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Smart Voter
Los Angeles County, CA April 13, 2010 Election
Measure ElSegundo-M
Telecommunications Tax
City of El Segundo

Ordinance - Majority Approval Required
Final Results

Pass: 1570 / 70.8% Yes votes ...... 647 / 29.2% No votes

See Also: Index of all Measures

Information shown below: Impartial Analysis | Arguments |

Shall the ordinance amending El Segundo Municipal Code Chapter 3-7 that imposes a Utility User Tax on non-residential users in the City by updating and replacing the telephone tax regulations with modern communication services tax regulations be adopted?

Impartial Analysis from City Attorney Mark Hensley
Measure M proposes adopting an ordinance that would amend the existing telephone utility user tax with an updated communications tax.

The utility users tax (or "UUT") was first adopted in 1988. It is imposed on commercial and industrial service users of electricity, water, telephone, and gas. Measure M would only affect the telephone tax of the UUT; it does not affect the existing UUT applied to electrical, gas and water services.

Significant technological advances since 1988 rendered the telephone tax less effective in taxing technology that replaced the telephone; the tax is not imposed on communication services and devices that have increased in usage since 1988. Unless precluded by federal statute, Measure M would update the existing UUT to apply the telephone tax to all types of communication and video services. A federal statute currently prohibits local taxation of internet and broadband services providing access to the internet. Measure M would not apply to digital downloads such as music, games and ringtones.

Currently, the rate for the telephone tax is 2%. Revenues from this telephone tax + approximately $530,000 in 2008-2009 + can only be used for the City's general governmental purposes. The tax cannot be increased in the future without voter approval.

Several federal court decisions in other states make it unclear whether the telephone tax, as currently written, can be imposed on long distance, cellular and bundled telephone services. Several California cities with taxes similar to El Segundo's are currently litigating this issue. Should California courts determine that telephone taxes are inapplicable to those services, the telephone tax revenues would be reduced. Adopting Measure M would protect the City from an adverse outcome in any such litigation.

To be adopted, Measure M must be approved by a simple majority of the voters in the city of El Segundo.

A "yes" vote on Measure M favors the Measure.

A "no" vote on Measure M opposes the Measure.

  Official Information

City of El Segundo
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Arguments For Measure ElSegundo-M
Your entire city council supports Measure M and we urge you to vote YES on it.

Residents of El Segundo are NOT subject to this tax and would NOT be taxed if this measure passes.

Measure M would bring our utility users tax (UUT), which applies only to businesses, up to date to comply with technology developments and changes in Federal law.

The City of El Segundo charges businesses a 2% UUT on their telecommunications bills. The city currently gets about $500,000 per year from this tax.

Measure M would increase the amount that the city gets from this tax without raising tax rates. The rate would stay at 2%.

Changes are needed in our law because advances in technology and changes in Federal law have made our city's UUT law out of date.

That means that the city is losing out on potential revenue from new telecommunication services, such as cell phones.

Measure M would also bring our law in line with new developments in Federal law, which, by example, prohibit cities from taxing services like Internet access and music downloads.

All five members of the city council support this measure. We have each signed this argument in favor of Measure M in order to modernize our local tax law without raising tax rates and without taxing residents in any way. The voters in at least 50 other California cities have adopted similar changes to their own tax laws for the same reasons.

We urge you to vote YES on Measure M to help insure the financial health of El Segundo. Thank you for your support of this important change to our law.

/s/ Mayor Kelly McDowell
/s/ Mayor Pro Tem Eric Busch
/s/ Councilman Carl Jacobson
/s/ Councilman Bill Fisher
/s/ Councilman Dr. Don Brann

(No arguments against Measure ElSegundo-M were submitted)

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