Palo Alto drops plan for November tax measure

City looks to 2017 and beyond for business tax measure to fund transportation improvements

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."

Related content:

Palo Alto prepares to vote on new business tax

Palo Alto nears decision on November tax to combat traffic


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16 people like this
Posted by Neal
a resident of Community Center
on Jun 28, 2016 at 6:39 am

Just how is this new tax going to solve our transportation problems? It seems the CC wants to raise some tax revenue, but this article doesn't give a hint about how they plan to spend the money.

8 people like this
Posted by Observer
a resident of University South
on Jun 28, 2016 at 7:05 am

I think they would have an easier time if they had a concrete plan for the money. This seems like there was a desire to tax jobs away, and they decided that they could spend the money on transportation.

If the Council had identified specific projects and tried to talk to people ahead of time, it would have gone better. Now they have time to do it.

7 people like this
Posted by Mark Michael
a resident of Community Center
on Jun 28, 2016 at 8:01 am

In light of concerns that it may be premature to levy a tax on businesses for transportation solutions, could the Council benefit from greater focus on finalizing the Transportation Element of an updated Comprehensive Plan? Ad hoc and reactive debates may lead to hastily designed proposals. Not typically a formula for success or public trust in the City government. If "ready, aim, fire" is a better approach, then first complete the long-term plan and then utilize the context for evaluating priorities and specific projects. Clarify the vision of the community, engage with the public on what this implies, and execute on the plan. It often seems that, for whatever reason, we have stumbled on the planning effort, resulting in confusion and some level of mistrust. And, by the way, what a strange time this is for politics at all levels, everywhere.

16 people like this
Posted by parent
a resident of College Terrace
on Jun 28, 2016 at 9:05 am

Be realistic, $50 per employee is not nearly enough to pay for the roads and other infrastructure improvements that are needed to reduce our traffic congestion. Newspapers are reporting that San Francisco is proposing a 1.5% payroll tax on tech companies to help pay for their impact on the community. This is thousands of dollars per employee, not just $50. Palo Alto needs to put together a realistic plan that will have a meaningful impact on the city's problems. $50 is a joke that will barely pay for the paperwork of the tax.

9 people like this
Posted by Star chamber
a resident of Mountain View
on Jun 28, 2016 at 9:32 am

Judy Kleinberg - the CEO of the Palo Alto Chamber of Commerce - was a Palo Alto city councilmember. It pays.

16 people like this
Posted by Peter Carpenter
a resident of Atherton
on Jun 28, 2016 at 9:52 am

Peter Carpenter is a registered user.

"Palo Alto needs to put together a realistic plan that will have a meaningful impact on the city's problems"

Such a plan needs to deal not only with how to raise the necessary revenues but,much more important, what exactly will be done with the funds. Just dumping these funds into the general fund would be a huge mistake.

3 people like this
Posted by Be Positive
a resident of Leland Manor/Garland Drive
on Jun 28, 2016 at 10:30 am

Be Positive is a registered user.

Since the City seems fine with potentially taking property by eminent domain to take Buena Vista from the Jisser family, why don't we take Stanford's property along El Camino and turn it into Parking and Housing?

6 people like this
Posted by CGPA
a resident of Downtown North
on Jun 28, 2016 at 11:37 am

CGPA is a registered user.

If the measures we passed REALLY went to the subjects we passed them for, the schools would be drowning in money. Instead, the lottery money was just used to reduce money from the general fund that went to schools. The schools didn't get one dime more, and the prison guards union soaked up all that extra cash.

The employers are paying $50 per month for their employees to park on the streets they already paid for. If we need to do more, we should enact a tax that subsidizes bike maintenance and caltrain passes for people who work in the downtown and Cal ave districts. I'd rather see a tax that has actual effects than one that grabs money and has virtually no effects at all, other than to add to the general slush fund.

2 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jun 28, 2016 at 1:22 pm

The tax was not a well thought through concept as it was described and so I am pleased that this idea has been scrapped.

However, I hope that this isn't the council saying well we tried, you didn't like it so there's nothing we can do.

There are many approaches that have never been discussed. Parking and traffic are two different subjects. They can't be treated as one and throwing money at them as one is crazy.

