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Palo Alto revising business-tax guidelines
Planned changes include policies to exclude minors, nonprofits from filing statements

by Gennady Sheyner
Palo Alto Online Staff

Posted by Anonymous, a resident of another community, on Oct 14, 2009 at 1:35 pm

It sounds fairly stupid to tax based solely on employee count. For instance, a car wash with 10 employees making say 400K a yr (a guess) pays more than two venture capital guys making millions?

Why not tax a portion of gross revenues or profits or something along those lines. At the present the city should be giving credits for having more employees.

Posted by suomy, a resident of the Fairmeadow neighborhood, on Oct 14, 2009 at 1:57 pm

Until they really come up with a solid proposal that they do not have to change willy nilly then I will vote for it. The current proposal is too open ended and hits the small business owner harder than the larger businesses

Posted by Tax Payer, a resident of the Community Center neighborhood, on Oct 14, 2009 at 2:09 pm

This business tax is the wrong tax at the wrong time. It will discourage small business expansion and discourage new businesses. What happened to a goal for Palo Alto to be the heart of Silicon Valley innovation? This business tax certainly discourages that goal.

Posted by Marvin, a resident of the Charleston Gardens neighborhood, on Oct 14, 2009 at 2:18 pm

Can they do this--a revision of the guidelines? i though the ballot measure has been written and what i sin the measure is what we vote on--not an open ended measure that can be changed at the council's leisure. I assume Drekmeier either did not know what the measure says or he feels that he can change things now, a few weeks prior to the election.

Posted by Rick, a resident of the Green Acres neighborhood, on Oct 14, 2009 at 3:40 pm

The only reasons the City is revising the business tax now is they can see it going down in flames.

Next time I advise every City Council person to read very carefully every word of a tax measure that's going on the ballot; perhaps then you can avoided some of the blunders that have occurred.

Many residents, in this town of smart people, have read every word of it and they don't like it. The "No" on Measure A campaign has been very successful.

Posted by What am i voting for?, a resident of the Downtown North neighborhood, on Oct 14, 2009 at 4:51 pm

How can the council put something on the ballot for us to vote on and then have the power to change it afterwards! In fact, they can't even wait until after we've voted to begin changing it. Whatever they take away now, they can put back later.

Posted by Jim Burch, a resident of Another Palo Alto neighborhood, on Oct 14, 2009 at 5:39 pm

I'd like to respond to some of the earlier comments. Two methods were considered on which to base the tax: gross receipts or number of employees. The response by the business community was overwhelmingly in favor of the employee method.

I believe what Mayor Drekmeier was saying is that minor wording could be changed in order to clarify the intent of the ordinance, Do we really need to make clearer that teen agers who mow lawns or babysit or run a lemonade stand will have to pay anything or even have to file an exemption? Yet this is what Justman and the opponents of Measure A use as legitimate arguments. Justman said one senior citizen told him she supplements her income by washing and mending clothes and said "she would be darned if she let some city employee come in and get into her supplemental income."

Do you know what would happen in Palo Alto if anything remotely like that were to occur?

Of course you do! The media would have a field day, the national media would pick it up:"City forces lemonade stand owner to buy $75 license" and more would follow. There would be huge crowds of parents at City Hall. When this argument is so illogical, why

do the opponents continue to use it and other absurdities in ballot statements, speeches, mailers and ads? In my view it is because they know the power of fear as a motivator

The sobering aspect to me is that some people obviously believe it. But then I remember the reasons given for why we had to invade Iraq ("they have weapons of mass destruction") and the reasons given now in the fight against health care {"you can't choose your doctor, etc.") and the power of fear to confuse and upset and motivate is everywhere.

Read the City Attorney's impartial analysis on page 9 of the Voter Information Pamphlet. It's easy to read and gives you all rates. Run some examples for yourself. A restaurant with 20 part-time or 10 Full Time Equivalent = $381 per year. An attorney who works alone = $75, with two additional employees = $265. MACY'S (assuming the equivalent of 200 full time employees = $684. Does ANYONE actually believe that these fees would or could make a business want to leave Palo Alto?

