Sharon Yarber, a Rancho Palos Verdes resident, filed a claim against the city on Wednesday, calling for the halt of a tax collected on phone services and the refund of $5.6 million generated from the tax over the past eight years. The claim is also a precursor to a lawsuit.
The controversy over the tax comes one week after the Rancho Palos Verdes city council failed to create a November ballot measure to prevent the city from finding itself in legal hot water over the way it collects utility taxes. The ballot measure was stopped in its tracks when two members of the council voted against the proposal, which city staff said is needed to “modernize” the city’s utility-users’ tax to protect it from legal issues.
Yarber called the $5.6 million collected by the city “disgraceful,” adding that the city needs “to have an open discussion about the needs of the tax at all.”
On the subject of the November ballot measure that was shot down, Yarber said that it was intended “to pull the wool over the eyes of the public” by updating the tax’s provisions and lowering it by .25 percent. City Attorney Carol Lynch said that although the measure was indeed created to protect the city from lawsuits, the city had made this intent clear from the beginning.
The controversy revolves around Rancho Palos Verdes collecting utility-users’ tax on phone, electricity and other services since 1993. The telecommunication portion of these taxes end up generating approximately $700,000 annually, which comes out to about 3 to 4 percent of the city’s operating budget.
The city modified the provisions of their utility-users’ tax in 2006 to comply with a federal ruling, but lawsuits have determined that voters must have a say in these changes.
The council will soon make a decision to either halt the utility-users’ tax, or put it in a fund to pay out in case of future claims.
Read more about the claim here.