PURPOSE

Staff requests that City Council adopt an ordinance to amend Article 11 of Chapter 14 of the Burbank Municipal Code (BMC) pertaining to the City�s Utility Users Tax (UUT) to:

1. Update and clarify the definition of telecommunication services.

2. Update and clarify provisions for administration and collection of the UUT.

3. Reorganize Article 11 into a more logical format.

BACKGROUND

Under Article 11 of Chapter 14 of the Burbank Municipal Code (the UUT Ordinance), the City imposes a tax on the users of certain utility services including telephone, electricity, and gas.   

In Burbank, the Utility Users Tax (UUT) is a very important General Fund revenue source and represents approximately 14% of the total revenue collected for Fiscal Year 2002/2003. The UUT is one of the few revenue sources over which the City has exclusive control over the use of the revenues generated. The revenues generated from this tax help to fund many municipal services in the General Fund, such as Police, Fire, Parks & Recreation, and Libraries.

With society�s rapid technological growth, the current UUT Ordinance does not reflect the ongoing changes in the telecommunications services industry. An amendment to the current Ordinance is necessary to update and clarify the definition of telecommunication services. Clarification is also necessary to provide guidance on the UUT application to future telecommunication services.

ANALYSIS

Amendments to the UUT Ordinance are necessary to update and clarify provisions for administration and collection of the tax. Staff worked with the City Attorney�s office and the City�s UUT consultant, MBIA MuniServices, on the revisions to the Ordinance which include:

• In Section 14-1101, a new definition for �Mobile Telecommunications Service� and a more detailed definition of �Telephone Communication Services� are added, and the terms Intrastate, Interstate and International Telecommunications Services are deleted.

• Under the Telephone Users Tax (Section 14-1102 subsection (a)), the revised Ordinance defines who is subject to taxation in regards to mobile telecommunications services.   

• Under Section 14-1102 sub-section (d), �administrative ruling� is clarified and defined.

• Under Section 14-1104, Gas User�s Tax, �public utilities� are renamed to �gas corporations.�

• Section 14-1106 has been added in regards to substantial nexus/bundling. Some telecommunication providers will bundle several separate charges into one component for marketing purposes. Although certain companies will offer its customers packaged or �bundled� services for convenience, the City should still be able to collect taxes on certain services.   

• Section 14-1107 has been revised to provide exemptions required by statutory law in addition to those required by constitutional law.  

• Section 14-1114 provides for the administrative determination and assessment of a tax deficiency, including the imposition of penalties. It is a consolidation of similar provisions found in two sections of the current ordinance into one section.

• The following sections have been added to the Ordinance as well:

1. Section 14-1122 � Remedies Cumulative. This is new language that merely preserves to the City the right to use all available remedies at its disposal for a failure to collect the tax and other violations of the ordinance.

2. Section 14-1125 � Penalties. Though not strictly necessary, this new provision specifies that a violation of the ordinance is a misdemeanor, unless filed as an infraction by the City Attorney�s Office.

3. Section 14-1126 � Future Amendment or Recodification of Cited Statute or Regulation. There are several references to state and federal statutes in the revised ordinance, and this section deems future changes in those statutes to be incorporated into the City�s ordinance, thereby eliminating the need to amend the ordinance every time there is a change in state or federal law.

It is also desirable to reorganize and renumber various sections of Article 11 in order to have a more logical format. Due to the addition of the sections described above, previous sections have been renumbered and moved around to be more understandable.

These clarifying amendments neither increase the UUT or expand the existing tax base and therefore do not require voter approval under Proposition 218.

FISCAL IMPACT

There would be no fiscal impact to the City since this in only a change to the language within the Burbank Municipal Code.

RECOMMENDATION

Staff recommends that City Council introduce the proposed ordinance entitled: AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK AMEDING ARTICLE 11 OF CHAPTER 14 OF THE BURBANK MUNICIPAL CODE PERTAINING TO THE CITY�S UTILITY USER TAX ORDINANCE.  

Derek Hanway

DH:SL

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