These are the fees that will help preserve our valued services and resources.

Measure A is critical to our future. Please Vote YES on A!

Posted by Hyperbole, a resident of the Adobe-Meadows neighborhood, on Oct 14, 2009 at 6:19 pm

"Save our Services" a bit melodramatic. Where do I get a lawn sign for "No on A?" Bad timing.

Posted by No on A, a resident of the Charleston Gardens neighborhood, on Oct 14, 2009 at 7:13 pm

[Post removed by Palo Alto Online staff.]

Posted by R Wray, a resident of the Midtown neighborhood, on Oct 14, 2009 at 7:47 pm

Undoubtedly the main purpose of Measure A is to establish the principle that local businesses are the milch cows of city government. Later, the rates can easily be adjusted upward to something more "reasonable". Those who control want flexibility.

I will vote No on A.

Posted by cake, a resident of the Crescent Park neighborhood, on Oct 14, 2009 at 8:06 pm

As Jim's noted above, most people don't appear to understand the actual impact of the measure. Don't take his word for it, if you have a personal problem with him, read up on it.

Vote Yes on A.

Posted by Kate, a resident of the Duveneck/St. Francis neighborhood, on Oct 14, 2009 at 8:13 pm

I suggest that City Hall find out if it's even LEGAL to change the wording or details on a Measure after it is printed in the election information guide. Also, the City Clerk, whose job it is to certify the eligibility of those running for office, claims she didn't have the "time" to submit Victor Frost's case to the District Attorney's office for a ruling. Didn't have the TIME? She has a staff, and it was her JOB to take the time to make certain that our voting process in Palo Alto is legal and is not put up to ridicule as Frost is doing. This is a mockery of the election process. Did she get a bonus for meeting "goals"?? Someone in City Hall should know whether or not the Measure A rules can be changed for better or for worse. The "worse' part worries me a lot.

Posted by anonymous, a resident of the Midtown neighborhood, on Oct 14, 2009 at 8:55 pm

Typical of our city council -- the ink is not even dry, and they are changing the tax already. Is this the same council that did not read the high-speed rail issue before they voted on it? Honestly, can we get them to read something before they jump on the bandwagon?

I am disappointed in the council candidates - they have been caught with their pants down: supporting a tax which is now under revision before it is voted upon!

Posted by resident, a resident of the Community Center neighborhood, on Oct 14, 2009 at 9:00 pm

This tax is just a give-away to the unions. Most of the city expenses (and this new tax revenue) will go straight to the employees -- and they know it! Remember them - the strike a week ago? I know, it hardly registered a blip to any citizens, but they are not stupid. If they drag out negotiations until after the election, they will get ALL of this money.

This is just not fair - why should we be taxed, and give money to the union, when there is a global downturn?

Posted by Math teacher, a resident of the Duveneck/St. Francis neighborhood, on Oct 14, 2009 at 9:16 pm

Jim Burch:

Check your math. Macy's wouldn't pay $600/year with 200 employees. They'd pay $6,000+ per year.

Posted by Living in PA, a resident of the Community Center neighborhood, on Oct 14, 2009 at 9:59 pm

Jim -

In the past, not decency, common sense nor fear of mockery has stopped PA city government from absurd behavior and outlandish decisions.

The council seems to be in its own world of ideology and theory, and only responds to reality on the ground when certain people essentially scream in their ear.

"Do you know what would happen in Palo Alto if anything remotely like that were to occur?

Of course you do! The media would have a field day, the national media would pick it up:"

This has already happened, and it is not a legitimate argument for actions that might allow things to occur.

Posted by Susy, a resident of the Green Acres neighborhood, on Oct 14, 2009 at 10:12 pm

"This tax is just a give-away to the unions." This is not so; if the Business Tax fail the City has already said: "they are proposing to cut school support before City services"

If Measure A fails they won't do what you expect them to do i.e. cut Union benefits; they will cut some of the $6 Million they give to the PAUSD in return for Cubberley and the School District's playing fields. In other words they will make quite sure they hurt you or your children by cutting school support.

