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Sunnyvale Moves to Decrease Electric Utility Users Tax
Sunnyvale, CA -- At its March 6th meeting, the Sunnyvale City Council voted unanimously for an ordinance changing the Municipal Code to reduce the Utility Users Tax (UUT) for residential and small commercial customers from 2.3% to 2.0%. Final action on the change will be taken at the March 20th meeting.
In 1997, to address the uncertainty regarding deregulation, Council placed on the ballot, and the voters approved, Measures K and L that allow incremental increases in the UUT rates to offset revenue losses due to deregulation. The legislation implementing deregulation prescribed that electric rates would be reduced by approximately 30 percent over a period of six years. The first decrease was scheduled to be a 10 percent reduction for residential and small commercial ratepayers in 1998. It was projected that another 10 percent drop would occur in 2002 and again in 2008 for residential and small commercial customers. Large commercial customers were slated for a 30 percent decrease in 2002. Because the City’s UUT is a percent of the total dollar amount of a customer’s electricity bill, the decrease was expected to substantially effect the City’s revenue stream. Revenues from the UUT go directly into the General Fund to help pay for police services, fire services, library services, street repair and other core City Services.
As anticipated, the first phase of statewide electric deregulation occurred on January 1, 1998. Residential and small commercial electric rates were reduced by 10 percent. In July of 2000, to address the impacts of deregulation on the City’s revenue stream the City Council authorized an increase of the UUT for residential and small commercial customers from 2.0% to 2.33%. However, recent turmoil in the electricity market has indicated that electricity rate increases will occur instead of scheduled decreases. Therefore, the City Council moved last night to undo its action of July 2000.
"Our goal has always been not to increase or decrease our revenue base, but to maintain it. Given the current state of the electricity market, the previously authorized .33% increase was no longer needed, so, in keeping with the spirit of the ballot measures, we wanted to lower the rate for our customers," said Mary Bradley, Director of Finance.
Sunnyvale’s Utility User Tax is significantly lower than the statewide average of 6%.
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