TITLE
Recommendation to conduct hearing on proposed levy of utility users tax, receive supporting documentation into the record, conclude the hearing; adopt finding of emergency; and adopt resolution calling an election for November 4, 2008, for the purpose of the continuation of such levy. (Citywide)
DISCUSSION
Under Long Beach Municipal Code (LBMC) 3.68.050, a Utility Users Tax (UUT) of 5 percent is charged to any person in the City of Long Beach that uses telephone services. Since the original passage of the UUT in 1985, the telecommunications industry has undergone significant technological changes with the advent of cell phones, satellite communications and other communication media. As competition increased, the industry engaged in efforts to reduce costs to the customer through bundled calling plans and simpler billing methodologies. Although the City revamped its UUT ordinance for telephone services in 2006 to eliminate a reference to the Federal Excise Tax, efforts on the federal and state level to manage the way in which fees and taxes are applied to telephone services have continued to evolve.
In 2006, the federal government issued the May 2006 Internal Revenue Service (IRS) Notice, which reduced the base of the Federal Excise Tax. On the basis of the May 2006 IRS Notice, telecommunication industry providers challenged the methodology some California cities have used to assess their UUT. Though the City corrected some of these issues in 2006, certain discrepancies still remain in the City's existing Municipal Code, thus requiring the City to update and amend its UUT. Should the City fail to modernize its UUT ordinance, the total amount of General Fund revenue derived from this source, $15 million annually, could be jeopardized. The telephone UUT is the fifth largest General Fund revenue source, representing approximately 4 percent of the General Fund ongoing resources. In service delivery terms, the telephone UUT is greater than the entire Library...
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