The only evident cinch in tomorrow’s election is the innocently named Measure W.
This is the so-called language update of the utility users’ tax that has been assessed against Culver City residents for more than 40 years.
Throughout the most publicized election campaign in the community’s history, Measure W has received less attention than the Lincoln assassination.
This may mean either that voters are resigned to maintenance of the high-rent district rate of 11 percent or they are blissfully unaware of it.
Supremely confident City Hall has promoted Measure W with the same expectation of success of a father challenging a group of 3-year-olds to a round of tackle football.
Not a Priority
Meanwhile, the minds of the audience were focused on the candidates rather than on the utility users’ tax.
What Enthusiasm?
Mr. Muir was received with the same enthusiasm that a man married 20 years welcomes his mother-in-law when she arrives for her annual 6-month visit.
An unavoidable obligation.
If the CFO was not greeted and treated with discernible vigor, neither did he encounter a shred of resistance.
“No one ever accosted me, and nobody has told me I am full it of,” he told the newspaper.
Dispassionately, Mr. Muir presented City Hall’s case — if Measure W, by some shocking development, is defeated, crucial public safety services will be jeopardized.
Even though it was the No. 1 City Hall talking point, not a single voter was overtly rattled, or even concerned, when the CFO presented the issue as starkly as he was capable.
Politicians on the left and the right are strongly campaigning for its passage even though Mr. Muir, at the vortex of the campaign, pleads neutrality.
“I am not taking a side,” he says. “I am just presenting information.”
Mr. Muir said that all of the estimated 150 California cities with a utility users’ tax have won voter approval of the language update or are in the process of doing so.
He said no community has been denied by voters.
Following is the city’s formal case for Measure W:
“A Utility Users’ Tax is a tax levied on each user of a utility (such as telephone, electricity, gas, water, or video services) within the city’s boundaries. The city’s rate is 11 percent of applicable charges, and it has been in force (at various rates) since the 1960s. Since then, communication technology has changed tremendously with the invention of cell phones, the internet, satellite communication and other communication media.
“Similar to many cities in California, Culver City’s UUT ordinance excluded from the tax base amounts paid for communication services that were “exempt from” or “not subject to” the Federal Excise Tax (FET). Prior to May 2006, the IRS had followed a policy of imposing the FET on telephone service charges based on either time or distance. Culver City did the same.
“ In May 2006, the IRS announced that, due to a number of legal challenges, it would no longer impose the FET on telephone charges unless those charges are based on both time and distance.
“Charges for many current telephone plans, especially cellular phone plans, are based on time only, not on time and distance.
“Since Culver City’s telephone UUT referenced the FET definition, there was concern about the impact of the IRS’ change in practice on the city’s practice of collecting UUT on telephone charges based on either time or distance.
“In response to the IRS’s change, the city amended its UUT ordinance on July 24, 2006, to clarify that it did not wish to adopt the IRS’s new practice, but rather wished to continue to impose the UUT as it had historically been imposed (for charges based on time or distance). Many other cities chose to protect their UUT revenue by adopting similar amendments.
“Submitting an ordinance for voter approval will allow the public to confirm this action and will also serve to modernize the language and include new communications technology within the tax base as they are developed in the future.
“On June 18, 2007, the City Council directed staff to move forward with the process of drafting an ordinance to modernize the current language of the communications portion of the UUT ordinance, hereafter referred to as Communications Users Tax, in order to preserve the city’s tax base from that tax.
“Over the past few months, lawsuits have been filed by telecommunications companies in a few jurisdictions challenging the ability of local governments to continue to apply their Communications Users Tax based on the former IRS approach without voter approval. As a result, many California cities are going to the voters to reaffirm the collection methodology, modernize their ordinances and ensure application of the tax on new or emerging technologies.
“Members of the City Attorney’s office, City Treasurer’s office, City Manager’s office and Budget & Finance have been meeting continuously since the IRS decision almost two years ago. This team has worked with legal counsel to draft a modernized ordinance.
“The definitions in the current Municipal Code are based upon the technology that existed at the time of the adoption of these definitions, more than 30 years ago. At that time, the primary medium for communication technology was the public switched network (land line technology). The current trend in communication technology has been away from the public switched network toward technologies that operate on different mediums.
“Modernizing the language in the ordinance will reaffirm the city’s intent to tax the communication technologies of the future, regardless of which medium is being used to deliver the communication services.
“Additionally, as telecommunication technology advances and competition between service providers increases, the cost of service is driven downward (cheaper calling packages and per minute charges). As costs decrease and taxpayers pay less for telecommunication services, the city’s tax revenues decrease accordingly. This loss of revenue is compounded by the trend away from the public switched network and toward broadband network communications. This has become increasingly apparent over the last few years as the revenues from the telecommunications portion of the UUT have steadily decreased. Modernizing the UUT language and including the city’s intent to tax emerging technology as it develops may offset some of the revenues that are lost as a result of decreasing consumer costs.
“Some important highlights of the proposed UUT ordinance include:
“The tax rate will remain unchanged at 11 percent.
“Existing exemptions, including those for income-eligible individuals 60 years of age or older, or disabled, will continue.
“Emerging technology is included within the tax base as it develops.
“It should be noted that if voters do not pass a modernized UUT measure, the existing UUT would remain in place and shall be preserved. However, if voters do not pass this measure, there could be some risk of legal challenges to the existing ordinance and Communications Users Tax revenues may continue to decrease.
“UUT revenue is the city’s second largest source of revenue, accounting for nearly 20 percent of total General Fund revenues. The Communications Users Tax alone accounts for nearly 7 percent of total General Fund revenues.”