 |
|
|
|
|
Sunnyvale increases electricity usage tax
Officials say new rate necessary to prevent revenue shortfall
By Daniel Hindin
Sunnyvale City Council unanimously approved last Tuesday a .33 percent increase in the city's Utility User's Tax on electricity.
Mary Bradley, the city's Director of Finance, was on hand to give a full presentation on the tax. She was joined at the podium by Bob Reynolds of Reynolds Associates, the group hired to research and analyze Sunnyvale's electricity use data dating back to 1996.
Bradley was quick to note the tax was actually approved by voters in November 1997, as part of ballot measures K and L. The user's tax will be increased from the current rate of 2 percent to 2.33 percent. The increase in taxes comes in the wake of the state's fall 1996 decision to deregulate the electric power industry.
The deregulation of electric power, Bradley said, led to three 10 percent rate decreases for residential and small commercial users. The first decrease occurred in 1998. The second decrease is slated for 2002, and the third will happen in 2008. Bradley said the biggest impact will occur in 2002, when the large commercial (maximum peak demand over 20 kilowatts) users get their one-time decrease of 30 percent.
Although the tax increase was approved almost three years ago, council members opted after an April 1998 public hearing not to enforce the increase until they had researched the effects of the 10 percent decrease.
Reynolds Associates analyzed volumes of data to assess the impact of the 10 percent decrease on the city. Reynolds analyzed the city's revenue from electric taxes, the amount of utility users, and whether or not the rate decrease affected how much electricity was used in Sunnyvale.
Reynolds concluded that the real rate decrease for Sunnyvale homeowners actually came out to 9.95 percent. People still used the same amount of power they always had, researchers concluded. Therefore, Bradley adamantly emphasized, once the 10 percent decrease in rates and the .33 percent increase in tax rates are figured together, residents will actually pay roughly the same amount for their electricity that they previously paid.
Bradley asserts that without the tax increase, Sunnyvale would actually be losing revenue.
"In 20 years," she says, "the total loss of revenue will be $11 million. This is not a problem yet, but we need to take proactive steps now before it does become a major problem."
Bradley also notes that the increase represented the first of several future increases. She says that for every 10 percent decrease in electricity rates, the city must react with a .33 percent tax increase up to a total of 3 percent. She emphasizes that, "the average Northern California Utility Users Tax is 3.6 percent."
|
|
|
|
Sunnyvale, California Since 1994
