The staff report for Item 3 on Tuesday night’s City Council Agenda includes a recommendation by the UUT Oversight Committee that the Council increase the UUT rate to 12%. The Oversight Committee voted 3 to 2 to make that recommendation. According to the staff report, the recommendations state that for the fiscal year ending June 30, 2011, staff has estimated the UUT revenue will be greater than the base year (2008) revenue by $1,332,939, while public safety expenses for 2011 will be greater than the base year by $2,192,299. Therefore the increase in public safety expenses for the year ending June 30, 2011 over the base year 2008 exceeds the increase in UUT revenue for the same period by $859,360.
Council could have increased the rate to 12% in 2010, but decided not to because there was savings in the PD and FD that totaled $400,000, and money that was budgeted but not spent. There is a Sunset Clause in Measure U that states that the UUT must go back to 10% in June of 2014, 8% in 2015, and the original 6% in 2016. This clause means the Council needs to plan for the loss of revenue by either cutting city services or finding a new source of revenue. One possibility for a new source of revenue would be to place the UUT back before the voters to extend it.
To read the staff report for this item, click here.