One councilman disagreed with the measure, and another thought a last-minute change was improperly noticed to the public.

For two weeks officials have been arguing that they need to follow a statewide trend in updating their 38-year-old utility users tax ordinance, which effectively would apply a tax to every phone bill in the South Bay city.

The measure would reduce the telecommunications tax rate from 5 percent to 4.75 percent and expand the tax to long-distance calls, private communication services (T1 lines), texting, paging and toll-free numbers. It now applies to in-state calls only.

Officials said reducing the rate is meant to prevent them from collecting windfall revenue on the expanded tax. Chula Vista is the only city in the county to have a utility users tax. The City Council had wanted to place the measure on the November ballot as a general tax, but that would have required a unanimous council vote.

Councilman John McCann forced a new tack because he said he disagreed with the measure's necessity and said the ballot language was misleading. Mayor Cheryl Cox immediately resorted to Plan B, which was buried on the fifth page of the agenda materials.

Utility users tax facts The Chula Vista City Council delayed placing a measure on the November ballot asking voters to decrease the utility tax rate on telecommunications from 5 percent to 4.75 percent and at the same time expand the scope of the tax to apply to long-distance calls, private communication services (T1 lines), paging, texting and toll-free numbers. It was first adopted in 1970 to help fund public services and capital improvement projects through the city's general fund. Chula Vista is the only city in the county with a utility users tax.

That new plan called for a special tax, which does not require a unanimous council vote to proceed to voters. It does require a two-thirds yes vote, and the tax must be earmarked for specific use – in this case public safety.

Just as the council was ready to vote on the backup plan, Councilman Jerry Rindone said he did not think the special tax had been properly noticed and asked to hold the item until next week.

Since 1970, a 5 percent tax has been applied to telecommunications users in Chula Vista. The revenue derived from that tax – about $4.6 million a year – is used for the city's general fund to pay for fire and police services, officials said.

A utility tax also is applied to gas and electricity but at a lower rate of less than 1 percent. That tax is not affected by the measure. Altogether, the city collects $7 million from the utility users tax.

Utility carriers collect the tax on monthly bills and pay the city. Officials say that about 20 percent of telecommunications customers, represented by various carriers, are not paying the tax out of failure or wording loopholes.

Eliminating the ordinance's legal weaknesses and updating the language to reflect changes in federal law and technology will help keep the city from losing money on the utility tax, said City Manager David Garcia.

“We're doing what many cities in California are doing,” Garcia said. “It's the same ordinance adopted by more than 20 cities.”

Those cities include Los Angeles, Pasadena, San Bernardino and Hermosa Beach.

The argument for the change was debated for hours last week with taxpayer and telecommunications groups declaring that the ballot language was misleading and that the tax would be considered new to those who aren't paying it.

At the time, the proposed ballot language focused on the rate decrease and not the expansion of the rate-payer pool.

“There couldn't be a more classic case of bait and switch,” Lani Lutar of the San Diego County Taxpayers Association said last week.

Tanya Sierra: (619) 498-6631; tanya.sierra@uniontrib.com