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AGENDA ITEM REVIEW FORM
5.D.
Regular City Council Meeting
Meeting Date:
06/08/2016
Department Head:
Kay Macuil
Submitted By:
Kay Macuil, City Attorney, Attorney's Office
Action Requested:
Motion

ITEM:

Discussion and possible action on any and all matters regarding reconsideration of Ordinance No. 354.  An ordinance related to the Tax Code of the City of San Luis relating to the use Tax Rate for Purchases of Tangible Personal Property. (Kay Marion Macuil, City Attorney)

SUMMARY:

City Council passed Ordinance No. 348,  amending the San Luis Tax Code and  providing for a tiered sales tax rate of 1.5% on single items costing $2,500.00 or more while the sales tax on remaining items of lesser value have no change at 4%. Ordinance No. 348 went into effect on June 1, 2016.

The Department of Revenue required technical changes to include use taxes in the same tiered rate to comply with the U.S. Constitution Commerce Clause on interstate trade.  

After discussion and review of language by two (2) tax experts, those changes were attempted in Ordinance No. 354.  After the  passage of Ordinance No. 354 at the May 25th Council Meeting, the Department of Revenue found another flaw in Ordinance No. 354.  The effective date of August 1 is referring to the sales tax rather than the use tax.

In order to preserve the June 1st effective date of the tiered sales tax, staff is recommending that City Council reconsider its May 25th motion to pass Ordinance No. 354.  Motions to reconsider must be made the next day that a business meeting is held.  (See San Luis City Code §30.059(A)(1) and Robert's Rules of Order at RONR (11th ed.), p.76, III, 25-32). 

For this June 8, 2016 Council Meeting there will need to be a two (2) step process.  First there will be a motion to reconsider.  If that motion passes then there will be a separate agenda item recommending a motion to deny Ordinance No. 354.  After publication of notice of an new ordinance addressing the excise tax by itself, we will present that ordinance to Council for first and second reading.  But again the sales tax portion can be preserved with the effective date on June 1 by reconsidering the approval of Ordinance No. 354 and in the agenda item following this one, denying Ordinance 354.

In order to preserve the June 1st effective date of the Tiered Sales Tax, staff recommends reconsideration of the May 25th motion approving Ordinance No. 354.
 

RECOMMENDATION / SUGGESTED MOTION:

I MOVE TO RECONSIDER THE MOTION OF MAY 25, 2016 WHICH APPROVED AND ADOPTED ORDINANCE NO. 354.

Fiscal Impact

IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
N/A
CITY/STATE/FEDERAL FUNDS:
N/A
TOTAL:
N/A
BUDGETED:
N/A
AVAILABLE TO TRANSFER:
N/A
GL ACCT # & NAME/REMAINING BALANCE BEFORE PURCHASE:
N/A

FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):

Preserving the effective date of June 1, 2016 will create a reduction in tax for higher-priced items this month. This may attract businesses with higher-priced items to sell to locate in San Luis and so generate more sales tax revenue.

Attachments