Mountain View Voice

News - November 5, 2010

City says yes to phone tax expansion

by Daniel DeBolt

The city's general fund is in slightly better shape with the passage of measure T on Tuesday, perhaps bucking a trend of no-new-taxes sentiment in this election.

Because it wasn't technically a tax increase, Measure T only required a simple majority to pass. It received support from 69.4 percent of voters, according to results posted Wednesday morning.

The measure applies the city's 3-percent phone tax to calls made over the Internet, and also extends the tax to interstate and international calls. Mountain View's 40-year-old "telephone users tax," as it's called, currently brings in $1.9 million a year. But city officials say it has declined by $50,000 over the last year as Internet phone services become more popular.

The city's general fund will now be in slightly better shape than it was before, as the tax goes to core city services, such as fire, police and the library. Tremutola, a city-hired consulting firm, said the city could see a few hundred thousand dollars in new annual revenue if the measure passed. But city officials were concerned that if it did not pass, phone tax revenue could continue to decline or, worse, face legal challenges as the old phone tax was based on obsolete federal laws.

Only businesses that heavily use broadband phone services may see a significant increase in their utility bill, which was shown to be hundreds of dollars a month in one case. But those who have their own broadband networks, such as Google, would not.

A group of city council members, residents and at least one city official said to be working on his own time organized a campaign to pass the tax, raising $8,500 for mailers with funds from housing developers and city employee unions.

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