Loading...
HomeMy WebLinkAbout2005-04-05; City Council; 18052; Cell Phone Cost Reimbursement Council MembersCITY OF CARLSBAD - AGENDA BILL IO AB# 18,052 MTG. 4/5/05 DEPT. CA - TITLE: DEPT. HD. CELL PHONE COST REIMBURSEMENT FOR CITY COUNCIL MEMBERS CITY Am. CITYMGR. a RECOMMENDED ACTION: Adopt Resolution No. members of the City Council. 2005-097 authorizing reimbursement for cell phone usage by Taxable as income? Records subject to public information request? ITEM EXPLANATION: City Council members may be reimbursed for actual and necessary expenses incurred in the performance of their duties under Government Code section 36514.5. Cell phones have become an important communication device used by the City to improve the delivery of both day-to-day and emergency services. For many departments, cell phones have become the primary means of communication with field personnel, and contractors working in remote locations. City Phone Allowance Reimbursement No Yes No Yes Maybe Only those portions being reimbursed Currently the City pays the cost of cell phone usage by reimbursing City Council members that use their personal cell phones in connection with the performance of their official duties. Ease of administration to City Ease of administration to user Many cities have found that the proper reimbursement for elected officials is difficult due to the often complex calling-plan features. Proration of fixed charges, taxes and service features complicate the reimbursement process. Therefore, cities have searched for better ways to manage the need for use of personal cell phones for elected officials in performing their official duties. Moderate Easy Difficult Easy to Easv to Difficult There are basically three ways that cities have found to reimburse cell phone usage by city council members: 1. City Phone - Issue a phone to a City Council member and reimburse the member for costs associated with the performance of official duties. Any personal use is reimbursed by the Council Member to the City. 2. Allowance - Pay a monthly allowance which is an estimate of the actual expenses in the performance of official duties. 3. Reimbursement - Reimburse for actual costs for cell phone usage in the performance of official duties. Each of the reimbursement methods has characteristics that are important to consider when selecting a manner of reimbursement. These characteristics are outlined in the following table and discussed further below: I Moderate I Moderate I PAGE 2 OF AGENDA BILL NO. 18,052 Tax Consequences: If the City provides an allowance for cell phones, then the amount of the allowance will be taxed as income to the Council Member in the year paid. The amount of the allowance will approximate the reasonable and necessary business expense of the City Council Member in conducting their public affairs. The reimbursement (and any reimbursement use greater than the allowance) may be deductible for income tax purposes depending on the amount of business use and the individual’s personal tax situation. The deduction would be taken on the individual’s annual income tax returns. Public Information Requests: Records for City equipment use (such as a cell phone) are considered public information. Also, the documentation to support the payment of City funds (in the case of a reimbursement) is a public record. Under the allowance method, the phone records may be subject to the California Public Records Act for those portions of the actual expenses that support the allowance. Ease of Administration: Purchasing a cell phone by the City requires approvals and documentation similar to any other purchase. Also, when the City owns the phone, the phone bills must be reviewed, approved and paid monthly. In addition, Council Members are not allowed to have the City pay for any personal use of their cell phone; the requirement to document that personal use creates an administrative burden for both parties. This makes the administration of City-owned cell phones more cumbersome than an allowance. For the user, the most time-consuming method is the reimbursement method, as the Council Member must document the calls in the performance of the public’s work and prepare the paperwork to submit for reimbursement. In addition, the same review, approval and payment process as is used for City-owned cell phones is followed for reimbursements. In contrast, the allowance method is easier to administer. An allowance would be set up one- time and then paid through the standard payroll processing. The process does not require any extra effort it is once set up. Exhibit 2 shows how other San Diego County cities are paying for cell phone usage by their Council Members. Alternatives: Based on the above information, the City Council may elect to do nothing, provide cell phones to Council Members only for use in the performance of their official duties, or provide a monthly allowance to City Council Members which represents an allowance for the actual and