Guest Opinion: Business tax will harm Palo Alto | News | Palo Alto Online |

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Guest Opinion: Business tax will harm Palo Alto

Local business leaders question whether funds would support transportation projects

The Bay Area has an affordability crisis, with Palo Alto businesses closing their doors or relocating to more affordable markets, as seen in daily news stories and empty storefronts. Yet, the cost of doing business in Palo Alto could get more expensive, since the City Council has been exploring options to place a business tax measure on the November 2020 ballot.

At its meeting on Jan. 27, the City Council directed city staff to develop a detailed tax proposal based on an employee headcount approach, which in essence will be a tax on jobs in Palo Alto. This tax structure would affect all businesses but would disproportionately impact smaller businesses that only operate in Palo Alto. By taxing businesses based on their Palo Alto headcount, larger companies may choose not to hire locally in Palo Alto. Small and medium sized businesses would have an extra financial burden.

Our local businesses will inevitably add this additional tax cost to their prices, so ultimately Palo Alto residents will be adversely affected, too. Small businesses that cannot pass along additional costs might have to close their businesses entirely. And a business tax would impose a costly compliance burden on Palo Alto businesses and significant administrative costs on the city.

A reduction in business vitality across all sectors will have negative effects for everyone, including residents. Instead of exploring options to tax local businesses, the council should support a stable business environment which is crucial to our local economy and a necessary component to ensuring everyone has the opportunity to thrive.

It is an odd time for the City Council to pursue a business tax because the city's finances are in very good condition. Palo Alto's long-range financial forecast that was released at the end of last year indicated city revenues would rise by 7%, or $9.8 million, in the upcoming fiscal year. This dramatic growth is due in part to tax revenue generated by businesses.

The business community is making substantial contributions to the fiscal health of the city. Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy in Palo Alto, reviewed the fiscal impact study prepared for the city's Comprehensive Plan and found that "Most sales tax revenues come from visitors and businesses, not residents. In 2015 the study reports 48% of sales tax revenue came from visitor spending, 41% from local employees and business spending and 11% from local households." Additionally, Levy wrote, "Although it was not covered in the fiscal study, it is true that the recent growth in infrastructure funding has come from the increase in the transient occupancy tax paid mainly by businesses and visitors." A business tax could jeopardize this significant and consistent source of revenue.

Another concern for Palo Alto taxpayers is the city's poor track record of managing taxpayer funds. The City Council made the case to voters in 2014 and 2018 that it needed to pass hotel taxes to fund critical infrastructure upgrades, including a new downtown parking garage. In February 2019, the City Council ignored its promise to construct the parking garage and decided not to honor its commitment to the voters. The parking garage would have been pivotal for addressing our community's traffic congestion and parking issues. This history raises the question of whether the funds generated by a new business tax would in fact fund these projects.

We have observed this process that began in the City Council in April 2019, where most of the council's focus has been on designing a tax rather than on assessing city needs that would justify a specific level of additional business taxes. The city is generating budget surpluses due to a strong local economy and significant taxes already in place. In this process the City Council has authorized additional spending up to $179,125 to conduct polling and outreach in order to design a business tax system that is most likely to be acceptable to enough voters to pass, yet without identifying the need it is trying to meet. If the council had started with a focus on opportunities to improve the business climate in Palo Alto, there would be a much better chance of gaining the support of the business community and voters as well.

Ultimately, if the City Council moves forward with placing the tax on the ballot, the voters will have the chance to weigh in. This is not the first time the council has pursued a similar jobs tax. In 2009, Palo Alto voters overwhelmingly rejected a similar measure that would have taxed companies based on employee headcounts. The council should take note of that election result and realize that Palo Alto voters do not want to burden the businesses in their city with higher costs that will only be passed along to them.

Instead of rushing to place a business tax on the ballot, the City Council should invest its time in working with diverse stakeholders on alternatives that could strengthen our local economy by supporting and retaining our local businesses. We strongly urge the City Council to forego placing a business tax on the November 2020 ballot. Our community deserves a solution that works for everyone, not just City Hall.

