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Smart Voter
San Diego County, CA November 2, 2010 Election
Proposition H
Telecommunications Users' Tax Amendments
City of Chula Vista

Majority Approval Required

Fail: 23,303 / 43.7% Yes votes ...... 30,003 / 56.3% No votes

See Also: Index of all Propositions

Information shown below: Impartial Analysis | Arguments |

Shall the ordinance to modernize the City's 1978 Telephone Users' Tax (renamed the Telecommunications Users' Tax), with no rate increase; maintain exemptions for low income senior citizens; ensure Tax proceeds continue to be available for general municipal purposes, including police, fire, streets, libraries, and parks; revise the method for calculating and collecting the Tax to reflect technological and legal changes; and amend the tax base to equitable include all applicable telecommunications services be adopted?

Impartial Analysis from CIty Attorney
Since 1970, the City of Chula Vista has had a Utility Users' Tax, which includes a Telephone Users' Tax. The Telephone Users' Tax imposes a five percent (5%) tax on the use of intrastate telephone communication services in the City of Chula Vista. Since the tax's inception, there have been significant advances in telecommunications, both technological and legal.

In terms of technology, Chula Vista residents, instead of solely using traditional landline telephones, now have additional technologies and services to choose from, including private network communications (T-1 lines), cell phones, voice-over-internet telephone services (VoIP), 800 and 900 services, pre-paid calling card services, and paging services.

In terms of the legal changes, the current Utility Users' Tax was written before changes to federal law, including The Mobile Telecommunications Sourcing Act of 2000 and IRS regulations, concerning how the Federal Excise Tax ("FET") applies to long distance services, were made.

If approved by a majority of voters, Proposition H would modernize the Utility Users' Tax to correspond with changes in telecommunications since the 1970's. Other cites have similarly modernized their Utility Users' Tax. Consistent with the modernization of the Utility Users' Tax, Proposition H renames the "Telephone Users' Tax", the "Telecommunications Users' Tax."

Proposition H establishes a modern definition of telecommunication services subject to the tax. The modern definition would apply to all types of telecommunications regardless of the technology that is used and regardless of whether the communication is intrastate, interstate, or international. Among the telecommunication services are private network communications (T-1 line), cell phones, voice-over-internet telephone services (VoIP), 800 and 900 services, pre-paid calling card services, and paging services. The Proposition ensures the Telecommunications User's Tax is in compliance with current federal laws and assists to avoid potential litigation.

Proposition H continues the current tax rate of five percent (5%) that is imposed on telecommunication services. While the tax rate has not changed, some types of telecommunication services, which were not previously taxed, are now also taxed. Proposition H does not tax Internet services or cable or video programming services subject to franchise fees.

Taxes generated from Proposition H are general taxes, meaning they go into the general fund. General fund monies are used to pay for many public services, such as police, fire, libraries, park and recreation services, and maintenance, repair, and replacement of City property.

Proposition H assigns the City Finance Director the duties of Tax Administrator, tasked with administering the Proposition. The Proposition provides that the tax will be collected from the telecommunications carrier. Should they fail to pay in a timely fashion, penalties and interest will be assessed.

Proposition H provides that independent third party audits may continue to be conducted to ensure the tax has been properly applied, exempted, collected and remitted, and revenues were properly expended. Over paid taxes will be refunded. Anyone may appeal the assessment of the tax. The Proposition continues the existing exemption for qualified senior citizens. The tax cannot be increased without a vote of the residents of Chula Vista.

 
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Arguments For Proposition H Arguments Against Proposition H
Protect our parks, libraries, and police & fire services by joining us in protecting our Telecommunications Users' Tax.

Proposition H protects the revenues received from telecommunications companies and keeps the current rate unchanged at 5%.

Prop H is not a new tax. When the ordinance was drafted in 1970, today's mobile phones didn't even exist. This outdated law prevents Chula Vista from collecting users' tax fairly from all telecommunications providers. Some providers don't pay it at all!

95% or more of Chula Vista residents and businesses already pay their fair share of this fee. Prop H expands and modernizes telecommunications definitions to address state and federal changes since 1970 so every resident is treated equally.

If Prop H fails, the City could lose $6 million per year, which currently funds:

  • 50 Police Officers, or
  • 57 Firefighters, or
  • CVPD Traffic, Property Crimes, Family Protection and Violent Crimes Investigation Units, regular staffing for a one-engine Fire Station, and the Fire Prevention Unit, or
  • Over 50% of the Public Works Department (such as park maintenance and road repairs), or
  • The Animal Care Facility and all libraries + Civic Center, South Chula Vista, and Eastlake, or
  • All recreation centers and all three libraries

Chula Vista's "Fiscal Health Plan" requires a balanced budget, adequate reserves and pension benefit reform. Following this Plan, the City Council cut 20% from the City's budget and 25% of its workforce since 2007. State government raids and the economic downturn forced local service and staff reductions to 1990 levels.

Losing $6 million per year in telecommunications revenues would mean further cuts in services to close budget deficits even greater than those the city already addressed during the past three years.

Prop H protects what we receive from telecommunications companies so residents can have the services we need.

