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oO'V o• Q\ EL CERRITO AGENDA BILL Agenda Item No. 4(8) Date: May 20,2014 To: El Cerrito City Council From: Lori Trevino, Senior Financial Analyst Lisa Malek-Zadeh, Finance Director/City Treasurer Subject: Utility Users Tax Presentation ACTION REQUESTED Receive a presentation from the City Attorney and Finance staff regarding the City's Utility Users Tax. BACKGROUND/ANALYSIS On November 2, 2004, the voters approved revisions to the Utility Users Excise Tax (UUT), Chapter 4.40 of the El Cerrito Municipal Code. The ordinance was revised by the City Council in March 2007 to clarify the definition of "telephone communications services" in the ordinance, as it related to the application of federal excise taxes on communications services, but did not affect the method of calculating the UUT. Services subject to the 8% UUT include electricity, gas, water, video, and wired and wireless telephone. Taxes are collected by utility service providers from their customers and then remitted to the City on a basis. Due to an unexpected decline in UUT revenues in FY 2012-13, City staff have been reviewing remittances for discrepancies and researching the possible reasons for the decline. During the March 2014 mid-year budget review, there were numerous questions about the UUT. The presentation this evening will provide an overview of the UUT ordinance, UUT revenues, changes in legal and economic conditions related to the UUT since it was revised in 2004, and what the City can do to address revenue declines and fluctuations.