Judy Kleinberg is the president of the Palo Alto Chamber of Commerce and a former mayor of Palo Alto. Dan Kostenbauder is the vice president, tax policy for the Silicon Valley Leadership Group. Brad Ehikian is chairman of the Palo Alto Downtown Business and Professional Association and co-owner of Premier Property Management Inc. Kleinberg can be reached at Judy@paloaltochamber.com; Kostenbauder can be emailed at dkostenbauder@svlg.org.

Related content:

Guest Opinion: Real problems need real solutions - Former mayors make argument for potential business tax in Palo Alto

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Comments

24 people like this
Posted by Random
a resident of Midtown
on Feb 7, 2020 at 7:25 am

You failed to write about how the language on the ballot will improperly influence voters’ decisions. The City will present it as needed for “critical 911 infrastructure spending.” And the poor suckers of a Palo Alto will think “oh yeah, who doesn’t want to support 911 infrastructure! I’ll vote yes! Deception goes on even at the local level.

At a minimum, Palo Altans should deject this of small businesses are not exempted. Residents scream about how their retail and mom and pop shops are being driven out. Now let’s see you reject a measure which does not support small businesses.


70 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 7, 2020 at 8:18 am

Look! The Chamber of Commerce, the commercial real estate industry, and the Silicon Valley Business Lobby are all opposed to a business tax on big companies, even though nearly every other city has one already. I'm shocked, shocked I tell you.

Sure wouldn't want to have Palantir pass that tax through to local residents.


56 people like this
Posted by Pat Burt
a resident of Community Center
on Feb 7, 2020 at 8:25 am

@Random
At the recent city council meeting on the prospective tax, Tanaka focused on a poll question that included asking about the priority of strong 911 response. The city manager and polling consultants made clear that the question was only included as a baseline against prior polls and that there is no intention to include 911 funding in the uses of the tax or the ballot language.
Let’s focus on a factual debate on the measure.


61 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Feb 7, 2020 at 8:49 am

When businesses are faced with potential business taxes they always threaten to pas it on to the consumer. It's a very old bogeyman they invoke in order to continue to bleed the public dry while contributing little in return.

The last thing Palo Altans need is additional business vibrancy, they need LESS. Business vibrancy on steroids has destroyed their quality of life.


11 people like this
Posted by @Pat Burt
a resident of Crescent Park
on Feb 7, 2020 at 9:29 am

Pat, you of all people ought to know how this little gimmick you and other council members run every time a tax measure is put on the ballot. Like every hotel tax increase. Go look up the language and don’t be ignorant.

Let’s talk about a factual debate. You pretend to care about retail preservation. Put your money where your mouth is and let’s see if anyone, including you, supports exclusions for small businesses. Let’s debate that. This council did not seem to care about small business exclusion even though vast majority of residents support such an exclusion.

Where do you stand?


61 people like this
Posted by Pat Burt
a resident of Community Center
on Feb 7, 2020 at 9:31 am

Despite the misrepresentations in this op-Ed, Palo Alto remains one of the most sought after business locations anywhere. The proof is in the the lease rates that reflect actual demand. Our office rates average $8/square foot per month, twice what nearby San Jose averages and even higher than San Francisco.
Our retail rates are also among the highest in the U.S. Vacancies ebb and flow as tenants grow or evolve, but any vacancies would disappear rapidly if property owners offered them at rates comparable to nearby cities. But they know that they will be able to fill space at the premium rates soon enough and they are unwilling to make rate cuts to fill short term vacancies.


40 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 7, 2020 at 10:04 am

Judy Kleinberg, Dan Kostenbauder and Brad Ehikian:

>> Small and medium sized businesses would have an extra financial burden.

I think small businesses should be *almost* exempt. They should still have to file a report with the headcount of number of employees, and pay a $1 tax.

>> By taxing businesses based on their Palo Alto headcount, larger companies may choose not to hire locally in Palo Alto.

Precisely! Bring it on! We desperately need to reduce the number of cars flooding into this city, and, discouraging larger companies from hiring is the fastest way to do it. You've almost convinced me to vote for the tax, but, I want to see the small company exemption.


