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Business tax proposal moves ahead in Palo Alto

Original post made on Sep 17, 2019

Palo Alto forged ahead Monday toward placing a business tax on the 2020 ballot when the City Council majority signaled its support for charging local companies to pay for big-ticket transportation projects.

Read the full story here Web Link posted Tuesday, September 17, 2019, 8:03 AM

Comments (20)

29 people like this
Posted by Pied Piper
a resident of Gunn High School
on Sep 17, 2019 at 11:51 am

Pied Piper is a registered user.

Our taxes are never enough for elected officials.
There's little accountability, no guarantee of results or efficiency.

Money is the opiod of politicians.


20 people like this
Posted by Judith Wasserman
a resident of Leland Manor/Garland Drive
on Sep 17, 2019 at 11:51 am

Judith Wasserman is a registered user.

It's about time. The idea that taxes are always too high is counter to living in a society. If you like civilization, pay taxes. Otherwise, you may be happier in a more rural community.


24 people like this
Posted by Novelera
a resident of Midtown
on Sep 17, 2019 at 12:17 pm

Novelera is a registered user.

So Judy Kleinberg thinks it should require 2/3 of voters to pass. That sure sounds like the Chamber wants a high enough bar to perhaps prevent it happening at all. And, even better, after it fails, there won't be another effort to get such a tax.

Every single city on the peninsula has such a tax. Frankly I'm appalled that businesses profiting from living in such an affluent community are fighting tooth and nail against paying their fair share.

Those of us who've lived in this town for many years (37 for me) have watched as many, many businesses appear to want to benefit from the "cachet" of a Palo Alto address. I certainly doubt that a reasonable business tax is going to dis-incentivize these carpetbaggers.


5 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Sep 17, 2019 at 2:23 pm

Gale Johnson is a registered user.

I tend to agree with Novelera. Just moving to PA in 1961, after receiving a job offer from Philco's Western Development Labs, made me feel special, and when I later took a job with Kaiser Electronics in 1964 in their facility in Stanford Industrial Park, it made me feel even more special. The name of the city along with the Stanford connection made me feel more special and proud and I think it might have impressed some of my friends, neighbors, and relatives. I wasn't smarter than I was before (I never attended Stanford), but it might have given that impression. Giving credit to businesses having brains (at least the ones running the businesses)...I think they think along those same lines. A slow move on the business tax is best. It should reveal what impact and tolerance level it would have on companies that want a Palo Alto address, how much it's worth. If they have smart people on their financial side, a 1-2% difference isn't going to be a show stopper and a cause to move.

I have watched most of the council sessions online and I like what I see. They seem to be more respectful and civil towards one another than the previous 9 member council. We've got a good team together.


7 people like this
Posted by musical
a resident of Palo Verde
on Sep 17, 2019 at 2:51 pm

We just finished raising the hotel business tax to 15.5 percent. Are we raising it again?


14 people like this
Posted by common sense
a resident of Midtown
on Sep 17, 2019 at 6:54 pm

A business tax could be a good thing, if it's dedicated to capital projects for the public good. A business tax would be a bad thing if it's being done because "every other city has one".

The key question is the city government trustworthy enough to spend the money on actual capital projects, or will this be another funding mechanism for salary increases, goofy pet projects of city management and city council.

We just passed raising the hotel tax - show us where that money went. We voted for sales tax increases for improving transportation - but many of our streets are still needing repaving. Remember the parcel tax that suppose to reduce class sizes and provide other services? it went to multiyear salary increase for the school district employees and management.


5 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Sep 17, 2019 at 8:36 pm

I'm not against a business tax if its done properly. I would be wary against mom and pop businesses employing minimum wage earners a huge whack. They are already finding business hard, they should not be taxed out of business.

I always worry about middle size businesses. If you tax them by employees over say 50 or 100 people, they will keep to 49, and any extras will be called contractors, or part time, or temporary, or seasonal or whatever. Some businesses may have more employees for seasonal work. Some may depend on 16 year old high school student workers since they are operating evenings or weekends.

Then of course there is what is going to be done with the money. If it is for transportation issues, then we must make sure they are not planning to spend the money on bikes, e.g. Ross Road or Arastradero, but are using it to buy and run additional shuttles to and from high way ramps, or providing satellite parking lots with shuttles.

We have been promised garage signage to show available spots. Not happened. There has been talk about smart parking meters, or parking apps on phones, or parking payment apps on phones, or technology that shows where the shuttles are and how long they will take to get to the various bus stops.

