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Home My WebLink AboutVII (A) First Reading of Ordinances. Second Reading and Public Hearing Scheduled for June 19, 2001 at 7:15 p.m Agenda 6-5-2001 Item VII A1a,b,c LEIBOWITZ & ASSOCIATES, P.A. SUITE 1450 JOSEPH A. BELISLE 5 SUNTRUST INTERNATIONAL CENTER TELEPHONE (305) 3043Se L. R JORGEZ BUSTILLO ONE SOUTHEAST THIRD AVENUE TELECOPIER f3051530-9917 ILA L. FEW MATTHEW L. LEIBOWITZ MI AMI. FLORIDA 33131-1715 E-MAIL Firm@broadlaw.com SCOTT A. ROBIN THOMAS H.WILLIAMS,JR. May 25, 2001 VIA US MAIL & FACSIMILE(407) 656-6885 Jim Gleason, Acting City Manager City of Ocoee 150 N. Lakeshore Drive Ocoee, FI 34761 Re: New Communications Services Tax Simplification Law Dear Jim: On July 1, 2000, Florida's Communications Services 'lax Simplification Law (Law) was enacted.The Law established a new tax structure designed to treat communications service providers in a nondiscriminatory manner with respect to the compensation they have traditionally provided to local governments. The new Law combined several different types of taxes and fees into a two-tiered tax composed of a state and local component. The local component is known as the "Local Communications Services'fax." The initial adoption of the Law, in 2000, did not include the new tax rates. The initial Law, however, did direct the Legislature to set and adopt, in the 2001 Legislative Session, the new tax rates to be applied under the new communications tax structure. The new Law created two Local Communications Services Tax rates: (1)a Conversion rate. and(2)a Maximum rate. The Conversion rate or"initial"rate varies for each local jurisdiction and was based upon the size of the communications tax base for each particular local jurisdiction and the revenues received by that local jurisdiction in 1999. "Ihe Conversion rate is known as the initial rate because it takes effect on October 1, 2001, without any formal action by the local government. The new Law also established a Maximum rate. The Maximum rate is a weighted average. The State assumed that each municipal and chartered county had imposed upon communications providers all available taxes and fees at their highest possible levels under the previous tax structure. The potential maximum revenue from this assumption was then totaled. "fhe State then divided this potential maximum sum, by the sum total of the new taxable base for each municipal and chartered county. The outcome was 5.100%u. a.raI HI•,0 v',1 enenV OWma..-NeTmIav-II I]doe G�.zy,ol..TI Jim Gleason,Acting City Manager May 25,2001 Page 2 In the last days of the 2001 Legislative Session, a second Maximum rate was included in the new Law. This second Maximum rate applies only for the period beginning on October 1,2001,and ending on September 30, 2002. The original Maximum rate does not therefore become effective until October 1, 2002. The new Law therefore allows a municipality, for the period beginning on October 1,2001 and ending on September 30, 2002, to adjust its Conversion rate upward to the a Maximum rate,which equals the sum of the Maximum rate established under s.202.19(2)(a),Florida Statutes (2001) [the original Maximum rate], plus the difference between the Conversion rates set forth in ss. 202.20(1)(a) and (1)(b), Florida Statutes (2001). On October 1, 2001, the City of Ocoee will have a 5.00% Conversion rate. On October I. 2002. the City of Ocoee will have its Conversion rate reduced to 4.60%. As described above, for the period beginning on October 1,2001 and ending on September 30.2002,the Maximum rate shall be established to be the sum of the Maximum rate under s. 202.19(2)(a), Florida Statutes (2001) which is 5.10%, plus the difference between the Conversion rates set forth in ss. 202.20(I)(a) and (1)(b),Florida Statutes(2001): 5.00%and 4.60%respectively or a 0.40%difference. Accordingly, the Maximum rate for the first twelve months of the new Law for the City of Ocoee is established to be 5.50%. Permit Fees The new Law also allows the City to increase its Conversion rate by an additional 0.12% in lieu of requiring and collecting permit fees. The City is required to notify the Department of Revenue of its decision of whether to continue to collect permit fees on or before July 16,2001. If the City does nothing,the Department will automatically begin to collect 5.00%in the first year and 4.60% in the second. The Department will treat the City's silence as a choice not to collect permit fees. And, it only follows that, if the City does nothing to notify the Department of its decision, the City will be prohibited from collecting permit fees. The above rates,which will be collected automatically,will not include the additional 0.12% rate in lieu of collecting permit fees. The new Law requires an affirmative act by the City before the Department will begin to collect the additional 0.12%. The new Law allows that the City's affirmative act to be by resolution or ordinance. Such resolution or ordinance, however, must be postmarked and sent via certified mail on or before July 16, 2001. While the new Law permits the City's expression to be done by resolution or ordinance, I recommend an ordinance. Resolution was added to the new Law, because it can be done in one reading. Given the amount of time between the end of the 2001 Legislative Session and July 16, 2001. it was not clear if a local jurisdiction would have enough time to adjust its Conversion rate with two readings. What was not discussed before this amendment was added was that many City Charters require all new levies to be done by ordinance. For this reason, I recommend that the that this adjustment be done by ordinance. n I Ale➢H)0 CoceeV.eners'Gl morn.N e,r.xl.wllmo l erc LEIBOWITZ &ASSOCIATES, P.A. SUITE 1450,ONE SOUTHEAST THIRD AVENUE, MIAMI, FLORIDA 33131.17I5 • TELEPHONE (305)530-1322 Jim Gleason,Acting City Manager May 25,2001 Page 3 The new Law is intended to be revenue neutral. By adopting these Ordinances which adjust the City's Conversion rate to the maximum amounts allowable under the new Law, the City is simply acting consistent with the specific legislative intent that the new tax structure provide revenue neutrality for local governments. In short,adjusting the Conversion rate is not a tax increase, but a vote to maintain revenue neutrality. A separate ordinance for each issue has been drafted. This was done for the following reasons: (I) the introductory WHEREAS clauses are different, (2) this allows the Commission Members the freedom to address each issue separately,and(3)a single subject ordinance will allow the career service employees of the Department of Revenue to catalogue the ordinances without any confusion. If you have questions, please do not hesitate to call. Sincerely, Jorge Cruz-Bustillo cc: lla L. Feld, Esq. G Cable'.20•00copt ma0Gleawmye.T5 Law-U4`N I Jm LEIBOWITZ & ASSOCIATES. Y.A. SUITE 1450,ONE SOUTHEAST THIRD AVENUE, MIAMI, FLORIDA 3313 1-1 7 15 • TELEPHONE 1305/530-1322