CITY OFFICIALS FIGHT NET TAX BAN FEDERAL BILL WOULD KEEP LOCAL TOLLS OFF ELECTRONIC HIGHWAY.

Byline: Lisa Friedman Washington Bureau

WASHINGTON - California municipal officials are mounting a last-ditch effort to stop the U.S. Senate from passing, possibly as early as today, a permanent ban on Internet-access taxes that could cost city treasuries in the state an estimated $836 million a year.

Already, officials in 128 California municipalities - including Los Angeles, Burbank and Calabasas - have written to Sen. Dianne Feinstein, D- California, outlining their concerns.

``It was a deluge,'' Feinstein said in a Senate floor speech this week. ``I had never had that kind of opposition from California cities before in my 12 years in the Senate.''

Equally intense, however, is the pressure from telecommunications companies, high-tech firms and others intent on keeping the Internet tax- free. Without a permanent moratorium, one of the bill's sponsors said, tax-happy local governments could easily turn the information superhighway into a toll road.

``The political environment is really so volatile,'' said Marilyn Mohrman-Gillis, federal-affairs director for the National League of Cities.

A series of votes today could decide the fate of the Internet tax bill. The House already has passed an extension of the ban, and President George W. Bush supports a permanent moratorium.

Sponsored by Sens. George Allen, R-Va., and Ron Wyden, D-Ore., the legislation would permanently extend a moratorium on Internet access taxes that expired in November.

The bill also would prohibit taxes on all types of high-speed services, including digital-subscriber line service, cable modems, satellite service and other future telecommunications service. It also would require any current taxes to be phased out in three years.

State and local governments say the legislation goes too far, banning taxes not only for residential users but also for telecommunications companies. They call it an unnecessary break for telephone companies that could cost municipal treasuries $9 billion a year in lost taxes nationwide.

Locally, the impact varies.

Los Angeles, for instance, collects about $223 million a year in utility user taxes, and city officials have estimated that about $4 million could be wiped out if the Allen-Wyden bill passes.

Burbank officials say about $5.8 million of the city's annual $16.5 million in utility-user taxes would vanish from city coffers.

Calabasas takes in $1.3 million each year from a utility-user tax, but city officials have not determined how much of that is at stake.

Jessica Mullan, spokeswoman for the California League of Cities, said the amount of revenue at risk for each city depends on local ordinances.

Lisa Friedman, [phone]

lisa.friedman(at)langnews.com