necessary costs in the performance of their official duties. Option I - Do nothing: Under this option, there would be no change in the City’s existing policies. PAGE 3 OF AGENDA BILL NO. 18,052 Option 2 - Provide City funded cell phones to Council Members: Under this option, the City would purchase and pay for City-funded cell phones for each Council Member. The phones would be public property and would only be used in the performance of the public’s business. Option 3 - Provide a monthly cell phone reimbursement to Council Members: Under this option, the Council would receive reimbursement on a monthly basis that represents the actual and necessary costs in the performance of the duties of their office. For tax purposes, the value of this monthly allowance would be reported as income to the IRS on the annual W-2 statement. Attached to this agenda bill is a resolution implementing Option 3. If the Council wishes to proceed otherwise, it should discuss Options 1, 2 or any other options not identified herein. FISCAL IMPACT: The fiscal impact will depend on the reimbursement method chosen. If an allowance were given to the City Council based on the above analysis, the total annual fiscal impact would be $2,700. This allowance is consistent with the amounts currently being paid by the City for business use of cell phones. EXHIBITS : 1. Resolution No. 2005-097 authorizing the payment of an allowance for cell phone use for city Council Members. 2. Cell Phone Survey, San Diego County 3. Cell Phone Allowance Survey DEPARTMENT CONTACT: Kevin Branca (760) 602-2430, kbran@ci.carlsbad.ca.us RESOLUTION NO. 2005-097 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, REIMBURSING THE MAYOR AND COUNCIL MEMBERS ON A MONTHLY BASIS FOR ACTUAL COSTS IN THE PERFORMANCE OF THE OFFICIAL DUTIES OF THEIR OFFICES WHEREAS, cell phones have become an important communication device used by the City to improve the delivery of both day-to-day and emergency services; and WHEREAS, the City has provided a limited number of cell phones to City Council members to conduct the official duties of their office, however, that has not been efficient, productive or frequently used; and WHEREAS, reimbursement to City Council members for the actual and necessary expenses in the performance of their duties exceeds the monthly allowance stated herein; and WHEREAS, the ease of administration and the certainty of amount is a reasonable and proper expenditure of public funds; and WHEREAS, members of the City Council often need the use of a cell phone in conducting the affairs of their office at all times of the day and night, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That members of the City Council shall be reimbursed for cell phone usage for their actual and necessary costs in the performance of their official duties at the rate of $45 per month to be paid bi-weekly each pay period and to be included as the employee’s compensation for tax purposes. 3. That this resolution shall apply only to those Council memben mat have cell phones. 4. That each Council member will be responsible for the purchase of tf% cell phone and related equipment and for the payment of their monthly cell phone bill. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad held on the 5th day of APRIL , 2005 by the following vote, to wit: AYES: Council Members Lewis, Hall, Kulchin, Packard, Sigaf oose NOES: None ABSENT: None ATTEST: LORRAINE M. WOm, City Clerk (SEAL) 7606023553 No Yes 3 J J J 3 J FINANCE DEPT CITY OF CARLSBAD 09:17:54 a.m. 03-13-2005 Comments: Does not provide phone nor have an allowance Does not provide phone nor have an allowance Does not provide phone nor have an allowance City provides phone via city plan; however only 1 member of council uses it. Most have thelr own and do not utilize the city plan. City provides them via city plan and pays the monthly bill. City provides them via city plan and pays the monthly bill. 2 I3 J J Lemon Grove I City provides them via civxn and pays the monthiy- Does not provide phone nor have an allowance Mayor receives $35 reimbursement for use of cell phone. City provides them via city plan and pays the monthly 3 bill. J bill. 1 Poway 3 3 Vista City provides $50 allowance to members for phone use If Council wanted a phone Clty would purchase one for their use; currently they all use their own. City provides phone vla Clty paid plan. Although most members do not use it. Mostpurchase thelr own and use their own due to the freedom of information act. Does not provide phone nor have an allowance as a rule; however, if member doesn't utilize all of the auto allowance $300, then can apply remaining allowance to other expenses. Does not provide phone nor have an allowance J J CELL PHONE SURVEY SAN DlEGO COUNTY J I Does not provide phone nor have an allowance I J ICity provides a $30 allowance for cell phone. Exhiblt 2 7606028553 FINANCE DEPT CITY OF CARLSBAD 09:18:10 a.m. 03-18-2005 c CELL PHONE ALLOWANCE SURVEY Exhibit 3 3 I3