The Ventura City Council agreed Monday to let voters decide whether to preserve a relatively small utility tax collected on phone calls that rakes in big money for the city.

Voters will consider a ballot measure later this year on whether to update the telecommunications portion of the city's 40-year-old tax ordinance.

The proposal would reduce the current tax rate of 5 percent to 4.5 percent and is projected to generate about $2.8 million annually for the city to help pay for parks, streets, public utilities and employees.

Voters will decide Nov. 6. The measure would need a simple majority to pass.

The current utility users tax collected on telephone bills was written before cell phones existed and is woefully outdated. City financial staff fear most, if not all, annual revenue could be lost if it's not updated.

The utility tax also appears on cable, electricity and gas bills, but the problem is with the telecommunications portion. Technology has seen dramatic changes while the ordinance has stayed the same, and it would unfairly tax those without access to new technologies.

Dozens of California cities are facing a similar predicament, and some cities opted to reduce their tax rates to make it more palatable to voters.

"I think we would be much more likely to get a yes' vote with a decrease in the tax rate," Councilwoman Christy Weir said shortly before the 11:25 p.m. vote.

Mayor Carl Morehouse and Councilmen Brian Brennan and Neal Andrews preferred the current 5 percent rate and voted no.

The measure will include language to cover interstate and international calls, which have boosted revenues in cities that have modernized their tax rates by as much as 10 percent, or $280,000 in Ventura's case. Price competition between technologies could reduce the overall revenue over time, staff warned.

The city plans to do an education campaign on the measure. Phone surveys of potential voters showed that more than half would support a measure that does not increase the tax rate, a hired consultant told the council.

In other action, the council dropped a controversial proposal from a plan to reconfigure the Victoria Avenue corridor.

At the urging of opponents and city staff, the council agreed to scrap a proposal that would have reconfigured the eight-lane street to a six-lane thoroughfare with two local access lanes.

The council did continue to support the overall goal of trying to make the street more pedestrian-friendly and encouraging a greater mix of jobs.

In addition, Wal-Mart has agreed to study traffic impacts if it decides to submit an application to tear down the Kmart on Victoria and replace it with a new store, city staff said.