13 people like this
Posted by Eat Sensibly
a resident of Downtown North
on Feb 7, 2020 at 10:19 am

Simple solution...a business tax break for PA businesses employing the fewest workers (based on an individual earning ceiling of course).

That way, higher wages could be paid to the workers...keep in mind that I am referring to primarily service & unskilled workers, not lawyers running a two person law firm.

An example...a small PA restaurant with minimal staff serving up really good food would have more than its share of business, perhaps even having to turn diners away.

Today there are far too many overpriced restaurants in downtown PA competing for the out-of-towner dining dollar.


73 people like this
Posted by John Guislin
a resident of Crescent Park
on Feb 7, 2020 at 11:48 am

Judy Kleinberg is a paid lobbyist for business and her statements should be understood in that context. This opinion piece is our own mini-manifesto of misinformation.
The Chamber's answer to the question of a business tax is...delay. This has been the response of business to addressing problems since before the days of the tobacco industry fighting bans on smoking.
Do not be misled. This opinion piece offers distorted facts and logic in the service of business profits, which appear to be doing well if low unemployment and high traffic are valid indicators.


78 people like this
Posted by Chris Robell
a resident of Old Palo Alto
on Feb 7, 2020 at 12:03 pm

Palo Alto is one of the few cities in our area that does NOT have a business tax. Judy Kleinberg understandably doesn't want a business tax, as she represents business interests in her role at Chamber of Commerce. That is clear.

But businesses are CAUSING the problems the business tax is attempting to address.

It is patently wrong to punish residents with all the proposed taxes (Measure G, Measure H, parcel tax for school, parcel tax for affordable housing, sales tax increase,.....). When does it end? Should residents pay a tax to Google, Palantir, and FB?

I hope voters wake up and vote *NO* on all resident taxes and support taxes on those who caused the problems:
BIG BUSINESSES!


51 people like this
Posted by Pat Burt
a resident of Community Center
on Feb 7, 2020 at 12:29 pm

To @Pat Burt
I'm not sure why you think I and others oppose exemptions or discounts for small businesses. Most business taxes include such measures and I support that approach. And the council has not made any decisions on that aspect. Please come speak or send comments on the tax design at the upcoming Finance Committee and council meetings.
Consistent with what I proposed while on the council, the TOT (hotel) tax increases have been solely dedicated toward the Infrastructure Plan. That plan had been stalled for 15 years until we increased the TOT and dedicated revenue from new hotels toward the plan, which placed highest priorities on public safety needs - the new police building and two re-built fire stations.
Unfortunately, the massive regional office growth has drastically driven up construction costs for public works projects, as well as for housing. As a result, the council recently had to prioritize some of the second tier projects. I didn't agree with all of those decisions. In particular, the giant new garage on Cal Ave vs a more moderate size option that could have been combined with trip reduction/parking demand reduction initiatives.
Nevertheless, the city has lived up to its commitment to dedicate those funds toward the Infrastructure Plan.


17 people like this
Posted by Klein clone
a resident of Downtown North
on Feb 7, 2020 at 12:34 pm

Pat burt seems to be so knowledgeable about the city and what it needs. Maybe we should elect him to the city council.he will accomplish so much. Oh wait.......


70 people like this
Posted by Irresponsible
a resident of Another Palo Alto neighborhood
on Feb 7, 2020 at 1:13 pm

Hey all you apologist, doomsayer lobbyists - grow up and take responsibility for your fair share of what your folks created in our Valley of Hearts Delight - the housing crisis and transportation/traffic mess.

You now use small business owners and retailers as fronts to argue for giant Silicon Valley Corporations who leave it to us residents and our small city to subsidize your needs without pulling your weight. Now that Palo Alto finally gets ready to step up to hold you all accountable, you bring out the fainting couch. Please - spare us.

Small business and retailers will of course be on a sliding fee scale - they are valued and the tax will be fair. And business will continue to flock here. And this is not the tax of days gone by. Your Campaign of Fear will not prevail. Rationality and Fair Share will. Pat Burt is right on all counts.


