Alameda Utility Modernization Act is Really a Tax Increase that Requires a 2/3rd Vote

Alameda city staff presentation explaining that the Utility Modernization Act "expands" the things that are taxed - a tax increase.

Alameda city staff presentation explaining that the Utility Modernization Act “expands” the things that are taxed – a tax increase.

City staffers and the public safety unions – who stand to get a pay raise and pension boost from it – keep trying spin the Utility Modernization Act (Measure K1) as something other than a tax increase. But it clearly is a tax increase that demands a 2/3rd vote under state law.

The image above from a July 5th staff presentation to city council tells the tale clearly – Measure K1 “expands” the number of things taxed. It’s true that that the tax rate stays the same, but expanding the tax to cover services such as voice-over-IP telephone service (think Vonage) is an expansion.

And at the June 7th council meeting, staff explained that capturing tax revenue on such voice-over-IP telephone services is exactly the goal:

“Over the past several years, every city in Alameda County with a UUT (except Alameda and Piedmont) has successfully secured voter approval to modernize its UUT ordinance primarily to reflect the migration from traditional landline telephone use to new electronic communication technologies, such as wireless and VOIP (“Voice Over Internet Protocol”).

Modernizing the City’s existing UUT would assure that the 7.5% rate is applied fairly to all consumers so that those that use more advanced technology share the tax burden equally. It also is a tax that is paid irrespective of housing status, unlike a parcel tax that is paid solely by property owners.

Staff recommends leaving the tax rate the same (7.5%), but modernizing the language of the entire ordinance to ensure equal treatment of all users. While the tax rate would remain unchanged, the modernized UUT with its more explicit and modernized definitions should ensure an increase in collections and thus result in a net benefit to the City’s General Fund. ”

https://alameda.legistar.com/LegislationDetail.aspx?ID=2737015&GUID=966D2EC8-EAA6-4A45-B5CD-5BD15056969E&Options=&Search=&FullText=1

And there’s no doubt that the goal is to increase the amount of tax revenue – by $1.5 million. From the July 5th staff presentation again:

“This measure will return the UUT revenue in the General Fund back to the FY 2007/08 level.

– Expect to raise approximately $1.5 million”

Alameda Utility Modernization Act is clearly a tax increase intended to raise an additional $1.5 million per year.

Alameda Utility Modernization Act is clearly a tax increase intended to raise an additional $1.5 million per year.

So, there can be no doubt about it – Measure K1 is a tax increase, and putting it on the ballot as a 50/50 measure instead of a 2/3rds voter approval measure is a violation of state law.

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