Pass: 8,975 / 61.4% Yes votes ...... 5,642 / 38.6% No votes

See Also: Index of all Measures

The utility user tax was established in 1970. The current tax rate is 3.5%. The revenues from this tax -- approximately $2.8 million in 2008-2009 (12% of Placentia's general fund revenue) -- are used exclusively within the City for general governmental purposes including Police and Fire Safety, street maintenance and parks. As written, the existing language in the ordinance is outdated due to significant advances in technology since adoption, and the tax is not imposed on the many communication services and devices that have since come into existence, such as voice-over-internet protocol, paging, private communication services (e.g., T-1 lines) and IP-TV.

Recent federal court decisions in other states may cast doubt on whether the ordinance, as currently written, can be imposed on long distance, cellular and bundled telephone services. Several California cities with almost identical ordinances as Placentia's are currently involved in litigation on this issue. Should the City be sued, or an adverse decision be reached that is controlling in California, the revenues collected from the current ordinance could be reduced substantially. Adoption of the proposed ordinance would protect the City from adverse outcome in any such litigation, and avoid the expense of possible litigation against the City itself.

The proposed ordinance would update the definitions to apply the tax to all types of telecommunication and video services, regardless of the technology used, including intrastate, interstate, and international calls; private communication services (e.g., T-1); paging; and voice and video using internet protocol (VoIP and IP-TV). Federal law prohibits a local tax on "internet access" and the proposed ordinance does not apply to digital downloads, such as electronic books, music, games and similar digital products. The proposed ordinance will not change the current tax rate nor does it extend the tax to any other utility service not already covered by the existing tax.

A "yes" vote is in favor of adopting the updated utility users tax ordinance summarized above. A "no" vote is against adopting the proposed ordinance which would result in a continuation of the existing 3.5% utility users tax without updating the municipal code to reflect changes in technology and law. A majority of "yes" votes is required for the ordinance to be enacted.