Posted by resident, a resident of the Community Center neighborhood, on Oct 14, 2009 at 10:24 pm

Susy writes: "If Measure A fails they won't do what you expect them to do i.e. cut Union benefits; "

Susy -- I respectfully disagree. Look at the other side: if this PASSES, it is obviously a pile of money that the Unions will try to grab. If the city has funds, the unions will just dig in their heels harder. As long as the union deal is stalled until the election, I guarantee passage of Measure A will change the negotiation behavior! Like it or not, this money goes straight to a union. The council screwed up -- they should have closed the negotiation first, then put this on the ballot. Of course, by then they could have gotten the wording right.

Posted by LemonadeParent, a resident of the Community Center neighborhood, on Oct 14, 2009 at 10:31 pm

Jim -- you think the city won't tax old ladies and teenagers? I don't believe you.

"Do we really need to make clearer that teen agers who mow lawns or babysit or run a lemonade stand will have to pay anything or even have to file an exemption?"

This is funny, because my kids tried to sell lemonade in the park. Guess what? The city employee who patrols the park intimidated them into leaving, because they did not have a license. You could not have chosen a better example of poor city behavior. Your own example is in fact reality here. It pervades every aspect of this city and how they treat a) entrepeneurs, b) kids.

So I believe you would tax children. Really.

Picking on 10-yr olds. Honestly. Now you are going to tax them.

Posted by cake, a resident of the Crescent Park neighborhood, on Oct 15, 2009 at 8:03 am

This is all just a re-hash of the previous weak arguments. Nearly every city in California has a business tax and there are no reports of "picking on 10-yr olds".

Get informed!

Posted by Get educated before making an argument already made, a resident of the University South neighborhood, on Oct 15, 2009 at 9:20 am

I'm so sick of the argument "everyone else has a business tax so why don't we!" How is this a good argument? When your kid tells you all their friends have a new bike, do you go out and buy them one?

Most cities have business registries that are much more reasonable (ie. $75/business). It's an opt-in kind of thing where 2 1/2 employees are not required to manage the process. Drekmeier stated in the debate on Tuesday that 2 1/2 employees would be required to do this process. Imagine who will be paying those salaries and benefits for years to come? That's right! Just another log on the fire to fuel our budget crisis. Why continue to fuel the fire? Why don't we make the tough decisions and put OUT the fire!?

Just because other cities have a business tax, does not mean that we should have one too...let alone a POORLY written one. Don't let the "everyone else is doing it and I'll be left out" fear drive you to make a poor decision on election day.

VOTE NO ON MEASURE A!

Posted by Marvin, a resident of the Charleston Gardens neighborhood, on Oct 15, 2009 at 9:43 am

Check out today's Daily Post Editorial page--they state what is different as far as our proposed business tax and the business taxes that other cities have (which negates the Drekmeier/pro-tax argument that all cities have taxes).

I would consider voting for this tax if the city council would guarantee that it would be used solely for infrastructure repair. Unfortunately, the city council cannot be trusted with money and do not know how to keep their word or take responsibility for thier actions or lack thereof.

Also I am not sure that the council can change the tax proposal now that it is already on the ballot.

I forsee this money being used for the usual nonsense--extravagent bonuses for managers just showing up for work, Children's Theatre, History museum, Destination Palo Alto, green coordiantor.

Count me as a "no" vote on this issue.

Posted by cake, a resident of the Crescent Park neighborhood, on Oct 15, 2009 at 9:55 am

Get Educated, And I'm so sick of the argument that all the businesses will leave because Palo Alto introduces a tax that everyone else has.

Get informed!

Posted by They already left!, a resident of the University South neighborhood, on Oct 15, 2009 at 11:00 am

The businesses have already left because they couldn't afford the rents! 14% vacancy rate in downtown. That's the highest!

