CITY OF POMONA
COUNCIL REPORT
May 15, 2023
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director
SUBJECT: ADOPTION OF A RESOLUTION ADOPTING THE ANNUAL CONSUMER PRICE INDEX (CPI) ADJUSTMENT FOR BUSINESS LICENSE TAXES, UTILITY USERS’ MAXIMUM ANNUAL TAXES, AND INCOME LEVELS FOR QUALIFYING FOR RESIDENTIAL UTILITY USERS’ TAX EXEMPTION ELIGIBILITY RECOMMENDATION:
It is recommended that the City Council adopt the following:
RESOLUTION 2023-72 OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, ADOPTING THE ANNUAL CONSUMER PRICE INDEX (CPI) ADJUSTMENT FOR BUSINESS LICENSE TAXES, UTILITY USERS’ MAXIMUM ANNUAL TAXES, AND INCOME LEVELS FOR RESIDENTIAL UTILITY USERS’ TAX EXEMPTION ELIGIBILITY EXECUTIVE SUMMARY:
Pursuant to City Code Sections 50-415, 50-215, 50-216, and 50-218, the City Council may, by resolution, adjust Business License Taxes, Utility Users’ Maximum Taxes, and the gross income levels for qualifying for residential exemptions from Utility Users’ Taxes (UUT), in a percentage amount equal to the change in the Consumer Price Index (CPI). Attachment 1: Resolution 2023–72, effectuates, for Fiscal Year (FY) 2023-24, previously authorized and codified CPI adjustments for said taxes and exemptions. In accordance with the CPI during the 12-month period for the Los Angeles-Long Beach-Anaheim, CA as published by the United States Bureau of Labor Statistics, the CPI adjustment is 4.9%.
FISCAL IMPACT:
For FY 2023-24, it is estimated the proposed CPI adjustments will result in approximately $80,000 in additional Business License revenue. There is minimal impact in adjusting gross income levels for the residential utility users’ tax exemption. The additional revenue has been factored into the revenue projections for FY 2023-24 budget estimates.
PUBLIC NOTICING REQUIREMENTS:
None required for increasing existing tax with pre-existing provisions for annual CPI adjustments.
PREVIOUS RELATED ACTION:
On May 9, 2022, the Pomona City Council adopted Resolution No. 2022-71, authorizing the annual adjustment to Business License Taxes, Utility Users’ Maximum Annual Taxes, and residential Utility Users’ Tax exemption qualifications by 6.6%, a percentage amount equal to the change in the Consumer Price Index.
DISCUSSION:
Business License
Section 50-415 of the Pomona City Code states that business license taxes shall be adjusted annually based upon the year-over-year change to the Consumer Price Index (CPI) for the Los Angeles-Long Beach-Anaheim, CA. The adjustments are effective on July 1 of each year.
Annual business license tax adjustments are calculated by a formula which applies the year-over-year change in the CPI for the Los Angeles-Long Beach-Anaheim, CA to the currently prevailing tax rates. For FY 2023-24, this formula results in a CPI increase of 4.9%, and rounding the results to the nearest $0.25. The adjusted business license taxes are set forth in the Business License Tax Schedule – FY 2023-24, attached as Exhibit A to the Resolution.
Utility Users’ Maximum Annual Tax
Section 50-215 and 50-216 of the Pomona City Code state that Utility Users’ Maximum Annual Taxes shall be adjusted annually in a percentage amount equal to the change in the CPI for the Los Angeles-Long Beach-Anaheim, CA . The adjustments are effective on August 1 of each year.
Annual Utility Users’ Maximum Tax adjustments are calculated by a formula which applies the year-over-year change in the CPI for the Los Angeles-Long Beach-Anaheim, CA to the currently prevailing tax rates, while rounding the results to the nearest dollar. For FY 2023-24, this formula results in a CPI increase of 4.9%. The CPI adjustments to the Utility Users’ Maximum Annual Tax are shown in the table below and in Attachment No. 2. The adjustments are effective on August 1, 2023.
Utility Users’ Tax Code Section
2022-23 Current Annual Maximum Tax
2023-24 New Annual Maximum Tax
50-215 (Commercial)
$ 155,762
$ 163,394
50-216 (Small Business)
$ 9,480
$ 9,944
Utility Users’ Tax Exemption Income Levels
Section 50-218 of the Pomona City Code states that gross income levels for qualifying for residential Utility Users’ Tax exemptions shall be adjusted annually in a percentage amount equal to the change in the CPI for the Los Angeles-Long Beach-Anaheim, CA as published by the United States Bureau of Labor Statistics. The adjustments are effective on July 1 of each year.
Annual adjustments to the gross income levels for qualifying for Utility Users’ Tax exemptions are calculated by a formula which applies the year-over-year change in the CPI for the Los Angeles-Long Beach-Anaheim, CA to the current gross income levels, while rounding the results to the nearest dollar. For FY 2023-24, this formula results in a CPI increase of 4.9%. These annual CPI-based adjustments are shown in the table below and in Attachment No. 2. The adjustments are effective on July 1, 2023.
UUT EXEMPTION - GROSS INCOME LEVELS
Utility Users’ Tax Code Section
People in Household
2022-23 Income Levels
2023-24 Income Levels
50-218(a)
1 $ 24,614
$ 25,820
2**
$ 26,252
$ 27,538
3**
$ 29,088
$ 30,513
4+**
$ 37,390
$ 39,222
**The gross income levels indicated are for combined gross income of all people in the household.
Prepared by:
Shar Perez
Revenue Operations Manager
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2023-72
Exhibit A – FY2023-24 Business License Tax Schedule
Attachment No. 2 – Business License Tax Increase Comparison Resolution Adjusting Business License Taxes, Utility Users’ Taxes, and Residential UUT Exemption Qualifications