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Staff Report ;.1 )\\ City Hall 10300 Torre A venue Cupertino, CA 95014-3255 Telephone: (408) 777-3223 FAX: (408) 777-3366 kimberlys@cupertino.org CITY OF CUPEIQ1NO OFFICE OF THE CITY CLERK SUMMARY Agenda Item No. _ Meeting Date: November 19, 2001 SUBJECT AND ISSUE Preparation of arguments/rebuttals for the March 2002 election regarding the extension of the utility users excise tax. BACKGROUND On October 15,2001, City Council enacted Ordinance No. 1888, which extended the utility tax for a period of fifteen years and ordered the submission of a proposition to the electorate of the city on this matter. The election will be held on Tuesday, Mar 5, 2002. The deadline for filing arguments in the City Clerk's Office is 5 p.m. on Wednesday, Dec. 5. The deadline for rebuttals is 5 p.m. on Friday, December 14. These deadlines will be noticed in the San Jose Mercury News and the Cupertino Courier next week. "Utility Tax Initiative. Residents currently pay a 2.4% tax on uti lily use, specifically electric, gas and telephone. Shall the City of Cupertino extend the existing utility tax which will otherwise terminate in 2015 for an additional 15 years to 2030, for general city services and programs?" The City Attorney has prepared an impartial analysis of the measure, which will appear in the voter's pamphlet. The measure wording and impartial analysis are attached. RECOMMENDATION: Consider preparation of an argument in favor of the utility tax extension. Submitted by: Approved for submission: K~)~ City Clerk ,~w David W. Knapp City Manager Printed on Recycled Paper ATTACHMENT A Cupertino Measure_ Utility Tax Initiative. Residents currently pay a 2.4% tax on utility use, specifically electric, gas and telephone. Shall the City of Cupertino extend the existing utility tax which will otherwise tenninate in 2015 for an additional 15 years to 2030, for general city services and programs? Impartial Analysis Initiative Measure to Be Submitted Directly to the Voters On November 6, 1990, Cupertino voters approved the enactment of an ordinance which imposed upon the users of electricity, gas and telephone utilities a general excise tax of 2.40% of the monthly bills for said utility services (subject to an exemption for senior citizens). The purpose of this tax was to enable the City, through its general fund, to acquire and preserve various properties within the City (including Blackberry Fann) for open space and park services. Upon enactment of the tax measure in 1990, the City, through the issuance of new debt, was able to raise sufficient money to allow it to accomplish the above-described goals. The original debt issued by the City is scheduled to be retired in 2015. The 1990 tax measure provided that the utility users tax would also cease in 2015, unless extended by the voters. The City Council of the City of Cupertino has identified public interest and support for new public works projects (the most expensive of which is the construction of a new public library). The City's Director of Finance has infonned the City Council that the City's general fund will be unable to finance many of these new projects (including the library) without additional sources of revenue. If this measure were adopted, the City would be in the position to raise approximately $5,000,000 (through a combination of issuing new debt and refinancing of the existing debt) to be used by the general fund to defray some ofthe costs of these new projects. This measure would not increase the current utility users tax, but it would extend the existing tax for an additional 15 years from 2015 to 2030. The current senior citizen exemption would be maintained. Charles Kilian Cupertino City Attorney The above statement is an impartial analysis of Ordinance No. 1888'. If you desire a copy of the ordinance or measure, please call the Cupertino City Clerk's Office at (408) 777-3223 and a copy . will be mailed at no cost to you.