Cell phone service is taxed, Pleasant Hill admits
By Lisa P. White
Contra Costa Times
Posted: 10/03/2010 12:00:00 AM PDT


PLEASANT HILL -- For months, Pleasant Hill has been telling residents the city charges a utility tax only on landline telephone service.

But city leaders acknowledged last week, and several residents' wireless bills prove, that cell phone service also is taxed.

A July 19 city staff report stated that Pleasant Hill levies the existing 1 percent utility tax on intrastate, landline phone service only. The 1983 ordinance, however, says the tax applies to intrastate telephone service.

"Not everybody is as familiar with the language of the ordinance as others, and somehow that got slipped in (the staff report) that it applied to landlines only, and that's not correct," City Attorney Debra Margolis said.

The city has spread the same incorrect utility tax information in other ways. The September-October issue of the Outlook city newsletter repeated the claim that, currently, only landline phone service is taxed. That information also appeared in two places on the Pleasant Hill website until city staff members corrected it about two weeks ago.

And Redevelopment Agency administrator Bob Stewart's statement during a July 19 presentation to the council shows some city staff members didn't know Pleasant Hill is collecting tax revenue on cell phone service.

"The advantages of the (utility users tax) include expanding it to treat all taxpayers equally," Stewart said July 19. "For example, those residents using only landline telephones are subject to the current (users tax), while those using mobile phones are not."

At that meeting, the City Council voted to place Measure T on the ballot. Measure T would raise the tax to 1.5 percent and expand it to most utilities, including cable, electricity, gas, water and sewer bills.

Questions about whether Pleasant Hill taxes cell phone service arose during a Sept. 22 election forum, when council candidate Jack Weir -- who opposes the tax hike -- asked the incumbents to explain why the city utility tax appeared on his AT&T Wireless bill.

Wireless companies have for many years interpreted older utility tax ordinances, such as Pleasant Hill's, to apply to cell phone service, said Verizon spokeswoman Heidi Flato. She could not say when the company started charging Pleasant Hill residents the utility tax, but she said it probably has been levied since the company was created in 2000.

Weir later said he was disappointed to learn the city had misinformed voters.

"They should be better about doing their homework. That's the root of this problem," Weir said. "This is just very sloppy staff work, pure and simple. They made a statement that is patently untrue."

According to Margolis and City Manager June Catalano, the estimates of the revenue the city collects now from the utility tax and the projections for future revenue, if voters approve Measure T, are accurate.

On Thursday, Margolis and Catalano said they didn't think the city needed to act to get the right information about the utility tax to voters before the election.

"We're not sure what to correct because there's no effect, it doesn't change anything," Margolis said. "We have communicated to the voters that we currently tax intrastate telephone services, so why is it so important that voters understand that it applies to both landlines and cell phones?"

But in an e-mail Friday, Catalano said the city apologizes for any confusion, and that a "clarifying statement" will be made at Monday's council meeting.

Kris Hunt, executive director of the Contra Costa Taxpayers Association, said she is disturbed that the city changed the website without acknowledging the mistake.

"This makes everybody nervous about government," said Hunt, whose organization opposes Measure T. "That's the wrong way to handle it. They should be daylighting this. They should have explained, 'Yes we've given you wrong information.' "

Lisa P. White covers Martinez and Pleasant Hill. Contact her at 925-943-8011. Follow her at Twitter.com/lisa_p_white.

 


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