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HomeMy WebLinkAboutO-12078J-01-460 6/07/01 ORDINANCE NO. 1 2 � 0 j 8 AN EMERGENCY ORDINANCE OF THE MIAMI CITY COMMISSION RELATED TO COLLECTION OF PERMIT FEES AND ESTABLISHING THE MAXIMUM RATES FOR PROVIDERS OF COMMUNICATION SERVICES BY (1) ELECTING NOT TO REQUIRE AND COLLECT LOCAL PERMIT FEES IN EXCHANGE FOR AN INCREASE' IN THE LOCAL COMMUNICATION SERVICES TAX CONVERSION RATE UPWARD BY 0.12%; (2) ELECTING TO LEVY A COMMUNICATION SERVICES TAX AT A RATE OF 5.1% PLUS THE 0.12% PERMIT FEE ADD-ON FOR AN EFFECTIVE RATE OF 5.22% TO BE EFFECTIVE BEGINNING ON OCTOBER 1, 2001, PROVIDED, HOWEVER, FOR THE PERIOD BEGINNING OCTOBER 1, 2001 AND ENDING SEPTEMBER 30, 2002 THE MAXIMUM RATE SHALL BE 5.50% PLUS THE 0.12% PERMIT FEE ADD-ON FOR AN EFFECTIVE RATE OF 5.62%; PROVIDING FOR NOTICE TO THE STATE DEPARTMENT OF REVENUE; CONTAINING A REPEALER PROVISION AND A SEVERABILITY CLAUSE. WHEREAS, Chapter 202, Florida Statutes (2001), as amended, i ,'reformed the tax laws to provide a fair, efficient, and uniform r method for taxing communication services sold in the state for the purpose of promoting the economic vitality of the communications industry and accounting for the impact of federal legislation, industry deregulation and convergence of service offerings; and 120178 0 WHEREAS, the communication services tax imposed pursuant to Chapter 202, Florida Statutes (2001), as amended, is a replacement of taxes and fees previously imposed and not a new tax; and WHEREAS, Section 337.401 (3) (c) (1) , Florida Statutes (2001) , as amended, requires each municipality to make an election regarding the payment of permit fees in connection with the erection, construction, reconstruction, installation, operation, maintenance, dismantling, testing, repair and use of a communications system in, upon, along, across, above, over, under or in any manner connected with the streets or public ways within the corporate limits of the City by providers of communication services; and WHEREAS, a municipality that elects not to require and collect local permit fees from communication service providers will be permitted to increase the local communication service tax conversion rate upward by 0.12% with such election taking effect on October 1, 2001; and WHEREAS, Section 202.19(2)(a), Florida Statutes (2001), as amended, provides for a municipality to levy, by ordinance, a communication service tax at a rate of up to 5.1% plus the 0.12% permit fee add-on for an effective rate of 5.22% to be effective beginning October 1, 2001, provided, however, that for the period beginning on October 1, 2001 and ending September 30, 2002, a municipality may elect a maximum rate which equals the sum of the Page 2 of 6 maximum rate established under Section 202.19(2)(a), Florida Statutes (2001), as amended, plus the difference between the conversion rates set forth in Subparagraph (a) and (b) of Section 202.20(1), Florida. Statutes (2001), and plus the 0.12% permit fee add-on; and WHEREAS, the City Commission finds that it is in the best interests of its residents, citizens and the general public to make the election not to charge local permit fees; to increase the local communication service tax conversion rate upward by 0.12-'.; to impose the maximum rate of 5.1% plus the 0.12% permit fee add-on for an effective rate of 5.22% beginning October 1, 2001, provided, however, for the period beginning October 1, 2001 and ending September 30, 2002, the maximum rate shall be 5.50% plus the 0.12% permit fee add-on for an effective rate of 5.62%; and WHEREAS, the foregoing legislation requires that the City inform the State Department of Revenue of these elections no later than July 16, 2001; NOW, THEREFORE, BE IT ORDAINED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Ordinance are adopted -by reference and included as if fully set forth in this Section. Page 3 of 6 120 4 8 Section 2. Intent and Elections. (A) It is the intent of, and the City Commission of the City of Miami, Florida, elects under Section 337.401(3)(c)(1), Florida Statutes (2001), as amended, to not require and collect the payment of permit fees in connection with the erection, construction, maintenance, dismantling, testing, repair and use of a communications system in,.. upon, along across, above, over, under or in any manner connected with the streets or public ways within the corporate limits of the City by providers of communication servicesand to increase the local communication service tax conversion rate upward by 0.12% with such election* taking effect on October 1, 2001. (B) It is the intent of, and the City Commission of the City of Miami, Florida, elects under Sections 202.19(2)(a), and 202.20, Florida Statutes (2001), as amended, to impose the maximum rate of 5.1% plus the 0.12% permit fee add-on for an effective rate of 5.22% beginning October 1, 2001, provided, however, for the period beginning October 1, 2001 and ending September 30, 2002, the maximum rate shall be 5.50% plus the 0.12% permit fee add-on for an effective rate of 5.62%. Section 3. Notice to State Department of Revenue. The City Commission of the City of Miami, Florida, directs the City Manager or designee to provide the statutorily required Page 4 of 6 12078 notice to inform the State Department of Revenue of these elections no later than July 16, 2001. Section 4. All Ordinances or parts of Ordinances insofar as they are inconsistent or in conflict with the provisions of this Ordinance are repealed. Section S. If any section, part of section, paragraph, clause, phrase, or word of this Ordinance is declared invalid, the remaining provisions of this Ordinance shall not be affected. Section 6. This Ordinance is declared to be an emergency measure on the grounds of urgent public need for the preservation of peace, health, safety, and property of the City of Miami, and upon the further grounds. of the necessity to make the required and necessary payments to its employees and officers, payment of its debts, necessary and required