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HomeMy WebLinkAbout1996-084 Occupation Taxes .'h ORDINANCE. NO. 96 -84 AN ORDINANCE relating to occupation taxes on utilities; changing tax rates and tax bases; amending Sections 5.50 050 and 5.50 070 of the City of Yakima Municipal Code, and adding new Section 5.50 100 to the Municipal Code. WHEREAS, by Section 5.50 050 of the City of Yakima Municipal Code (the "Municipal Code ") the City of Yakima (the "City') has imposed certain taxes on the privilege of conducting electrical, telephone, gas and steam businesses in the City and has set the rates and other provisions of such taxes; and WHEREAS the City hereby finds and determines it is fair, equitable and appropriate to impose a tax on the privilege of conducting cellular telephone service businesses in the City; and WHEREAS, the City finds and declares it necessary to increase tax revenue; and WHEREAS, the City hereby finds and determines that it is in the best interest of the City and its inhabitants to amend Municipal Code Sections 5.50 050 and 5.50 070, and to add a new Municipal Code Section to impose a tax on the privilege of conducting cellular telephone service businesses and to increase revenues to the City from fees and taxes; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA. Section 1 Section 5.50 050 of the Municipal Code is hereby amended to read as follows. A. There are levied and shall be collected annual license fees or taxes against the persons on account of business activities and in the amounts to be determined by the application of the rates herein prescribed, as follows. 1 Commencing October 1, 1994, upon every person engaged in or carrying on the business of selling or furnishing electric light or power, a fee or tax equal to six percent of the total gross income derived from such business in the city of Yaluma. 2 - _ •:• vy Year Rate 1986 5.0% 1987 1.8% 1988 1.6% 1989 1.1% - Commencing July 1, 1989, upon every person engaged in carrying on a telephone business, a fee or tax equal to six percent of the total gross income derived from such business in the city of Yakima; provided, that such fee or tax be subject to the limitations prescribed by RCW 35.21 714, and provided, further, that the city shall suspend collection of any franchise fee on a telephone business in excess of the rates of fees and taxes permitted under RCW 35.21.870(2), which rates is six percent. - ace -asfellows+ Year Rate 1989 6.1% 1990 6.2% '99 thcrcaftcr 6.0% Total gross income for this purpose shall not include charges which are passed on to the subscribers by a telephone business pursuant to tariffs required by regulatory order to compensate for the cost to the telephone business of the tax imposed by the ordmance codified in this section. "Telephone business" as used herein means the business of providing access to a local telephone network, local telephone network switching service, toll service or coin telephone services, or providing telephonic, video, data or similar communication or transmission for hire, via a local telephone network, toll line or channel, or similar communication or transmission system. It includes cooperative or farmer line telephone companies or associations operating an exchange. "Telephone business" does not include the providing of "competitive telephone service" as_ defined herein below nor the providing of cable television service or cellular telephone service. "Competitive telephone service" as used herein means the providing by any person of telephone equipment, apparatus, or service, other than toll service, which is of a type which can be provided by persons that are not subject to regulation as telephone companies under RCW Title 80 and for which a separate charge is made. 3 Commencing January 1, 19911984, upon every person engaged m or carrying on the business of selling or furnishing natural gas for heat, -2- I power, light and other purposes, a fee or, tax equal to fo percent of the total gross income derived from such business in the city of Yakima_; = - - - • : : :. _ - - _ - - - - • - schedule: Year Rato 1986 5.0% 1987 1.8% 1988 1.6% 1989 1.1% 1990 1.2% 1991 and thorcaftcr 1.0% 4 Commencing January 1, 1985, upon every person engaged in or carrying on the business of selling or furnishing steam for heating or other commercial consumption, a fee or tax equal to five and eight - tenths percent of the total gross income derived from such business in the city of Yakima. 5. Commencing February 1, 1997, upon every person engaging in or carrying on the cellular telephone service business, a fee or tax, equal to six percent of the total gross income derived from conducting such business within the city of Yakima, as indicated , by. billings and/or charges to Yakima customers. "Cellular telephone service" as used herein means a two -way voice and data telephone/telecommunications system based in whole, or substantially in part, on wireless radio communications, and which is not subject to regulation by the Washington Utilities and Transportation Commission (WUTC). This includes cellular mobile service. The definition of cellular mobile service includes other wireless radio communications services such as specialized mobile radio (SMR), personal communications services (PCS), and any other evolving wireless radio communications technology that accomplishes a purpose similar to cellular mobile service. "Cellular telephone service" as used herein also means service provided by means of an electronic device that has the ability to send or receive voice or digital messages transmitted through the local telephone network, via satellite, or any other form of voice or data transmission. B The minimum fee or tax on each such business activity shall not be less than two hundred fifty dollars per tax year -3- 'r D. Commcncing July 1, 1989, and continuing until December 31, 11 /1 ceiling or furnishing natural gas or soiling or