Town and Country is thriving only because they offered lower rents than downtown. "In her shoes" just moved to Town and country because of the lower rents. People are either changing locations within Palo Alto (and losing revenues for the days they are closed) or getting out of town. Why drive more businesses away when they are holding on by a thread?

These statements are based on my discussions with local business, just not my opinion. See for yourself and go talk to business. It's not a mystery and it's not a complex issue. It's high costs. What's a business to do?

Posted by anon, a resident of the College Terrace neighborhood, on Oct 15, 2009 at 11:13 am

The problem with jim Burch and Mayor Drekmeier's rational is this: sure the little old lady making "pin money by taking in laundry" might be purposely ignored by the present powers that be, but a good ordinance would not have to rely on the discretion of interpretation, it would be written in a way to provide for the kind of tax structure we really believe in.

The argument that a car wash with ten employees ( and i believe most car washes have many more than ten employees ) would pay more than a small professional group such as

big developer or VC firm is pretty troubling.

We have lost so many small service or retail businesses recently in Palo Alto. Is it the intention of the proponents of measure A to turn Palo Alto to one big office complex were residents have to go to other cities to get there cars washed and purchase small items....

hardly compatible with the idea of a walkable city!!!

Posted by barbara, a resident of the Barron Park neighborhood, on Oct 15, 2009 at 11:26 am

I don't think the number of people against this tax is limited to a "small" group of small businesses. I think alot of people are against it and as one respondent said, voting on something that can be changed at will if it is approved is the biggest reason of all not to vote for it.

Posted by cake, a resident of the Crescent Park neighborhood, on Oct 15, 2009 at 11:29 am

They already left!, You claim on the one hand that we shouldn't tax and let market forces decide and on the other that they have left because rents are too high.

What are you saying? You don't want a tax but you want rent control?

If this tax were going to send them under, the businesses were going under anyway.

Posted by Ellen Fletcher, a resident of Another Palo Alto neighborhood, on Oct 15, 2009 at 11:38 am

Kate wrote:

"... the City Clerk, whose job it is to certify the eligibility of those running for office, claims she didn't have the "time" to submit Victor Frost's case to the District Attorney's office for a ruling. Didn't have the TIME? She has a staff, and it was her JOB to take the time to make certain that our voting process in Palo Alto is legal and is not put up to ridicule as Frost is doing. This is a mockery of the election process."

I believe she meant that the legal case couldn't be resolved in time before the November 3rd election.

Posted by pat, a resident of the Midtown neighborhood, on Oct 15, 2009 at 11:46 am

So Mayor Drekmeier guarantees that the city has absolutely no intention raiding the homes of those who don’t pay the business tax. He says, ”I’ll go on record saying that’s never going to happen.”

Will every future mayor and city council buy into this guarantee?

Drekmeier says only "two or three" employees will be hired to administer the tax, at a cost of $250,000. Does this include benefits and pensions? Will this little department grow in the future to include auditors and others?

While Drekmeier accuses anti-tax proponents of scare tactics, what about the city threatening to cut support of the Cubberley Center if Measure A doesn't pass?

The truth is that the PAUSD owns Cubberley Center, which is funded from the Utility User’s Tax The UUT currently generates about $11.25M/year.

Drekmeier also says city officials are working to “clean up” the language of the 15 page ordinance to make it clear that teens are exempt from the business tax. Are we expected to vote for a law that is still being revised?

A new tax is not the answer to Palo Alto’s budget problem. The more we give them, the more they will spend. Vote NO on Measure A.

Posted by Justin Mayle, a resident of the Palo Verde neighborhood, on Oct 15, 2009 at 1:18 pm

Starving artists, sole proprietors, therapists, musicians, dog sitters, child care in your home, selling items on ebay? Photographers who charge for services, car detailers, anyone who earns money even if there is no profit.

If you're over 18, you'll pay the tax. Even part time endeavors. Home businesses will be taxed. And, without a cap, yes, the City of Palo Alto can change or modify the tax at any time. Vote NO on Measure A.