In other words, let us see where the money is going to be spent and then make sure it is spent on that. Improve life for all of us that live in town, not for the ones who want to live here. We should be investing in quality of life improvements for residents.


5 people like this
Posted by senor blogger
a resident of Palo Verde
on Sep 18, 2019 at 9:11 am

So.. when the council wants to chicken out on a vote they put it on the ballot.


11 people like this
Posted by Pat Burt
a resident of Community Center
on Sep 18, 2019 at 12:17 pm

Pat Burt is a registered user.

As Tom Dubois explained on Monday, Palo Alto has three big needs that current revenues are far short from being able to address adequately; traffic congestion, affordable housing and grade separations. Addressing these needs is essential to the well being of everyone, residents and the business community alike.
Each of these problems is being compounded by the huge growth in our region's high tech industries, but Silicon Valley remains an exceptionally low local business tax region with Palo Alto being one of the few communities with no business tax. In contrast, the average business tax rate in local communities is less than 5% what San Francisco charges businesses, yet tech companies continue to expand there at rapid rates. Clearly, even SF's rates represent only a small fraction of the large cost premiums that tech companies are willing to pay to be located here.
Palo Alto is overdue for its larger businesses to pay their share to meet the critical needs they have created.


8 people like this
Posted by Kenny
a resident of University South
on Sep 18, 2019 at 12:25 pm

"I'm not against a business tax if its done properly. I would be wary against mom and pop businesses employing minimum wage earners a huge whack. They are already finding business hard, they should not be taxed out of business."

A business tax would be a hardship for many Palo Alto businesses. They are already hard hit by exorbitant commercial rents, and many longtime businesses, such as Kimura Gallery, Congdon & Crome and Prolific Oven have closed as a result. There are many, many others. That results in increased inconvenience and decreased quality of life for residents, especially downtown. That is unlikely to change as long as there is a shortage of commercial space.

Small business employees were not exempted from the RPP parking tax. Do you really think they will be given a break on the business tax? The city government identifying a potential new revenue stream is like a shark smelling blood in the water.


16 people like this
Posted by Pat Burt
a resident of Community Center
on Sep 18, 2019 at 12:49 pm

Pat Burt is a registered user.

@ Kenny
Most communities either exempt or heavily discount smaller businesses and retailers in particular. The city council has already identified small retail and hospitality (hotels) as categories for lower rates or complete exemptions.
The problem of losing small, values local retailers is an important issue, but the causes and solutions are different from what you describe. For over three years city council has has a ban on conversion of retail to other uses. This has also helped to reduce the rate of rent increases on the retail sector.
The problems those businesses are facing are multiple, online competition, along with traffic and housing choking off the availability of retail workers while imposing severe hardships on their remaining workers. Those are the issues that the proposed tax would be targeting.
As far as the RPP, the downtown RPP offers highly discounted permits for low income/retail workers. In addition, the downtown TMA provides subsidies for transit passes and ride share apps for low income workers. This is one of the key programs that council member DuBois proposed would be expanded from its current pilot to citywide from the tax on larger businesses.


14 people like this
Posted by Can't trust Chamber
a resident of Midtown
on Sep 18, 2019 at 3:20 pm

>So Judy Kleinberg thinks it should require 2/3 of voters to pass. That sure sounds like the Chamber wants a high enough bar to perhaps prevent it happening at all.

Whatever Judy Kleinberg, President of the Chamber of Commerce (and her buddy LizKniss) want can't be good for residents. She sneakily wants the measure to fail by making it much harder to pass.
I do not trust her views.


2 people like this
Posted by Fr0hickey
a resident of Fairmeadow
on Sep 18, 2019 at 5:28 pm

Fr0hickey is a registered user.

I agree with business on not wanting to increase taxes. If the city needs to raise money for moving Caltrain tracks, then lets find the money without a tax that never sunsets and gets diverted to policitian's pet projects to ensure their re-election. I would support a multi-year fee increase for all residents and businesses to raise the money which sunsets after a set time.
Besides, businesses do not pay taxes. Its their customers that end up paying.


19 people like this
Posted by This makes Sense and Cents
a resident of Another Palo Alto neighborhood
on Sep 18, 2019 at 5:39 pm

Councilman Dubois and Former Mayor Pat Burt are right - we need a substantial business tax to pay for grade separations and affordable housing - things we desperately need. It is a no brainer and will benefit all, not harm businesses and won't break their backs as Pat Burt points out. Smaller businesses and retailers will pay a discounted amount - we are a progressive community and will have a progressive business tax.