CHERYL COX
Mayor, City of Chula Vista
PAMELA BENSOUSSAN
Councilmember, City of Chula Vista
BERTHA LOPEZ
Teacher, Parent, and Community Volunteer>
WILLIAM HALL
Businessman, Former Port Commissioner

Rebuttal to Arguments For
A tax is a tax!
Supporters of Prop H claim the Utility Users' Tax is NOT a new tax. Who are they kidding? Chula Vista residents will be charged a new 5% tax on their cell phone bills if Prop H passes. The City can't even be truthful that passage will result in a tax INCREASE.

Don't believe false promises
Claims that the money will "protect" essential programs are FALSE. Not ONE DIME is set aside for essential services. The City can spend this money any way it wants. The City also claims it will "lose" money if Prop H doesn't pass. The City loses NO CURRENT FUNDING for police, fire, parks and libraries if Prop H does not pass.

This tax hurts working families the most
The City would love to get its hands on more of YOUR money by charging this new tax. Every member of your family who uses a cell phone will be taxed 5% each. This will hurt hardworking families the most at a time when they can least afford it.

No means NO!
How many times do voters have to say NO to Chula Vista politicians? The Council's new Fiscal Health Plan is just that, a plan. This "Plan" doesn't guarantee REAL reform. The City needs to first demonstrate its fiscal discipline before asking people for a dime more in taxes.

Vote NO on Proposition H

JILL GALVEZ
Chula Vista Telecom Executive
JAIME MERCADO
Fmr. Member, Sweetwater Union High School
District Board of Trustees/Retired Principal
CHRISTOPHER ALTBAUM
Small Business Owner
PENNY VAUGHN
Mobile Home Residents Community Leader
Prop H is a TAX INCREASE
Prop H will impose NEW TAXES on services used by Chula Vista residents and businesses. If you use a cellphone, pager, or make toll free or international telephone calls, you will likely end up paying more in taxes.

Worst possible time to raise taxes
With an ailing local economy, heartbreaking foreclosures in both East and West Chula Vista, and businesses struggling just to keep their doors open, the last thing we need is another tax increase.

New taxes could easily end up paying for pensions and salary increases, not services
Not one dime of this tax is set aside for essential services like public safety, streets, parks, or libraries. This tax could pay for public employee salary and pension benefit increases - or anything else the politicians desire.

Reform before revenue
Voters have already told the City Council to reduce spending before raising taxes. Over the last 10 years, Chula Vista pension costs have increased 190%. Yet City employees pay NOTHING toward their own retirement accounts. What a deal! Other cities across San Diego County are reforming their pension systems and saving countless millions, but not Chula Vista. The City should reform their absurdly generous pension benefits and scrutinize expensive overtime before asking taxpayers for more money.

Don't reward fiscal irresponsibility
Chula Vista has repeatedly failed to demonstrate fiscal responsibility to voters - continually asking for tax increases to fix its problems. The City foolishly spent $255,000 on a special election last year, wasting precious taxpayer dollars only to have voters overwhelmingly reject the 1% sales tax increase.

The City needs to reduce labor costs, streamline operations, and demonstrate fiscal discipline before asking taxpayers to cough up more in taxes.

Vote NO on Proposition H.

Visit www.chulavistataxpayers.org and www.sdcta.org for more information.

JAMES F. DOUD
Vice President
Chula Vista Taxpayers Association
LANI LUTAR
President & CEO
San Diego County Taxpayers Association
MARSHALL "TY" COMPTON
Past Commissioner
Port of San Diego
ISABELLE ESPINO
Vice President
Chula Vista Civic Association
ED HERRERA
CEO
San Diego South Chamber of Commerce

Rebuttal to Arguments Against
Prop H is not a new tax but it does guard important revenues that have protected Chula Vista residents since 1970!

Prop H funds help provide police and fire protection, parks, libraries and other vital city services.

Prop H treats every resident fairly. 95% of all residents and businesses already pay the Telecommunications Users' Tax. Prop H updates the law to treat all taxpayers equally, and Prop H keeps the current 5% rate unchanged.

100% of telecommunications providers that serve Chula Vista already collect the tax on all calls placed within California.

99% of these providers already pay on cell phones, interstate and international calls, text messaging, prepaid and postpaid telecommunications and paging. Prop H will ensure that ALL providers play by the same rules.

Important fiscal reforms have already been implemented to tighten our belts.

The City has already made extensive budget reforms since 2007, eliminating 259 permanent full-time positions and cutting spending by 20%. In August, the City began budget planning six months in advance to balance the 2011-12 budget.

But now, nearly $6 million of the City's annual revenues are at risk if Prop H is not passed. Help safeguard our city from devastating layoffs and service reductions.

Voters can support Prop H while City employees and the City Council work on reforms to salaries and benefits, reserve funds, and require balanced budgets. The quality of life in Chula Vista hinges on these important reforms.

CHERYL COX
Mayor, City of Chula Vista
JERRY R. RINDONE
Retired High School Principal
RUDY RAMIREZ
Councilmember, City of Chula Vista
DAVID BEJARANO
DAVID HANNEMAN


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