Posted by Wayne Martin, a resident of the Fairmeadow neighborhood, on Oct 15, 2009 at 1:18 pm

From above:

> Measure A is critical to our future

From the Measure A flyer, signed by maybe 20 “community leaders”:

> Failure to pass Measure A will necessitate cuts to the highly valued

> community services that have been the hallmark …

What’s amazing about these claims is that if Measure A passes, the $3M of “new” revenue amounts up to about 2.25% of this years roughly $140M budget. By what logic does 2.25% constitute a “critical” component of anything?

Thinking this through a little more .. the other revenue streams the City looks to for its expenditures will grow when the economy picks up again .. and the budget will grow again .. beginning to head for $200M a year. The Measure A funds will only increase by CPI, so the 2.25% will become smaller in the future.

So .. what “services” will this money, targeted for the General Fund, actually save? Amazingly .. this group of “community leaders” has failed to be specific .. they have used “scare tactics” to threaten the electorate .. not once seeming to believe that City reorganization, more effective management and e-Government will be reducing head count in the future, reducing the need for "new revenue".

Folks .. think this thru ..

Vote NO on Measure A!

Posted by Save downtown, a resident of the Downtown North neighborhood, on Oct 15, 2009 at 1:21 pm

Vote No on A. Why should the business' pay for what the city can't seem to handle, their own budget. Again the city wants to tax the business but pay for a farmers market out of our city's budget. Stop the madness and vote down measure A and do away with a subsidized farmers market, Crazy

Downtown already looks like a homeless shelter with all the panhandling going.

Posted by Kate, a resident of the Duveneck/St. Francis neighborhood, on Oct 15, 2009 at 1:31 pm

To: Ellen Fletcher:

No Ellen, I meant what I said. There was PLENTY of time between the last date for filing for election and the election to send the Frost case to the DA - starting Day One. It was not as if the Clerk's office didn't know what Frost planned to do. He took out the papers long before the final filing date. And that was about 2 1/2 months before election. Plenty of time to at least start the process and AT LEAST make an effort. The POST had a good editorial on this today, October 15th. And P.S. Maybe "Woody Woodpecker" lives on or by that same Page Mill telephone poll too. Since the County can't- or won't - verify who is even a legal voter anymore, there are a lot of "Donald Ducks" voting and pseudo Woody Woodpeckers. . Anybody can register - at the DMV, on-line, at card tables set up in malls and bars - anyplace. And the names are rarely checked - if ever. Our voting requirements are a disgrace and a fraud.

Posted by David Lieberman, a resident of the Professorville neighborhood, on Oct 15, 2009 at 2:29 pm

So Drekmeier, a 45 year old man who has never held a job in his life, is now an expert on small business and home based business in Palo Alto.

And how did he get on the city council in the first place? Was everybody asleep? Victor Frost's resumé is a lot more impressive.

Posted by Herb Borock, a resident of the Professorville neighborhood, on Oct 15, 2009 at 3:47 pm

If and when the proposed tax is approved by the voters, designated staff can issue administrative guidelines, but as long as there is no ordinance there are no administrative guidelines that can be issued or changed.

Posted by jimmy, a resident of the Barron Park neighborhood, on Oct 15, 2009 at 4:53 pm
jimmy is a member (registered user) of Palo Alto Online

can you trust a city that charges onto your utility bill street sweeping and street lights and the cost to rent park land from stanford?

sure you can trust them to change the rules of a new tax after the sample ballots are printed but before the vote

well at least we can trust them to protect our trees...

Posted by jimmy, a resident of the Barron Park neighborhood, on Oct 15, 2009 at 4:57 pm
jimmy is a member (registered user) of Palo Alto Online

this is about the principal of the thing

small business is getting hammered and we need to draw a line in the sand

we are small enough to fail

we have all seen city worker asleep in there trucks, lets wake them up and tell them we are in a recession

Posted by John, a resident of the Meadow Park neighborhood, on Oct 15, 2009 at 6:56 pm

Enough taxes already! Vote no.

