Answers to Queries on Utility Measure

Answers to Queries on Utility Measure

 

At its July 5 meeting, the City Council voted to place the Utility Modernization Act on the November ballot. This measure maintains funding for critical city services. This is an important decision for the city of Alameda, so here are the answers to some key questions voters should consider. 

  • Why is modernizing necessary? Modernizing is necessary to protect funding for city services like police and fire, streets and parks and more. We all pay an existing utility users tax on four things: electricity, gas, cable and telecommunications. However, because this tax has not been updated since 1970, some cell phone companies are collecting the tax and some are not. Taxes should be applied fairly and equally. When two customers with similar services but different providers are paying different taxes, that’s not fair and equal. This “modernization” clarifies that cell phones are included under telecommunications, so companies collect this tax correctly.

It is common for municipal utilities to help pay for essential city services such as public safety, roads, parks and libraries. An annual payment from Alameda Municipal Power (AMP) to the city has taken place for more than 100 years, and that revenue is part of the city’s budget. This measure asks voters to confirm this existing payment. It will not increase electric bills, as it is already factored into the rate structure. 

  • Will you tax the Internet? No. Federal law prohibits all local taxes on Internet access, whether by broadband, DSL, Wi-Fi, WiMAX, or Wireless Mesh. It also prohibits taxing satellite television. To get more information about this federal ban on Internet taxes, Google the “Permanent Internet Tax Freedom Act. President Barack Obama signed this into law on Feb. 24. The act permanently extends a 1998 law that bans taxing Internet services.
  • n Does this measure increase tax rates? No. Voters are being asked to confirm the existing payment from AMP to the city, maintaining a practice that has been in place for more than a century so the city’s most vital services are not at risk of being cut. This measure does not change the Utility Users Tax rate, which has been 7.5 percent for the last 21 years. 
  • Does this measure expand services that are taxed? No. This measure simply preserves existing city services. Because technologies have been changing so rapidly, each year the city receives less and less revenues from the outdated utility users’ tax. If this measure passes, it returns revenues to what they were in 2007. 
  • n What if the measure does not pass? If the Utility Modernization Act does not pass, Alameda will face significant cuts to the city’s essential services, including police, fire, emergency response, parks and recreation, street and sidewalk repair, libraries, and other services provided by and for the city.

Detailed information about the measure is online at www.
alamedaca.gov. Email me at shenry@alamedaca.gov or call 747-4714 if you have any questions or concerns. We want to ensure you have all the facts come Election Day.

 

 

Sarah Henry is the Public Information Officer at the city of Alameda. She can be reached at shenry@alamedaca.gov.