furnishing ctoam to any ono E. Commencing January 1, 1991, tho ratcs of tax set forth in CP Commencing October 1, 1994, the rates of tax set forth in subsection A above shall be measured against a maximum of the first four thousand dollars of the total gross income attributable to selling or furnishing telephone services described in the definition of "telephone business" contained herein, selling or furnishing natural gas -, selling or furnishing steam, or selling or furnishing cellular telephone services described in the definition of "cellular telephone service" contained herein to any one customer m any one calendar month or fraction thereof. DC Commencing October 1, 1994, the first four percent of the tax set forth in subsection A above shall be measured against a maximum of the first four thousand dollars of the total gross income attributable to selling or furnishing electric light or power to any one customer m any one calendar month or fraction thereof; two percent of the tax set forth in subsection A above shall be measured against the total gross income attributable to selling or furnishing electric light or power (Ord. 94-46 § 1, 1994 Ord. 93 -105 § 1, 1993 Ord. 3263 § 4, 1990 Ord. 3163 § 1, 1989 Ord. 2807 § 1, 1984 Ord. 2717 § 1, 1983, Ord. 2653 § 1, 1982, 2449 § 1, 1980; Ord. 2343 1978, Ord. 2134 § 1, 1977, 1865 § 1, 1975 Ord. 1717 Ord. 2568 § 2, 1981 Ord. § 1, 1979; Ord. 2224 § 1, Ord. 2020 § 1, 1976. Ord. § 1, 1974 Ord. 1592 § 1, 1973, Ord. 1469 § 1, 1972, Ord. 1359 § 1, 1971, Ord. 1263 § 1, 1970; Ord. 1192 § 1, 1969; Ords. 1162 § 1, 1969. Ord. 1091 § 1, 1968 Ord. 1080 § 1, 1968 Ord. 974 § 1, 1967 Ord. 851 § 1, 1966 Ord. 786, 1966 Ord. 735, 1965 Ord. 582 § 1, 1964 Ord. 476, 1963 Ord. B -95 § 5, 1935). -4- i Section 2. New Section 5.50 100 is added to the Municipal Code, such new Section to read as follows. A. Service Address. Payments by a customer for the telephone service from telephones without a fixed location shall be allocated among taxing iurisdictions to the location of the customer's principal service address during the period for which the tax applies, regardless of the location of the facilities used to provide the service. The customer's "pnncipal service address" is, with respect to each telephone: (a) the customer's plant, store, office, or other facility where the telephone is normally assigned for use in conjunction with the customer's business activity: or (b) the customer's place of residence if the telephone is for personal use. B. Presumption. There is a presumption that the service address shown on the telephone service company's records is current. and accurate, unless the taxpayer has actual knowledge to the contrary. C. Roaming Phones. When the service is provided while a subscriber is roaming outside the subscriber's normal cellular network area, the gross income shall be assigned consistent with the taxpayer's accounting system to the location of the originating cell site of the call, or to the location of the originating cell site of the call, or to the location of the main cellular switching office that switched the call. D. Dispute Resolution. If there is a dispute between or among the City of Yakima and another city, or cities, as to the service address of a customer who is receiving cellular telephone services, and the dispute is not resolved by negotiation among the parties, then the dispute shall be resolved by the City and the other city or cities by submitting the issue for settlement to the Association of Washington Cities ( "AWC "). Once taxes on the disputed revenues have been paid to one of the contesting cities, the cellular telephone service company shall have no further liability with respect to additional taxes, penalties or interest on the disputed revenues so long as it promptly changes its billing records for future revenues to comport with the settlement facilitated by AWC. Section 3 This ordinance shall be effective thirty (30) days after its adoption and publication as provided by law PASSED BY THE CITY COUNCIL, signed and approved this 17th day of E, 1996 CITY OF YAKIMA, WASHINGTON By Y Mayor Lynn Buchanan 1 -5- f-_ ATTEST 6 �-- 7 `� sU l City Clerk Publication Date: 12/70/96 Effective Date: 01/19/97 1 110 -6- • CERTIFICATE I, the undersigned, clerk of the City of Yakima, Washington (the "City ") and keeper of the records of the City Council (hereinafter called the "Council ") DO HEREBY CERTIFY 1 That the attached ordinance is a true and correct copy of Ordinance No.`n? g bf the Council (hereinafter called the "Ordinance "), duly passed at a regular meeting thereof held on the 17th day of December , 1996 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given, that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been duly fulfilled, carved out and otherwise observed, and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this 17th day of Dec. , 1996. City Clerk -7- 1 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT III Item No 3 0 For the meeting of Dec. 17, 1996 ITEM TITLE. An Ordinance amending Sections 5.50.050 and 5.50.070 of the Yakima Municipal Code and adding a -w Section 5.50100 relating to Occupation Taxes on Utilities. SUBMITTED BY Director of Finance & Bu get i CONTACT PERSON /TELEPHONE. John R. Hanson, 575 -6070 SUMMARY EXPLANATION As a result of budget deliberations (see attached memorandum) the City Council authorized staff to prepare legislation to extend the City's utility tax on "telephone service" to cellular phone service. The attached ordinance provides the changes in the Municipal Code to eliminate the loop hole provided for users of wireless communication services. The definition of "cellular telephone services" in the ordinance includes not only cellular phones, but also services provided "by means" of an electronic device that has the ability to send or receive voice or digital messages transmitted through the local telephone network." This � eans that paging