Council supports tax modernization proposal

BY ERIC LINDBERG
DAILY SOUND STAFF WRITER

Santa Barbara city leaders gave a unanimous vote of support necessary to place a measure that would modernize the city’s utility user’s tax (UUT) on the ballot this November.
Leaders stressed the importance of bringing the tax up to date to ensure funding for police, firefighters, street maintenance, libraries and parks, among other government services, remains intact.

Had the City Council been split on the decision to declare an emergency and place the measure on November’s ballot, it wouldn’t be eligible for a vote of the people until November 2009.
“We need to take action on this now,” Councilmember Roger Horton said. “One reason is we don’t know what’s going to happen [with the state budget].”
Due to changes in federal legislation, as well as technological advances in the telecommunications industry that have left the city’s UUT outdated, the city stands to lose approximately $4.3 million used to fund essential services.
Approved in the 70s, the telecommunications portion of the tax doesn’t apply to cell phones, voice-over-Internet-protocol technology and other newer forms of telecommunication.
In modernizing the ordinance to cover those technologies — in order to avoid litigation with utility companies — the city will specifically exempt taxing Internet access.
City Finance Director Robert Peirson took pains to note even if the federal government overturns a moratorium on taxing Internet access, the city won’t take the opportunity to levy such a tax as reflected by explicit language in the updated UUT.
He noted that 25 other cities in California have already updated their UUTs and all received approval from their voters at varying levels of support.
City leaders also decided, due to the potential increase in revenue that would be generated by covering a wider base of technologies, to lower the current tax rate on telecommunications from 6 percent to 5.75 percent to achieve revenue neutrality.
“It’s not like we’re trying to gouge people and be greedy about it,” Councilmember Iya Falcone said.
If formally approved by the City Council next week, the ballot measure will need a simple majority to pass.
Public polling showed initial support of the tax modernization came in at approximately 52 percent with 16 percent undecided.
After survey participants were given more information about the services provided by the UUT and how it works, the measure saw approval swell to 72 percent.
To that end, city leaders emphasized the need to run an effective educational campaign about the tax renewal, such as mailings describing services currently funded by the UUT.