without spending for a ballot measure, cut the UUT at any time during these past few years of unprecedented revenue growth, but they didn't.

Moreno Valley, like the rest of California governments is now in a revenue downturn. Unfortunately, the taxpayers and families of our City are also experiencing an economic squeeze: stagnant wages, fewer jobs, higher food prices, declining home values, higher gas prices, and higher utility rates.

Let's bring fiscal sanity to our local government, VOTE NO ON MEASURE "P."

Real tax reduction to reduce the tax burdens on our families and businesses is the way to bring economic growth and Measure "P" is not that.

By: Marcia Amino, Homeowner
  Ted T. Amino, (Ret.)

Rebuttal to Arguments Against
Measure "P" reduces the Utility Users Tax from 6% to 5.75%. The City Council can reduce the Utility Users Tax; however, a ballot measure locks the reduction in and prevents the City Council from increasing it. In addition, Measure "P" will modernize the language to make the tax fairer to all those using similar services and utilities.

A YES vote for Measure "P" will reduce the Utility Users Tax. The argument against states a ballot measure is unnecessary. In order to make the reduction permanent and fair to all, Measure "P" is necessary. Once Measure "P" reduces the Utility Users Tax, the City Council cannot raise it without a vote of the people.

Vote YES on Measure "P."

By: William H. Batey II, Mayor
  Frank West, Mayor Pro Tem
  Bonnie Flickinger, Council Member
  Richard A. Stewart, Council Member
  Charles R. White, Council Member


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