Pass: 31,093 / 76.57% Yes votes ...... 9,514 / 23.43% No votes

See Also: Index of all Measures

Official Sources of Information

• Official Election Web Site

Background. Upon incorporation, the City of Elk Grove adopted a Utility Users Tax ("UUT") identical to that used in the County of Sacramento. The County's UUT ordinance had been in effect for many years prior to the City's adoption of its text; the City has not altered any of the ordinance authorizing the UUT in the intervening 10 years.

Because of recent changes in federal laws, some cellular telephone companies are challenging ordinances similar to Elk Grove's in court. The cellular telephone companies claim that these federal changes should, in effect, remove the local UUT on most telephone calls. In specific, telecommunication companies are contesting the ability to tax call processing in the era of bundled services. 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 J 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 2.5% to 2.25% on all taxed utility services (gas; electricity; telecommunications, including telephone and cellular telephone; video services, encompassing cable television and wireless pay television; and sewer).

• 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. 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 "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 $600,000 per year. The General Fund pays for most of the City's police, code enforcement, animal control, financial and administrative services, and some transit services. Some or all of these services could be affected by the lost revenue. Measure J would prevent the loss of those revenues.

Respectfully submitted,
Susan Burns Cochran
City Attorney