We need a well thought through change in parking in our business districts. It is confusing, messy and doesn't work. Redwood City seems to have a good system in place with meters and nobody seems to object. Meters have never been discussed in Palo Alto recently. We have two hour free parking, but we don't have 30 minute parking outside retail. For someone going to pick up a prescription or drop something off at a business (something I need to do) we have to park a block away if we are lucky for a 10 minute errand. We also have cars circulating round and round looking for street parking which adds to the traffic. I don't hear anything about 30 minutes parking being discussed.

Traffic patterns do change when there is no school. I have said on many occasions that if we could get rid of school traffic by improving shuttles to our schools we would be getting rid of a lot of school commute traffic. We don't need to have free shuttles, we just need an adequate and efficient service at an affordable fare. This is something that I have never heard discussed. We also have a very complicated system for people who want to park all day on an occasional basis. This may be someone who normally gets to work by other means and sometimes needs to bring a car, someone who normally carpools, or someone who has car problems and needs to borrow or use a loaner car. Then there are other people who may need to park for longer than a couple of hours because they are visitors to town, either business visitors or those just visiting for other reasons. The complications of looking for somewhere to park and knowing how to pay for all day parking is not easy if you are a visitor to town. We don't have signs as to where to park all day and we don't have signs that show if there are spaces in garages. These factors make it very difficult for those who are visiting town.

So to get back to the need for lots of money. How much money will it cost to make some sensible changes that will help traffic and parking? How is this money going to be raised? Many of these ideas will cost some money in the implementation but then should not be expensive to maintain.

Where and when are we going to look at these issues (parking and traffic) with some common sense and in a timely manner.

9 people like this
Posted by Midtown
a resident of Midtown
on Jun 28, 2016 at 2:15 pm

Once money hits the general fund it is gone. It will be used to pay off pensions. It's not too hard to figure out how to fix trafic; fix the grade crossings, build some more parking garages with meters, charge a congestion tax for non-residents.

5 people like this
Posted by Klattu
a resident of Old Palo Alto
on Jun 28, 2016 at 6:17 pm

Guess you need a plan before asking for a tax to pay for it......

2 people like this
Posted by maggie
a resident of Evergreen Park
on Jun 28, 2016 at 6:35 pm

maggie is a registered user.

Sounds like not too many people actually listened to the council discussion. The article does not address all the angles that were discussed. Council did not pursue putting this on the ballot this fall for the very reasons some of you suggest. My understanding was council has directed staff to come back with a comprehensive list of possible traffic mitigation measures to be analyzed and prioritized. Then figure out a budget. Finally decide what is the best way to raise the funds. I believe it was Mayor Burt who said we should expect Palo Alto another million square feet of development as the temporary 50,000 sq annual development cap only applies to a small area around University Avenue, and possibly a small area around California Avenue. Even if the occupants don't drive and take alternative forms of transport, this will still be a huge increase in daily traffic commuting in and out of Palo Alto.

2 people like this
Posted by maggie
a resident of Evergreen Park
on Jun 28, 2016 at 6:39 pm

maggie is a registered user.

PS Parking and other measures relating to reducing single occupancy cars will all be part of the mix that will be included.

2 people like this
Posted by maggie
a resident of Evergreen Park
on Jun 28, 2016 at 6:41 pm

maggie is a registered user.

As to parking meters, that was tried, but removed after shoppers simply drove elsewhere to do their shopping.

1 person likes this
Posted by Johnny
a resident of Midtown
on Jun 28, 2016 at 6:45 pm

"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.

Does that surprise you... "Burt"? The "business community" are people who choose to compete in a free market. They face reality, work hard and make ends meet. Unlike some others who... (I'll stop there before my post gets censored)

ANY kind of tax has a negative impact on people and the economy.
Taxes are a necessary evil at best.
They should be introduced judiciously, not thrown around as if taking people's money by force (taxation) is a perfectly legitimate way of dealing with things.

5 people like this
Posted by Klattu
a resident of Old Palo Alto
on Jun 28, 2016 at 6:46 pm

Just have a city manager who is paid over $300,000 in salary+benefits, has a house paid for by Palo Alto residents including his property taxes, has assembled a management staff each earning six figure salaries which combined reaches into the multi-millions, has no accountability....So let's hear his ideas on how to fix Palo Alto's dilemmas. Why do we need more taxes when we have the highest paid city staff in the Bay Area to find solutions?

Sorry, but further commenting on this topic has been closed.

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