Is it going to go where we are paying 100% of what earn to pay city, county, state and fed taxes? Who isn't in our pockets? These business taxes will have to passed on to the consumer. They will only go up in the future.

All the fees and taxes are already crippling the California economy.

Please wake up before its too late! And I think it already is.

Posted by I thought we needed the money now?, a resident of the Crescent Park neighborhood, on Oct 15, 2009 at 7:42 pm

Great points Wayne Martin and in addition, on page 9 of the sample ballot the first taxes will not even be collected until January 2011, so how does that help the budget crisis NOW? It doesn’t vote NO on A.

Posted by Kevin Ohlson, a resident of the Old Palo Alto neighborhood, on Oct 15, 2009 at 10:51 pm

I am a long-time business owner, working out of our home in Palo Alto. To be honest, I don’t mind paying a reasonable fee for basing my business here. Every city but Palo Alto has one. Pretty standard stuff, and there's perhaps an element of "civic duty" in this.

But the proponents have served up a tar ball. I say this for a couple of reasons. First, to me “reasonable” includes both cost (actual amount of the check) and the effort (hours to figure out how much the company owes) required to pay. I can’t speak for every business in town, but my business does work with many different people, and according to the proposed ordinance I have to figure out how to account for them. I’ve read the proposed ordinance three times--it’s not very clear at all--and I believe reasonable people could come to very different conclusions about its intent. I believe the city recently tried to clarify the situation, but the way I read that was “we’ll let you know after you vote for it.”

Second, since I haven’t had the time to do some precalculations on what tax the company may owe, I took a few minutes to see what surrounding cities (Menlo Park, Mt. View, and Los Altos) charge. I believe these are better comparisons (not San Jose, San Mateo, and Union City, which the city uses). The fees in Mt. View and Los Altos range from $30 to $180, and Menlo Park ranges from $50 to either $8,000 or $30,000 (for $100M businesses). Palo Alto will be much higher.

So, I can’t vote for it. I wanted to, back when I thought it would be reasonable. Maybe next time.

Posted by John Galt, a resident of the Fairmeadow neighborhood, on Oct 16, 2009 at 9:56 am

No on A, send the city a message they MAY be able to understand. No more taxes! Bloated government should be told in no uncertain terms: Live within your means and provide contingency savings for lean years.

Simple.

Posted by David Lieberman, a resident of the Professorville neighborhood, on Oct 16, 2009 at 10:47 am

Mayor Drekmeier in his defense of Measure A states that he "guarantees" that minors doing babysitting chores will be excluded and that the city will not enter peoples houses to see if they are conducting (shudder) a business.

Mayor Drekmeier's "guarantee" isn't worth the paper it isn't written on. What good is a "guarantee" without consequences. If I were to "guarantee" that nobody who lives in Palo Alto would ever get sick, would you believe it? If Drekmeier funds an escrow account with, say, $10 million of his own money to compensate anybody who is harmed if such events happen, then I might be inclined to take his "guarantee" seriously.

It so happens that there is a way to "guarantee" that the harmful consequences of Measure A never happen; defeat it.

Posted by Kate, a resident of the Duveneck/St. Francis neighborhood, on Oct 16, 2009 at 6:21 pm

Where was our expensive legal department - 8th floor - during the crafting of Measure A? In fact, where was our legal department when employees 'rights' were ignored during the Children's Theater fiasco? Why doesn't the City Auditor "audit' the legal department and City Attorney Gary Baum - and find out how many times and why the city goes outside to hire more legal help for this and that when they have a sufficient number of attorneys already employed? Certainly if 'ordinary' citizens can smell the flaws in Measure A, the legal department could have done so - and there is at least one lawyer on the City Council. Did they really think that the residents, known to be 'fairly well educated' would not howl in rage?

Vote wisely for City Council. Maybe, just maybe, we. the residents, can clean out the stable.