devices and any other wireless sending or receiving units would also fall under the definition of "cellular telephones services." Additionally, the ordinance makes housekeeping changes to eliminate dated language which is no longer in effect. The effective date for implementation of the tax is February 1, 1997 'Resolution _ Ordinance ZC Contract _ Other (Specify) Funding Source APPROVED FOR SUBMITTAL. \. ity Manager STAFF RECOMMENDATION Staff recommends passage of Ordinance. BOARD /COMMISSION RECOMMENDATION •OUNCIL ACTION Legal/BD 1 Agenda JH 4 MEMORANDUM November 15, 1996 TO: The Honorable Mayor and Members of the City Council FROM: Dick Zais, City Manager John Hanson, Director of Finance & Budget SUBJ: Supplemental Budget Information: Cellular Phone Tax Proposal In order to further assist you in the consideration of the cellular phone tax budget policy issue, following are the principal reasons this proposal is recommended for 1997 1) State Law 6211 is a new unfunded mandate which significantly impacts the City's court costs and potential incarceration costs for domestic violence cases. The municipal court option is designed to partially offset the impact of 6211 kul not entirely Alternative sentencing options such as home /day detention are intended to help contain some jail expenses. However, the potential cost of incarcerating 24 or more new domestic violence prisoners in the county jail in 1997 could reach $472,000 or more and is not currently budgeted. 2) The possible closure of the Wapato jail for failure to meet State standards would ® require the City to transfer approximately 24 prisoners to the County Jail at an additional cost impact of $263,000 above current payments and is not budgeted for 1997. 3) The City has not reached an agreement with Yakima County or the City of Wapato re jail costs for 1997. The final outcome of these negotiations could exceed current budget estimates for jail cost payments to the County or Wapato next year and require additional funding not currently in the budget. 4) Compliance with 6211 has dictated that either a municipal court or district court will cost significantly more than 1996 levels. For 1997, the City has budgeted a municipal court, and added prosecution and public defender services at approximately $1.3 million — nearly $462.000 greater than 1996 District Court levels Further, an orderly disengagement from the County District Court is planned, however, some fiscal impact contingencies may occur as the process continues. Revenues from Probation and Day /Home Detention proposals are projected to cover about 62% of this cost increase — but the balance will come from General Fund reserves next year, as well as in 1998. 5) The City has previously prepared a cost reduction contingency plan in General Government in 1995 Portions of this plan were implemented in 1996 to add nearly $400,000 to the Street budget to improve street maintenance without raising taxes. While other portions of the cost reduction plan could be considered for 1997 they are not recommended by staff at this time due to the negative HDB/naily 1 DZ r impact the reductions would have on other important general government services. We believe that revenues derived from the adoption of the 6% cellular tax would at least partially offset the cost of 6211 mandated impacts and would s be preferable to imposing other more stringent service reductions in gene government operations. 6) The 1997 City preliminary budget has maintained essential services and curtailed spending. Over the past several months in excess of $600,000 has been reduced or eliminated from the original General Government budget submittals. This is after Departments had complied with original budget guidelines. Additionally, a selective hiring freeze is now in effect throughout General Government departments. As noted in the Budget Forecast and Preliminary Budget the majority of increases in the '97 budget are the results of •increased, fixed mandated and contractual costs. We appreciate that other spending priorities could be made by the Council elsewhere in the budget to further curtail expenditures and reallocate existing resources to pay for 6211 costs. However, we feel that there are not enough "acceptable" cost reductions in other municipal services to offset all the potential 6211 impacts noted in this memo. 7) The potential fiscal impact of 6211 on incarceration of City Domestic Violence prisoners also necessitates that the City explore the possibility of expanding the City's minimum security detention facility to curtail future jail costs. Depending upon the outcome of other issues noted above, the cellular phone tax may also provide a possible funding source to help finance a possible expansion of the City facility in the future. 8) The 6% cellular tax also would level the playing field with other City telephon utility customers which are currently paying 6% for general utility taxes to the City Further, this tax is currently being collected by most other cities in the State as part of the normal utility tax rates. 9) The City has very limited local taxing authority to raise additional general purpose revenue. The cellular tax is an option, which may be enacted by the Council at any time for general government purposes. This is deemed to be the least "offensive" burdensome tax option which does not adversely impact essential telephone service or low income citizens of the community and offers a significant revenue addition to the General Fund. 10) The City's projected General Fund cash reserves for 1997 are at minimum levels to provide for cash flow purposes and AFSCME labor settlement costs. In view of the uncertain affects of 6211, we do not recommend any further allocation of these cash reserves for other purposes or spending proposals at this time. We trust this information is helpful in your consideration of this vital policy issue proposal. 4 1 0 HDB/Daily 2 DZ