Utility Users Tax Q & A

MEASURE C _ on the March 26, 1996 Ballot

We have been requested, by a citizen, to put our "general information" flyer regarding this matter on the Net. The full text of the information sheet follows: Questions regarding Measure C should be direct to 354_6834. Full text of the Ordinance, the Ballot Measure, Attorney's Impartial Analysis, as well as the argument for and against, are on file in the Town Clerk's Office.(LG_Town_Clerk@Vval.com)

MEASURE C: UTILITY USERS TAX

QUESTIONS AND ANSWERS

INFORMATION SHEET

The utility users tax would be a 2% tax on the following utility charges: gas, electricity, cable television, water and telephone.

For the past two years, the Town has projected a budget shortfall ranging from $500,000 in the 1995_96 budget to $1 million by the end of the century. The major reason for this shortfall is that the State is now taking revenues from local communities which have historically been used to fund local services. Over the past four years, the Town has responded to this fiscal crisis by consolidating departments, reducing staff, and streamlining service delivery. This year, however, the Town reached the point where it had to either raise revenues or cut services. Through a series of community forums, citizens spoke strongly against cutting Town services. After the Town Council approved a utility users tax ordinance this past summer, the California Supreme Court in an unrelated case ruled that new taxes require a public vote. Upon that ruling, the Town Council stopped implementation of the tax and set March 26, 1996 as the date for a public vote on the utility users tax question.

No. The State could repeal the authority to collect the tax, but it could not take away the tax money collected.

Yes. It was citizens who suggested that the Town consider a utility users tax. Six community forums were conducted between July and September of 1994 where the Town's financial future was presented and public comments were obtained. In addition, the Council received public comments on May 15, 1995, June 19, 1995, and July 17, 1995. It was the consensus at the community forums that the utility users tax is the preferred method of raising additional funds until future economic development revenues close the gap.

Yes if the tax is adopted. The Town Council has public hearings scheduled on May 13, May 28, May 29, and June 3, 1996, to decide how the money will be spent in the Town's budget.

Any person or legal entity using utility services in the Town of Los Gatos who is responsible for paying for those utility services.

The tax will sunset in 5 years. This means that the tax automatically expires on June 1, 2001.

Yes. You may be exempt if your gross annual household income is less than $26,300. If you think you qualify, you will need to file an application for the annual exemption with the Town Manager's Office.

If you are a licensed business user, your total annual tax is limited to $5,000 per utility.

The tax will be collected by the suppliers of the various utility services (e.g., PG&E, GTE, Southbay Cable, San Jose Water Company, etc.) and remitted to the Town.

The Town estimates that the tax will raise approximately $800,000 per year.

The revenue will be used to fund the Town's general operations and services and capital improvements. The revenues will go into the Town's General Fund which finances such services as street repair, police, library, planning, sewer maintenance, and parks.

Yes. Many other cities in the Bay Area have a utility users tax. San Jose, for example, imposes a 5% utility users tax. Other communities in the area with similar taxes include Cupertino, Gilroy, Los Altos, Mountain View, Palo Alto, Saratoga and Sunnyvale.

The average rate for the 8 local communities that currently have a utility users tax is over 3.5%. All of these communities have the same or higher rates than Los Gatos would have. Sunnyvale has a 2% rate; Cupertino a 2.4% rate; Mountain View has a 3% rate; Los Altos and Saratoga have a 3.5% rate; and San Jose, Palo Alto and Gilroy have a 5% rate.

For a household with a gas and electric bill of $100 per month, the tax will be $2.00 per month. For a household with a cable television bill of $25 per month, the tax will be $.50 per month.

No. Non_payment of the tax will not affect your utility service.

The Town will bill for any delinquent taxes and will impose a 10% penalty on the amount of tax due for each month the tax is delinquent. An interest charge of 1% per month accruing from the date on which the tax first became delinquent, plus a $10 collection charge for each account delinquent, will also be imposed.

Copies of recent Town Budgets and Annual Financial Reports are available for review at Town Hall in the Town Clerk's Office and at the Public Library.

More information can be obtained about the Town's Budget by calling Town Hall at 354_6832.

NOTE: THESE ARE GENERAL ANSWERS. READERS MAY WISH TO REFER TO THE ORDINANCE FOR ADDITIONAL INFORMATION. COPIES OF THE ORDINANCE ARE AVAILABLE FOR REVIEW AT THE TOWN CLERK'S OFFICE AND THE TOWN LIBRARY