purchases of goods and supplies, and to generally carry on the functions and duties of municipal affairs. Section 7. The requirements of reading this Ordinance on two separate days is dispensed with by an affirmative vote of not less that four-fifths of the members of the Commission. Page 5 of 6 12078 Section 8. This ordinance shall become effective immediately upon its adoption and signature of the Mayor.!' PASSED AND ADOPTED this 14th day of June 1 2001. JOE CAROLLO, MAYOR in andante with Miami Code Sec. 2-36, since the Mayor did not indicate approjal of jj�i,z, LNi-slation by signing it in the designated !ace provided, said I- rvili bs-conma effective with the elapse of. ten (10) d from the date of rn,,,sstirt tctwUon regardng same, without the Mayor exer isi g ve ATTEST: Wal -r-. m City Clerk WALTER J. FOEMAN CITY CLERK F-1120 N w[LIEVmkl 1-15-55 W1072ymt.BSS RRECTNESS& If the mayor does not sign this ordinance, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this ordinance, it shall become effective immediately upon override of the veto by the City Commission. Page 6 of 6 12078 CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM TO: The Honorable Mayor and Members of the City Commission FROM: ���: 11ne • - RECOMMENDATION DATE : FILE JUN - 5 2001 SUBJECT: proposed Ordinance: Communications Services ,Tax Simplification Law REFERENCES: ENCLOSURES: It is respectfully recommended that the City Commission adopt the attached Emergency Ordinance relating to.the Communications Services Tax Simplified Law. This Ordinance elects the maximum rate permitted for the discretionary communications services tax, at a rate of 5.5% for fiscal year beginning October 1, 2001 and ending September 30,' 2002 and 5.1% for fiscal years beginning October 1, 2002. This Ordinance also elects to increase the local communication services tax conversion rate upward by 0.12%, above the maximum rate, as the City elects not to require and collect local permit fees in exchange for an increase in the local communication services tax conversion rate. BACKGROUND During the 2000 Regular Session, the Florida Legislature created the "Communications Services Tax Simplification Law" which created a new simplified tax structure for communications services. This law combines several different state and local option taxes and fees on communications services and replaces it with a local communication services tax. The new. tax structure establishes a broader base of services on which taxes are levied on the telecommunication industry while reducing the City's present tax rate, with the goal of achieving a revenue neutral position for - the City. The new tax rate was calculated by Revenue Estimating Conference using information provided by both the City and the telecommunication industry. From this information, the Revenue Estimating Conference calculated the City's taxable base, as defined in the new legislature. Using this taxable base, the City's new tax rate was then calculated by the Revenue Estimating Conference with an intent to achieve a revenue neutral position. However, included in the new taxable base calculation is direct broadcast satellite services for which no historical information is available. As a result, it is unknown at this time whether a revenue neutral position will be achieved from this new rate structure. Furthermore, -there is no guarantee that the City will not experience a shortfall in its revenues. 12078 In calendar year 1999, the City's tax rate and the associated revenues generated from telecommunication related taxes is as follows: Category Tax Rate Amount received in. calendar year 1999 Public Service Tax 7% $19,115,228.00 Telecommunications Franchise 3% $ 3,099,934.00 Cable Franchise Fees 4% $ 1,170,143.00 Permit Fees .75/s .ft $ 64,215.00 TOTAL $ 23,449,520.00 The above information was provided to the Revenue Estimating Conference, which was used to derive the City's new local communication tax rate. In, addition to revising the tax base, under the new law, the new tax structure will have the effect of revising the tax rate to 5.1%, 4.7%, and 4.3% for years beginning October -'1, 2001, October 1, 2002 and August 1, 2006,=respectively, assuming that the City elects not to require and to collect permit fees. The adjustment in rates from 5.1% to 4.7% reflects that the City will receive revenues for an eleventh month period as opposed to a twelve- month period in fiscal year beginning October 1, 2001 compared to fiscal years beginning October 1, 2002. The adjustment in rates from 4.7% to a 4.3% in August 1, 2006 reflects the expiration of existing franchise agreements held by the City. The new law also provides that the City's tax rate will be adjusted if revenues received for the period October 1, 2001 through September 30, 2002 exceed a threshold of 10%tor more than the revenues received from the replaced revenue sources for the corresponding 2000-2001 period, subject to other provisions. However, the foregoing rate adjustment requirement shall not apply to a local government that adopts a local communications services tax rate by resolution or ordinance. . The adoption of the maximum amount allowed under the new legislature will mitigate' any potential shortfall in the revenues generated from `the changes in the local communication -services tax under the new law. In addition, the adoption of the maximum rate will also ensure that the City's rate will not' be further reduced due to any provisions included in the new legislation, as well as continue the revenue stream relating to the existing franchise agreement, which would otherwise''be eliminated. This will, in turn, enable the City to continue to provide services that are partially funded through the imposition of the'communications tax'. The election to increase the local communication- services tax conversion rate based on the election not to require and collect local permit fees will enable the City to continue to be compensated for permit fees without having to collect these fees separately. CAG/g/PC/wd x.20'78.