SR-212-005 (11)
FD:RB:f:\finance\treas\share\uut rebate 2
City Council Meeting: July 24, 2001 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution Granting a Temporary Utility Users Tax Rebate and
Authorization for the Tax Administrator Authority to Administratively Adjust
the Actual Rate Charged
Introduction
This report recommends that the City Council adopt the attached resolution to grant a
temporary Utility Users Tax (UUT) rebate and to authorize the Tax Administrator to
administratively adjust the actual amount charged by the service providers during the
rebate period.
Background
At the Council meeting of April 10, 2001, Council directed staff to evaluate the State
energy situation and return with options to mitigate the impact of increased energy costs
on residents and businesses. On May 8, 2001, Council approved the addition of
Section 6.72.180 (Temporary Utility User Rebates Due to Extraordinary Increases in
Utility Costs) to the SMMC. At the June 19, 2001 Council meeting, Council directed
staff to rebate 50%, or $1.4 million, of the then estimated $2.8 million in additional UUT
receipts, which were expected to result from extraordinary energy cost increases to
customers, and to monitor the situation during the fiscal year adjusting the rebate
amount accordingly.
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Discussion
To implement the Council’s directive in a timely manner, and without additional costs to
the City, staff determined the best method of rebating the $1.4 million is through a
reduction in the UUT amount paid by customers. The City’s UUT tax rate is not being
reduced, but the mechanics of the rebate will involve a temporary reduction in the factor
used by the service providers in calculating the UUT amount actually paid by
customers.
During discussions with various service providers, staff was advised that approximately
60 days lead-time is necessary to make changes to customers’ bills. To allow service
providers sufficient time to make the necessary changes, an October 1, 2001 start date
is anticipated. Based on this start date, natural gas customers would be paying 24%
and electricity customers would be paying 12% less in UUT than they would normally be
paying with the application of the City’s 10% rate. The reduction equates to an average
monthly decrease of $2.50 for all customers, or $1.05 and $8.51 for residents and
commercial users, respectfully. This will allow the full year estimated amount of $1.4
million to be rebated in FY01/02.
Where possible, in the message area of the utility bills, appropriate language will be
included to advise customers of the temporary rebate and to inform them that the City’s
UUT rate has not been reduced.
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Recent information on natural gas prices and electricity usage conservation measures
by California residents strongly suggests that the rebate amount may be less than the
$1.4 million previously estimated. Staff will closely monitor actual UUT receipts from the
service providers to determine if these factors should be revised and will advise Council
of any adjustments, if they are needed, by December 2001. The Tax Administrator
(Director of Finance) will make revisions as appropriate.
Budget/Financial Impact
Funds of $1,406,000 to implement the rebate are available in the account
01274.566010.
Recommendation
Staff recommends that the City Council:
1) Adopt the attached resolution granting a temporary UUT rebate.
2) Grant the Tax Administrator (Director of Finance) the authority to
administratively adjust the amount charged by service providers during the
rebate period, as appropriate.
Prepared By: Mike Dennis, Director of Finance
Ralph Bursey, City Treasurer/Revenue Manager
David Carr, Assistant City Treasurer
Attachment: Resolution
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