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Palo Alto pushes forward with hotel-tax increase

Original post made on Mar 4, 2014

Seeking to solve the city's once insurmountable infrastructure problem, Palo Alto officials agreed on Monday to put on the November ballot a a measure that would raise the city's hotel-tax rate by 2 percent.

Read the full story here Web Link posted Tuesday, March 4, 2014, 12:45 AM

Comments (15)

Posted by Midtown, a resident of Midtown
on Mar 4, 2014 at 7:55 am

After the $10M sidewalk project on California and the $20M soccer fields at the golf course there won't be much left in the reserve fund. More money is just an excuse to burn more money.


Posted by John, a resident of Mountain View
on Mar 4, 2014 at 8:52 am

Usually the tax increments are in 1% or less increases out into infinity.
The money wasters are now just doubling it to 2% at a time.
The other newspaper is going to have Palo Alto salaries featured. 25% of the city employees earn well over $100,000 plus generous benefits. Tree trimmers get $75,000.
Taxes already collected should have been going for infrastructure.
Taxing out of towners is your answer?


Posted by ellie, a resident of College Terrace
on Mar 4, 2014 at 11:06 am

Of course Liz Kniss wanted the lower 2% tax hotel rate - it benefits the corporations that she is devoted to and serves.

That Kniss justified her vehement support of the lower rate by stating (in her own words) that she worries that PA is often perceived by others as arrogant and full of hubris, and potential Palo Alto hotel patrons would stay elsewhere to avoid the implied snobbishness indicated by a 1% higher tax rate. I nearly choked. As if anyone would stay somewhere less conveniently located to save a very few dollars - 1%. Kniss was transparent in her position which has nothing to do with the appearance of civic hubris (of which she is a prime practitioner) but everything to do with her continual catering to corporate interests.


Posted by Eric F, a resident of Downtown North
on Mar 4, 2014 at 11:08 am

If you needed to raise revenue, a hotel tax is probably one of the more reasonable ways to do it. Increasing hotel demand is driven by increasing business resulting from office overdevelopment downtown, which the city gets little financial benefit from but which residents already pay for in terms of traffic and parking woes, and other quality-of-life elements. A hotel tax at least collects revenue related to the root problem.

But the larger issue, as others have pointed out, is the city's weak fiscal discipline. Public payroll is an element, as is Palo Alto's unfunded public pension liability of anywhere from $100-500 million, depending on whose estimate you believe. Individual decisions like the special Maybell election, hiring an expensive PR person etc, don't help. Palo Altans reject taxes and bond issues not because we're luddites, but because nobody trusts the city with money.

What the city -should- do is explain clearly to Palo Altans what it is doing to control its finances in a responsible way, take some concrete action, and -then- go back to the electorate for bond issues and tax hikes with a sensible plan. Not simply continue to ask for more and then throw up its hands.



Posted by Ann Bilodeau, a resident of Community Center
on Mar 4, 2014 at 12:24 pm

It is not clear from the article whether the proposed tax increase is two or three percentabe POINTS or two or three percent. An increase of percentage points would take it from 12% to 14% or 15%, while an increase of 2 or 3 percent would take it from 12% to 12.24% or 12.36%.


Posted by Not a newspaper, a resident of Evergreen Park
on Mar 4, 2014 at 12:32 pm

This is the second article on this subject where the reporter writing the story does not understand the concept of percentage points vs percent. This also demonstrates a sorry lack of proofreading of the stories.


Posted by Brian, a resident of Evergreen Park
on Mar 4, 2014 at 1:56 pm

Those of you who are complaining about the trivial semantic issue of percent increase vs percentage point increase are apparently being disingenuous - for whatever reason I will imagine, but not discuss. The story is quite clear on this issue, even if the reporter doesn't use your exact wording. The current rate is 12%, and the story discusses the options of 2% or 3% increases to 14% or 15%; all of this is in the story. Can it be any clearer?


Posted by Ann Bilodeau, a resident of Community Center
on Mar 4, 2014 at 2:07 pm

Dear Brian, Thank you. I confess I did not see the mention of 14% until I re-read it after your post. It is pretty far down in the story, and I have seen this problem in other stories in the Weekly and in other newspapers.


Posted by Don't look down your nose at the hand that feeds you, a resident of Another Palo Alto neighborhood
on Mar 4, 2014 at 2:46 pm

There is a well-known difference between what people say they will spend for something and what they will actually pay for something, and that difference is much larger when it comes to spending public funds. It's probably even larger if you talk to people on the side of town the City Council still regards and treats like dirt. (And we vote.)


Posted by Leona Helmsley, a resident of another community
on Mar 4, 2014 at 4:15 pm

The problem I have with Eric F's linkage of the hotel tax with office development is that the services and projects financed by the hotel tax will be used as an excuse for more office overdevelopment to ensure that enough hotel guests arrive to pay the taxes to finance the services and projects. How you frame the linkage determines which is the cause and which is the effect.


Posted by AIRBNBs should be taxed as well, a resident of Midtown
on Mar 4, 2014 at 6:45 pm

If there is going to be an increase on the taxes on the hotels, The City should start taxing all of the Airbnbs in the city. There are many of them. In case you do not know what they are- they are residential families who rent out one or more or all of their houses for a fee per night. They advertise on Airbnb and people stay at their houses for one or more nights and are charged about $100 per night or more. I think it is unfair for the hotels to be taxed and theses airbnbs who are generating a revenue by renting out rooms which is a business, to not pay any taxes. Also the airbnbs are taking away business from the hotels, so they should at least pay some kind of tax.


Posted by SteveU, a resident of Barron Park
on Mar 5, 2014 at 9:29 am

SteveU is a registered user.

Why is this not a 'Tax without representation'? Many of the people who pay this can't even VOTE in a Palo Alto election.
'Hey! Tax these guys, they can not vote us out of office'

14%, no wonder local people are homeless.


Posted by Anonymous, a resident of another community
on Mar 5, 2014 at 9:39 am

Note to writer/editors: this might come across as pedantic, but an increase in the TOT from 10% to 12% is not, as indicated in the article, a "2 percent increase." Mathematically, the change from 10% to 12% is a 20% increase. The percentage change formula is as follows:

(NEW – OLD) DIVIDED by (OLD) = PERCENTAGE CHANGE

(12% - 10%) / 10% = 20%

The way to correct the above article is to say that the change in TOT from 10% to 12% represents an increase in the TOT of "2 percentage points."

I have no dog in this race -- I simply want to make sure the numbers are properly characterized. Good luck.


Posted by Anonymous, a resident of another community
on Mar 5, 2014 at 9:42 am

CORRECTION: this might come across as pedantic, but an increase in the TOT from 12% to 14% is not, as indicated in the article, a "2 percent increase." Mathematically, the change from 12% to 14% is a 16.7% increase. The percentage change formula is as follows:

(NEW – OLD) DIVIDED by (OLD) = PERCENTAGE CHANGE

(14% - 12%) / 12% = 16.7%

The way to correct the above article is to say that the change in TOT from 12% to 14% represents an increase in the TOT of "2 percentage points."

I have no dog in this race -- I simply want to make sure the numbers are properly characterized. Good luck.


Posted by Shell Game, a resident of another community
on Mar 6, 2014 at 6:25 pm

First, the City Council decides to ask the voters to approve an increase to the hotel tax, then the same City Council tells the voters that they will spend most of that tax increase on employee salaries at the same time voters are being told that the hotel tax increase will be used for something else. If the City Council didn't increase employee salaries, we wouldn't need an increased hotel tax.

"The new agreement will add about $7.6 million in expenses to the city over the two-year period" Web Link


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