Voters in Portola Valley overwhelmingly approved Measure F to lower to 4.5 percent the 5.5 percent utility tax levied on residential and commercial electricity, gas, water and telephone bills.
The new rate goes into effect Feb. 1, 2007, but returns to 5.5 percent July 1, 2010, unless the council offers another rate in a ballot measure in the November 2009 election.
The election count as of Nov. 13 shows 1,517 votes, or 86 percent, in favor of the measure, and 245, or 14 percent, opposed.
The measure’s passage does not affect the town’s 2 percent utility tax that sequesters funds for the purchase of open space.
The new tax rate will lower the town’s revenues by about $57,000 for the second half of the 2006-07 budget year, said Administrative Services Officer Stacie Nerdahl. “It will not cause us to perform poorly against our budget because we had already factored that in,” she added.
In the 2005-06 budget year, the town took in about $642,000 from the 5.5 percent utility tax. Considering the new 4.5 percent rate and a likely 5 percent annual increase in utility tax revenues, the take in 2007-08 would be around $540,000, Ms. Nerdahl said.
The idea of lowering the 5.5 percent tax arose last winter, shortly after the Town Council learned that the county would be boosting Portola Valley’s annual property tax revenues by about $400,000 in keeping with a 1988 state law that the county had been ignoring for 17 years.
Cell-phone tax
The fate of the utility tax on cell phone calls by Portola Valley residents had been settled in July, when the council authorized Town Administrator Angela Howard to tell cell-phone companies to stop collecting utility taxes for calls made on national calling plans.The decision lowered the town’s tax revenues by about $45,000 for 2006-07, a figure that would apply for 2007-08 as well, Ms. Howard said.
Council members said they took this step to be fair to residents who receive cell-phone services from companies other than Verizon Wireless. Verizon does not collect the tax and is in court with the city of Palo Alto, which sued the company to force it to collect the Palo Alto utility tax.
Portola Valley council members said they thought Verizon would win the argument in court, but in a recent settlement Verizon may have agreed to begin collecting the tax in Palo Alto.
Asked if the council might reverse itself and reinstate the tax on cell phones, Councilman Ed Davis, the liaison to the town’s Finance Committee, said he didn’t know what his council colleagues might say but that his own view is to let the decision stand.
