A drive to place a tax measure on the November ballot in Palo Alto screeched to a halt on Monday night, when the City Council agreed that it needs more time to craft the proposal and mollify the opposition.
At the same time, the council acknowledged by a unanimous vote that a business tax measure will be necessary to solve the city's worsening traffic problems. To that end, officials agreed to pursue a tax measure for the 2017 -- or perhaps even the 2018 -- ballot and to form a new committee of stakeholders from the business and residential communities who would help formulate the measure.
Despite the ultimate consensus, council members offered varying views about a November measure. Mayor Pat Burt and Councilman Greg Schmid were both inclined to support moving ahead with a business tax this year, with Schmid citing the critical importance of funding transportation improvements, and Burt pointing to recent polls showing that about two-thirds of local voters would likely support a measure -- provided there's no major opposition.
Councilwoman Karen Holman also said she wished the city could have pursued a tax this year, though she ultimately made a case for looking to 2017 -- a position that proved far more popular with her colleagues. Some council members characterized the current proposal as rushed.
"We just haven't had enough analysis," Councilman Marc Berman said. "We haven't had enough community engagement to decide whether or not this is the right solution to this problem."
Councilman Cory Wolbach said it's important to "do it right," which he said means that it cannot happen this fall.
Vice Mayor Greg Scharff, who served on the council's Local Transportation Funding Committee, agreed and said he would prefer pursuing a specific tax in 2017. Unlike a general tax, which goes to the General Fund, a specific tax is dedicated toward particular projects and requires a two-third majority for passage.
"It's clear to me that a tax in 2017 -- that is a specific tax that requires a supermajority -- is a superior option," Scharff said. "It benefits the business community and it benefits Palo Alto and it is the right way to go."
Between now and then, the council and a specially appointed committee will figure out exactly what type of tax to pursue. The leading contender is a tax based on employee headcount -- the option that the council was considering for this year. Under a proposal that the Local Transportation Funding Committee was discussing in recent months, businesses with one to 10 employees would be exempt; those with 11 to 50 would pay an annual tax of $50 per employee; and those with 51 or more would pay $100 per employee.
So far, the option has proven unpopular with local business leaders. On Monday night, several members of the business community attended the meeting to voice their opposition to placing a tax on this year's ballot.
Chamber of Commerce CEO Judy Kleinberg pointed out that with a general tax, which requires a simple majority for passage, there is no assurance that the funds "won't be spent on another project that could be considered a higher priority by a future council."
She also suggested that placing the measure alongside Santa Clara County's housing measure and the Santa Clara Valley Transportation Authority's (VTA) transportation-tax measure on the November ballot could potentially doom all three.
Kleinberg urged the council to figure out exactly what projects need to be funded and then to work with stakeholders to make it happen.
"The old adage that form follows substance should apply here," Kleinberg said. "You need to determine the substance first and them determine what form it should take to find everything. This might be the perfect time to bring back the 'Palo Alto Process.' Let's take the time to make it happen."
Other business leaders complained about insufficient outreach and said they hadn't learned about the proposed business tax until just a few days ago. Simon Cintz, whose family owns properties on El Camino Real and in downtown, complained about the lack of business involvement in crafting the proposed measure.
"You'd never think of putting a tax measure on the ballot that would affect residents without getting them very closely involved in how it would work," Cintz said. "Why would you do something different to a business community that's very crucial to not only the revenues that the city collects but also the services that Palo Alto residents depend on?"
Peter Stone, an attorney who serves as chair of the Chamber's board of directors, said there is "zero support for this in the business community."
"I haven't heard any business person say they would support this measure if it were on the ballot this fall," Stone said.
Not everyone was swayed by the complaints from the business world. Burt recalled the business community's opposition to the 2009 business tax (the measure was voted down), which he compared to whack-a-mole. No matter what scenario the city proposed, he said, members of the business community opposed the changes. The notion that they would back a tax even after extensive outreach and further refining is "very wishful," Burt said.
"I don't count on the business community coming around," he said. "It'd like nothing better than for them to prove me wrong over the next year or two, but I don't count on it."
Councilwoman Liz Kniss, who also served on the Local Transportation Funding Committee, said she believed the measure is rushed and argued that waiting until 2017 or 2018 would be the right thing to do. She made the motion to work toward a 2017 measure and, if needed, toward 2018.
Kniss also said she was more optimistic than Burt about the business community's capacity for compromise.
"They all sounded pretty cranky tonight," Kniss said. "I actually think if we come together and have a good discussion -- I think it makes a difference."