The usual scare tactics from Stanford Research Park and Chamber CEO Judy Kleinberg were predictable and tiresome. But that didn't stop Liz Kniss from leaving the dais in the middle of the council debate to go into the audience for a long discussion with Kleinberg in advance of her vote. Liz however couldn't deliver for her.

Palo Alto needs to catch up with the other towns around us which have succeeded in fashioning sound business taxes. The sooner the better for everyone.


3 people like this
Posted by Resident
a resident of Midtown
on Sep 18, 2019 at 6:46 pm

I don't trust their so-called "transportation improvements" which would probably be more unused bike lanes, converting crucial arteries into exclusive "bike boulevards" that no one uses, reducing lanes and forcing through ridiculous ideas like HOV3 or HOV4 lanes.
Improving transportation doesn't mean punishing car drivers and make driving completely unviable so that then people will somehow voluntarily stop driving. It doesn't work that way. It's been proven not to work that way.
Why punish businesses when we ought to punish the real culprit: spendthrift government officials who never have to face any consequences.


1 person likes this
Posted by Gus L.
a resident of Barron Park
on Sep 18, 2019 at 8:55 pm

Read My Lips, No New Taxes!!


4 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 18, 2019 at 9:51 pm

Resident above is right about many of the silly transportation "improvements" that no one wants and that wreck out cars. Go read the reactions on NextDoor to the latest fiasco in the Charleston/Piazza shopping center -- another bulbout that's already impeding traffic from exiting the shopping center, backing up traffic and spewing more exhaust fumes.

Yes, we certainly need a business tax instead of shifting all the tax nurdens onto residents. But we also need to cut the budget for "traffic calming" and other nonsense that wastes our time and our patience and ruins our cars.

Maybe we could raise some awareness of the wasted money by having a contest for the dumbest traffic "improvement"


7 people like this
Posted by Can't trust Chamber
a resident of Midtown
on Sep 19, 2019 at 11:14 am

>But that didn't stop Liz Kniss from leaving the dais in the middle of the council debate to go into the audience for a long discussion with Kleinberg in advance of her vote>

Wow. What else do you need to know about Kniss?


14 people like this
Posted by Pat Burt
a resident of Community Center
on Sep 19, 2019 at 11:37 am

Pat Burt is a registered user.

On Monday Council member DuBois identified the the community needs and uses for the business tax; traffic congestion relief, grade separation construction and an expansion of affordable housing.
He identified two needs in traffic relief, expansion of the city shuttle bus system and a citywide roll out of the TMA. The TMA has been piloted successfully downtown to reduce commuter car trips through subsidizing transit passes and ride share apps for low income retail workers. The Chamber of Commerce and the business community initially committed that the TMA would be expanded and funded by their voluntary contributions. That hasn't happened and is not likely to happen. Instead, the program has been modestly expanded mostly through the city's general fund. Not only has the TMA reduced the traffic and GHG's from commuters, it is a key reason the council last year opted to put on hold spending around $30 million in city funds for a new parking garage. It is also helping retailers in their desperate need to retain employees, but it will take a substantial and sustainable funding source, like the business tax, to make it successful citywide.
Affordable housing in Palo Alto requires subsidies to be built. Non-profits who build that housing are able to leverage city contributions to get the balance of their funds from state, federal and private resources. Our latest 60 unit affordable project was approved recently on Wilton Court with neighborhood support. Unfortunately, that project depleted the city's affordable housing fund so that it will be around three years before we can help fund a next project. Tom DuBois' proposal would approximately triple our rate of building affordable projects. That's a big deal that would have a huge impact on meeting the expanding needs of valued low and moderate income workers.
Lastly, grade separations will be anywhere between very expensive and enormously expensive. The city is due to get a big down payment on this project from the VTA measure B that voters passed in 2016, but there will need to be a large local share of the costs to leverage to get regional and state funds.
That's the outline of what was proposed and the basis for a good community discussion.


8 people like this
Posted by Beenherea while
a resident of Old Palo Alto
on Sep 19, 2019 at 3:26 pm

Pat Burt is right - businesses can and should pay more for the amenities they want and need. The huge increase in the number of jobs is one of the main reasons these "improvements" are needed. Essentially, our existing infrastructure have been diluted by a large influx of new users. Before Prop. 13, businesses paid 2/3 of property taxes in California. They now pay 1/3 - instead residents foot the bills. Most of these new jobs pay very well - $100K - $200K are typical median salaries. Will these companies really leave to save $500/year payroll tax? Is Palo Alto worth so little? And, the profits of these companies are quite high as well. They can afford it, and have an obligation to contribute to the community in which they have chosen to locate. We do not *need* more jobs.


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