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HomeMy WebLinkAboutSB 344_20191002_ Request for the Governor's Signature 02 October 2019 The Honorable Gavin Newsom State Capitol Sacramento, CA 95814 Fax: (916) 558-3160 Subject: SB 344 (McGuire) Local Prepaid Mobile Telephony Services Collection Act / One-Year Sunset Extension Request for Signature Dear Governor Newsom: On behalf of the City of San Luis Obispo I am requesting your signature on SB 344, which would provide a one-year sunset extension, from January 1, 2020 to January 1, 2021, for the point-of-sale collection mechanism for Utility User Taxes (UUTs) imposed on prepaid wireless service. AB 1717 (2014) set up this collection mechanism, similar to sales tax, where the California Department of Tax and Fee Administration (CDTFA) collects our voter-approved locally imposed UUT from retail sales of prepaid wireless telecommunication products and services and distributes those revenues to our community and the other 103 local agencies that participate in the program. Prior to AB 1717, there was no mechanism for collecting local UUTs on prepaid wireless, and because of this local agencies were losing their respective revenues. According to CDTFA data, to-date, over $24 million since 2016 has been received by local agencies under AB 1717. Another $6 million is estimated to flow from SB 344. The City of San Luis Obispo’s local utility user’s tax (UUT) supports police, fire, parks and other core services for our residents. We appreciate the continuation of the Local Prepaid MTS Act because it ensures equity among taxpayers by enabling our community to collect the applicable UUT when mobile telephony services are sold in a retail prepaid environment. The City of San Luis Obispo is among the 104 local agencies that participate in the collection of UUT made possible by AB 1717. Prepaid wireless services are offered on a "pay-as-you-go" basis with no required contracts, term or volume commitments, early termination penalties, overage charges, or credit checks. These factors make prepaid services available to those consumers to whom the security and convenience of mobile telephone service might not be available. We are pleased that SB 344, as with AB 1717, includes provisions to ensure that the UUT does not apply to prepaid transactions with a service allotment denominated as 10 minutes or less, or five dollars ($5) or less. This provides consumers utilizing prepaid wireless as an affordable and reliable option. SB 344 also continues to reimburse the CDTFA for the costs to implement the program through the collected local charges. Our agency along with other stakeholders, including the State Treasurer, the League of California Cities, California State Association of Counties, CTIA – the Wireless Association, the California Retailers Association, MuniServices/ Avenu and numerous cities recognize that the recent court decision (MetroPCS California, LLC v. Michael Picker et al, case number 17-cv-05959-SI) will require additional ‘clean-up’ language and that is why a short-term measure is the most effective approach to keep the local provisions continuing under current law. Without your signature on SB 344, AB 1717 will sunset on January 1, 2020 and subject our agency to lost revenue. For these reasons, we request your signature on SB 344. Respectfully, Heidi Harmon Mayor City of San Luis Obispo cc: State Senator Bill Monning, fax (916) 651-4917 State Assembly Member Jordan Cunningham, fax (916) 319-2135 Dave Mullinax, League of California Cities, dmullinax@cacities.org Meg Desmond, League of California Cities, cityletters@cacities.org Che Salinas, Governor’s Office (che.salinas@gov.ca.gov) Danielle Bradley, Legislative Aide, Senator McGuire (danielle.bradley@sen.ca.gov)