City of Alexandria, Virginia
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MEMORANDUM
DATE: SEPTEMBER 4, 2013
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER /s/
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Introduction and First Reading. Consideration. Passage on First Reading of an Ordinance to Implement the Utility Tax Rate Increases Included in the FY 2014 Approved Budget.
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ISSUE: Consideration of an ordinance that amends and reordains Alexandria City Code Sections 3-2-373 and 3-2-374 to implement the utility tax rate increases included in the FY 2014 Approved Budget.
RECOMMENDATION: That City Council pass the proposed ordinance (Attachment I) on first reading on Tuesday, September 10, 2013, and schedule the ordinance for public hearing, second reading, and final passage on Saturday, September 21, 2013.
DISCUSSION: The City levies a tax against consumers of utility services (electricity, natural gas, and water). The tax is levied and collected by the utility companies through the billing process and is remitted to the City. As part of the FY 2014 Budget process, City Council increased the utility tax rates for residential consumers of electricity and natural gas and for commercial and industrial consumers of electricity. These rate increases are explained below. The recommended ordinance is required to pass these tax rate increases into law and to allow them to become effective on October 1, 2013.
Consumer Utility Tax: Residential
The City utility tax for residential customers is currently capped at $2.40 per month for electricity and gas services. The proposed ordinance increases the monthly cap to the state maximum of $3 per month. Staff has estimated that increasing the utility tax cap will produce an additional $0.7 million in revenue in FY 2014. The average residential customer would pay an additional $1.20 per month or $14.40 per year.
Consumer Utility Tax: Commercial
The City utility tax on electricity for commercial consumers is currently $0.97 plus .004610 per Kilowatt Hour (kWh). The tax for industrial consumers is $0.97 plus .003755 per kWh. The proposed ordinance increases the rate for commercial customers to $1.07 plus 0.005071 per kWh and increases the rate for industrial customers to $1.07 plus 0.004131 per kWh. Based on FY 2012 collections, staff has estimated that increasing the utility tax rates on commercial and industrial consumers of electricity will produce an additional $0.4 million in revenue in FY 2014.
FISCAL IMPACT: These rate changes were estimated to produce a combined $1.1 million in revenues in FY 2014. Delay of implementation will result in an estimate of $0.3 million decrease in this estimate.
ATTACHMENTS:
Attachment 1 - Utility Tax Rate Ordinance Cover
Attachment 2 - Utility Tax Rate Ordinance
STAFF:
Laura B. Triggs, Chief Financial Officer/Director of Finance
Nelsie Smith, Director, Office of Management and Budget
Christina Zechman Brown, Assistant City Attorney