Department of Finance
Reference: Revenue Code Updates
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Ana Le Scoezec, Revenue Manager
Date Prepared: November 10, 2026
PURPOSE
To propose updates to sections of the City’s Municipal Code regarding sales and use tax, business licensing and utility billing.
BACKGROUND
Staff periodically review portions of the City’s Municipal Code to identify areas where updates may be needed to address changes in policy or practice or to improve efficiency. The Revenue Division within the Finance Department, which oversees Tax & Licensing and Utility Billing, has identified and is recommending the following updates:
Sales Tax (Section 3-28-75)
Taxability of City-provided Utilities
The City’s Municipal Code includes a list of goods and services that are specifically exempt from sales and use tax. This section does not currently address or include reference to City provided utilities. Without a specific exemption, the provision of water would be considered taxable to the purchaser.
The City does not tax these purchases and does not intend to. Therefore, staff recommends updating the Municipal Code to list City-provided utilities as exempt from sales tax. This would bring code into alignment with current practice by clarifying that this item is exempt from sales tax.
Licenses (Section 5-4-60)
Hearing process for denial, suspension or revocation of a license
Under the current code, if a license is denied, suspended or revoked, the applicant is notified and given the opportunity to respond. The changes will allow for notification and opportunity to respond, prior to setting the matter for a hearing if the license is being suspended or revoked. If it is a license denial, the applicant may submit an appeal.
Pawnbrokers (Article 5-44)
Removal of special requirements for pawn broker licensing
Municipal code lists a number of requirements for the licensing of pawn brokers that go beyond the usual business license review and requirements. These added requirements are burdensome and, at times, subjective. Staff in both the Finance, Legal and Police Departments reviewed these requirements and agreed that they do not provide added value or assurances and should be removed from Municipal Code.
Current practice has been to license pawnbrokers under the same requirements as other retail businesses. This means that practice has not aligned with Municipal Code and the proposed updates will bring code and practice into sync.
Utility Billing Section (Section 13-4-130 (c))
Removal of requirement to offer budget billing
Budget billing is a process that allows customers to pay a consistent amount each month based on an average of their actual usage during the prior year. At the end of the budget billing period the amount is recalculated, and the customer will either owe an additional sum or be due a credit depending on their actual usage during the budget billing period.
The City does not currently offer budget billing as discussed in Municipal Code. While this may change in the future, the management and administration of a program like budget billing is administrative in nature and can be managed through policy rather than mandated in Municipal Code.
The proposed updates align Code with practice and allow for administrative management of the program going forward.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
All proposed changes are within the authority of City Council to manage and approve. If approved, these changes would be effective January 1, 2027.
FINANCIAL IMPACT
None of the proposed changes are expected to have a material impact on city revenue or spending. These changes are primarily to bring Code and practice into alignment and/or to clarify language in the Code.
Next steps
If Council is supportive of these changes, they will be presented as an Ordinance for initial consideration on December 1, 2026 and final consideration on December 15, 2026.
Attachments:
Ø Proposed Ordinance (redline)
Ø Presentation