5,873 / 65.6% Yes votes ...... 3,079 / 34.4% No votes

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In the early 1990's the Legislature balanced the State budget by taking property taxes away from cities and counties. From 1991 through 2001, the State took $5,980,656 in property taxes from Pacifica. To partially replace this revenue, the City increased the annual ceiling on utility taxes paid by businesses in the City. No change was made to the utility tax paid by City residents. The increased ceiling on business utility taxes contributes approximately $165,000 per year to the City's General Fund, which pays for general City services, primarily police and fire services.

Measure. The measure would validate and readopt the 1991 ordinance mentioned above, as well as a 1993 ordinance which reaffirmed that earlier action, and validate taxes previously collected under that ordinance. The measure could protect the City from refund claims from businesses based on arguments that the recent court decisions upholding Proposition 62 should retroactively invalidate taxes imposed before that court decision was made. The ordinance authorizes the City Council to repeal or reduce the utility users tax or to amend the ordinance in other ways that do not increase tax rates. However, any tax increase would require voter approval.

/s/ Cecilia Quick
City Attorney

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For information about the City of Pacifica

• Will NOT cause any additional revenue to be raised.
• Gives necessary approval of the cap on businesses.
• Retains the cap that has been on for 11 years!
• Keeps generating over $100,000 in needed revenue!
• Helps business pay their fair share to support police, fire and city services.

/s/ Calvin Hinton
Councilmember

/s/ Pete DeJarnatt
Councilmember

AN ORDINANCE OF THE CITY OF PACIFICA VALIDATING AND RE-ENACTING CERTAIN AMENDMENTS TO THE CITY'S UTILITY USERS TAX

THE PEOPLE OF THE CITY OF PACIFICA DO ORDAIN AS FOLLOWS:

Section 1. Validation of Existing Ordinance. Ordinance Nos. 570-C.S. and 601-C.S. of the City of Pacifica, which increased the ceiling on utility users tax paid by businesses in the City from $175 to $500 per year, are hereby validated and re-approved or approved to the fullest extent permitted by law.

Section 2. Readoption of Existing Ordinance. Ordinance Nos. 570-C.S. and 601-C.S. of the City of Pacifica are hereby re-enacted.

Section 3. Amendment or Repeal. Section 3-11.08 of the Pacifica Municipal Code amended by Sections 1 and 2 of this Ordinance may be repealed or amended by the City Council without a vote of the people except as follows: as required by Propositions 62 and 218, any amendment to Section 3-11.08 that increases the amount of tax beyond the levels authorized by this Ordinance may not take effect unless approved by a vote of the people.

Section 4. Findings. The people of the City of Pacifica find as follows:

(a) On June 10, 1991, the City Council adopted Ordinance No. 570-C.S. to increase the ceiling on utility users taxes payable by businesses from $175 to $500 per year. On February 22, 1993 the City Council adopted Ordinance No. 601-C.S. to reaffirm that increase. In the early 1990's the Legislature balanced the State budget by taking property taxes away from cities. From 1991 through 1997, the State took $3,035,400 in property taxes from Pacifica. The portion of the utility users tax paid by businesses by virtue of the increase in the annual tax ceiling contributes to the City's General Fund and is used to pay for general City services, primarily police and fire services.

(b) In 1986 the State's voters approved Proposition 62 to require voter approval of local general taxes. The City Council did not seek voter approval of Ordinance Nos. 570-C.S. and 601-C.S. because a number of appeals courts, including the court which ruled in the case of City of Woodlake v. Logan, 230 Cal.App.3d 1058 (1991), had previously decided that Proposition 62's requirement that general taxes be submitted to a referendum violated the California Constitution and was therefore unenforceable. On December 14, 1995, the California Supreme Court disapproved the Woodlake decision in the case of Santa Clara County Local Transportation Authority v. Guardino, 11 Cal.4th 220 (1995). On June 4, 2001, that Court decided Howard Jarvis Taxpayers Association v. City of La Habra, 26 Cal.4th 236 (2001), which further suggested that the City should seek voter approval of Ordinance Nos. 570-C.S. and 601-C.S. The City Council thereafter proposed this Ordinance to the voters to validate the ordinances.

(c) Following terrorist attacks against the United States on September 11, 2001, all governmental units, including the City, have incurred increased demands for police, fire and other emergency services. The utility users tax on business provides a substantial portion of the City's General Fund and is used to pay for general City services, primarily police and fire services. In addition, the slowing state and national economy, together with the effects of the energy crisis, have placed the state in a fiscal deficit, a deficit that will likely lead to further reductions in state funding for City services. Maintaining the current level of the utility users tax payable by businesses is required to assist the City in maintaining general governmental services to the community in light of these fiscal threats.

(d) This Ordinance was proposed by the City Council of the City of Pacifica by the adoption of Resolution No. 31-02 by the affirmative votes of not less than four of its five members as required by Government Code Section 53724(b).

Section 5. Intent. Section 1 of this Ordinance is intended to authorize the continued collection of the utility users tax, to validate the amendment of that tax, and to validate taxes previously collected pursuant to Ordinance Nos. 570-C.S. and 601-C.S. Section 2 of this Ordinance is intended to re-enact Ordinance Nos. 570-C.S. and 601-C.S. to authorize future collection of the tax on businesses up to an annual ceiling of $500 in the event it is determined that Section 1 is not sufficient to do so.

Section 6. Effective Date. This ordinance shall take effect ten days after the result of election is declared by the City Council of the City of Pacifica.

Section 7. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance or Ordinance Nos. 570-C.S. and 601-C.S. validated or reenacted by it, is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining portions of this Ordinance and Ordinance Nos. 570-C.S. and 601-C.S. shall nonetheless remain in full force and effect. The City Council hereby declares that it would have adopted each section, subsection, sentence, clause, phrase, or portion of this Ordinance and Ordinance Nos. 570-C.S. and 601-C.S., irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions of this Ordinance and Ordinance Nos. 570-C.S. and 601-C.S. be declared invalid or unenforceable.

Section 8. Execution. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.

Compiled by the City of Pacifica City Clerk Flo Derby