02/01/1988 Meeting - Laserfiche WebLink

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e e e Ms. Schue expressed concerns about the complexity of liability with a service fee. Mayor Obie said he found it unclear whether the charge was a fee, a tax, or a license. Mr. Gleason said courts had preempted cities from charging a tax on alcohol use, but they had not preempted fees for related services, and he thought the relation between alcohol and public safety costs was defensible. Ms. Wooten said she had similar concerns about a surcharge that was not a tax but that went beyond a user fee. Mr. Gleason said fees might be charged at the point of wholesale distribution, and permit systems were another possibility. c. Utility Tax Mr. Wong said the utility tax would be a percentage of gross sales. He said the City already received franchise or in-lieu-of taxes from all public and private utilities except for sewer and water facilities. He said figures assumed an 8 percent tax, minus current receipts, for a net yield. That yield on a 1 percent increase would amount to more than $1 million, he said. Mr. Wong added that some utilities were subject to legal tax limits, such as 5 percent for cable TV. Mr. Holmer expressed concern about charging the tax only within the city limits. He asked whether the County was considering a utility tax. Mr. Wong said he was aware of no staff activity in that area. Ms. Bascom said the utility tax did not appear to provide a large source of revenue. She said cable TV and the Trojan power plant were limited by law, sewer rates recently had been raised, and the Pacific Northwest Bell franchise just had been renewed, leaving only the gas franchise. Mr. Wong said the EWES rate could be raised, and the gas franchise soon would be renegotiated. He also said PNB planned to introduce legislation that would significantly affect its franchise fee. Responding to Ms. Ehrman's question, Mr. Wong said collection probably would be done by utilities, and notations of pass-through costs to customers could be included on bills. d. Restaurant Tax Mr. Wong reviewed the revenue analysis for a restaurant tax. He said information for the local area was difficult to obtain, therefore State and County data had been disaggregated to the local level. He said data showed potential revenue of about $1 million for each 1 percent, and the addition of hotels, delis, and caterers probably would add another $60,000 to the yield. Mr. Wong said it was believed that approximately 400 to 500 establishments existed within city limits. A collection mechanism would be needed and could be similar to the method used for the room tax. He said the tax would apply to restaurants and fast food establishments, but application to other areas (e.g., catering, Saturday Market, church bazaars, supermarket delis, and salad bars) could be determined based on costs of collection versus yield. Mr. Wong said compensation to the restaurant operator for costs of collection would be included at some level less than 5 percent. He noted that states to the MINUTES--Eugene City Council February 1, 1988 Page 3