|
Getting your Trinity Audio player ready...
|
Palo Alto voters offered the City Council a financial lifeline on Tuesday night when they overwhelmingly approved the city’s business tax and emphatically affirmed its historic practice of transferring funds from the gas utility to pay for basic city services.
By approving Measure K and Measure L, in both cases by huge margins, voters have significantly brightened the financial outlook at City Hall after two years of uncertainty. Even though city revenues have largely rebounded after taking a hit during the pandemic, the current budget relies in part on one-time sources such as federal grants to fund public safety positions and other basic services. City officials had warned that without new revenue sources, many of the services that had been reinstated over the past year would need to be cut once again.
The two measures sailed through with ease, with Measure K, the business tax, picking up 67.4% of the vote and Measure L, the gas transfer policy, earning 77.9%, with all precincts reporting.
Keith Reckdahl, who led the Measure K campaign, said the result suggests the fact that people generally trust the local government and think highly of the quality of local services.
“They think the government is doing good things for them and this is their opportunity to help with those things,” Reckdahl said.
The adoption of business tax follows years of debate and intense negotiations with local and regional business leaders. The tax is projected to raise about $9.6 million annually, with proceeds split among three categories: affordable housing, improvements to the rail corridor and public safety. It would apply only to businesses with more than 10,000 square feet of space and it would tax businesses $0.075 per square foot, with taxes capped at $500,000.
The new tax will be far more modest than the one that the council had contemplated earlier this year, when it considered a rate of 12 cents per square foot and exemptions for businesses with less than 5,000 square feet of space. That version, which was expected to raise about $15 million, was scuttled over the course of negotiations between a committee of council members and leaders from the Palo Alto Chamber of Commerce and the Silicon Valley Leadership Group. The two organizations were preparing to campaign against the new business tax but agreed not to oppose it after the measure was scaled back.
Reckdahl suggested that the compromise was key to Measure K’s success. While many residents had hoped that the business tax would bring in more money, a higher rate may have jeopardized the measure with the business community preparing to spend significant sums to defeat it. The city’s prior effort to institute a business tax fizzled in 2009 after businesses came out strongly against it and voters rejected it.
“We got some money. We would’ve wanted to have more, because these are good causes, but better to have a high chance of some money than a small chance of more money,” Reckdahl said.
Council member Eric Filseth, who sits on the council’s Finance Committee, said he was pleased with the results on both tax measures. On Monday night, he was among the council members who declined to support a planned purchase of dinosaur sculptures at the Palo Alto Junior Museum and Zoo, citing his uncertainty about Tuesday’s election results. He was pleased to see early results showing both measures leading by a big margin.
“I think Measures K and L are good for Palo Alto and I think more residents recognize that. I’m glad to see a lot of people agree with that,” Filseth said.
Unlike Measure K, Measure L does not direct funds to any particular program or service. Rather, it allows the city to transfer about $7 million annually from the gas utility to the general fund, which pays for most basic services not relating to utilities. The vote authorizes the city to transfer up to 18% of the gas utility’s revenues to the general fund, consistent with historic practice.
The city was forced to halt the transfer practice in 2020 after a Santa Clara County judge ruled that it amounts to an illegal tax. The council then moved in August to place a measure on the ballot that would explicitly authorize the gas transfer.
“It’s something that people have voted for many years ago and I think a lot of our longtime residents know about it so they’re just reaffirming it,” Vice Mayor Lydia Kou said minutes after the early results were released. “They also see the good that it does for the city, in terms of a lot of the community services and things they enjoy.”
Leah Russin, who ran the Measure L campaign, said the campaign had a clear message: now is not the time to be cutting funding. The measure is particularly urgent at a time when the city is losing federal funding from the pandemic and striving to meet an ambitious climate goal of carbon neutrality. For proponents of Measure L, it helps that the money is coming from fossil fuel that the city is hoping to discourage. And even with the transfers, Russin noted, the city’s gas rates remain cheaper than PG&E.
“We didn’t want to put ourselves in the position of potentially incentivizing people to keep gas appliances,” she said. “That just doesn’t make sense for our city’s climate goals.”
Thank you to Keith and Leah for their hard work on helping get these measures passed
Is measure L retroactive or does the city still need to refund money for previous overcharges?
Please remember to prioritize city services, particularly our inefficient and unreliable power supply.
Thank you to Keith and Leah for chairing the two campaign committees and to everyone else that worked on these campaigns.
And a big thanks to the voters who supported these measures. The city’s budget is in good shape and can continue to provide the high quality services that are expected.
@Paly Grad
The city will still be providing refunds to residents resulting from the gas transfer settlement agreement.
Still waiting to hear any calls for accountability on spending by a city preparing to spend $144,000,000 on a fiber network about which its business users are complaining about when our current electrical grid is so unreliable, spending money for a DINOSAUR garden at a sterile museum no one visits after the city hired a consultant with NO local knowledge to destroy the treasured gem it replaced, etc etc etc.
So when will this fine city finally restore the library hours we’ve long been demanding?? Or do we need to hire more consultants to decide whether that’s really a priority?
Maybe when our “leaders” are done patting themselves on the back they can tell us when they’ll START advertising to fill those positions at the libraries and the police department.
Great! Now can they bring back full library hours and the free shuttles?
“Unlike Measure K, Measure L does not direct funds to any particular program or service.”
As I understand it, though, Measure K has no requirement to direct funds to any particular program any more than Measure L does; the City just put suggestions into the ballot description to make it sound more appealing to voters who favored those priorities. But the money still goes into the General Fund and could be used for anything at all.
I have just paid my property tax since it is November. As usual, it is higher than last year. It really made me think.
I am surrounded by properties that are being remodled and in the past couple of years there have been several properties that changed owners, the old ones having been owned by the prior owners for a couple of decades at least. This shows just how much more money the county is receiving from just my street alone.
I do know that the county and the city are separate entities, but it shows that there is a lot more tax dollars being gleaned from us and that seems to be continuing.
We are residents in an affluent suburb in an affluent county. Yes there are many who find it tough to live here, tough to afford the basic necessities to live each month, those who are not even able to find somewhere to live even though they are employed. But there are those of us who are in our own homes and doing our best too. We are often the forgotten, those who bought here because we worked hard and saved, denying ourselves some of the luxuries of life to enable us to do so. We never bought daily coffees to go, bought bottled water to drink at home, or felt the need to dine in Michelin restaurants or shop in yuppie grocery stores or wear designer label clothes.
We do not have bottomless pockets and wallets full of spare cash. We want to see our taxes spent wisely and without being asked for more so that dinosaurs can be bought or more street obstacles are put in to help bikers who pay more for their bikes and gear than we do on a week’s groceries.
Let’s put the average Palo Alto resident first for a change.
@Bystander, excellent points. The city used to publish how much more it took in every year from property taxes due to remodels, sales, etc. but come to think of it, I haven’t seen one of those reports lately. I’d love to see one of those reports because in the past the increase in property tax revenues was pretty dramatic.
I too resent the staff and the CC assuming that we’re all wealthy and thus willing to pay for every single brainstorm they devise WITHOUT providing oversight and holding staff accountable when obvious screw-ups occur. For example, Palo Alto Weekly did an excellent expose in the problems with the solar permitting staff and how none were issued for a very long time and how no one noticed until staff read the expose.
How much money did the city lose in addition to the tens of thousands of dollars homeowners lost?