18 people like this
Posted by Green Gables
a resident of Duveneck/St. Francis
on Feb 7, 2020 at 1:27 pm

Why didn't the previous City Councils pass a business tax? It's not a difficult question. Inefficient and ineffective.


40 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Feb 7, 2020 at 1:53 pm

Re-elect Pat Burt, one of our clear headed/thinking mayors.


44 people like this
Posted by Useful Idiots
a resident of Crescent Park
on Feb 7, 2020 at 1:59 pm


@Green Gables
The last business tax was blocked by then council person Greg Scharff. Scharffe upped the hotel tax, essentially having one industry shouldering the burden of infrastructure upgrades for all the growing tech businesses.


51 people like this
Posted by Becky Sanders
a resident of Ventura
on Feb 7, 2020 at 2:05 pm

This op-ed drags in the kitchen sink to try to make its point:

“This tax structure would affect all businesses but would disproportionately impact smaller businesses that only operate in Palo Alto. “

Well let’s not let that happen. Pat Burt came and spoke to PAN (Palo Alto Neighborhoods) at its January meeting, and he specifically called that concern out as one we’ll want to avoid by having a sensible criteria for separating, say a company like Palantir from say GreenMail. I think we can tell the difference.

“Our local businesses will inevitably add this additional tax cost to their prices, so ultimately Palo Alto residents will be adversely affected, too”

but then three paragraphs later we see that guests and visitors do most of the buying:

"Most sales tax revenues come from visitors and businesses, not residents. In 2015 the study reports 48% of sales tax revenue came from visitor spending, 41% from local employees and business spending and 11% from local households." Additionally, Levy wrote, "Although it was not covered in the fiscal study, it is true that the recent growth in infrastructure funding has come from the increase in the transient occupancy tax paid mainly by businesses and visitors."

Therefore, using this same logic, if there are price increases passed on to consumers because of the business tax, the price increases will mostly affect visitors. Am I wrong here? What am I missing?

“Another concern for Palo Alto taxpayers is the city's poor track record of managing taxpayer funds” -

One has nothing to do with the other. But it’s a good smokescreen. Let’s keep our independent auditor’s office and have them report directly to Council rather than go to a contract auditor who reports to the City Manager. That’s a cost saving measure that spells disaster for transparency and fiduciary responsibility.

“the City Council ignored its promise to construct the parking garage and decided not to honor its commitment to the voters”

There is a lot more backstory and nuance to the downtown parking garage than this broad brush stroke sentence paints. Between the time of levying the tax and deciding not to break ground on the downtown parking garage, the city of Palo Alto adopted other methods to try to deal with the incursion of employee parking in residential zones, such as the selling of permits to allow employees to park in neighborhoods…plus the fact that existing downtown parking garage at Webster/Cowper was not at full capacity, because a lot of residents didn’t even know it was there and employees didn’t want to park there. So calling out the parking garage is not really accurate … and isn't that strong a case.

“We have observed this process that began in the City Council in April 2019, where most of the council's focus has been on designing a tax rather than on assessing city needs that would justify a specific level of additional business taxes. The city is generating budget surpluses due to a strong local economy and significant taxes already in place.”

So we’re having a few good years… well we had so many bad years that even with a budget surplus we still have to dig ourselves out of a big hole. That money is already spoken for. Plus don’t forget we need to get our pension program out of the red and into the black as soon as possible.

And if a business tax is such a terrible idea, why do cities up and down the peninsula all have them? And city’s all over America? Why are we so slow to adopt a best practices approach to taxing the people that use the facilities we provide to them.

Palo Alto’s business boom has had enormous and deleterious consequences for the people that live here and work here, say particularly in the service industry, essential services and the public servants. They can’t live here anymore. That’s a big loss, because they can't invest in Palo Alto to the extent they would if they lived here. There’s so much good to be done with this tax, like building 100% affordable housing for instance and BMR housing. What if the people that serve the city could live here? Like our teachers and first responders, nurses, etc. And I’m even wondering about housing city employees so that we could continue to attract the brightest and the best city workers to make Palo Alto a better place for everyone to enjoy.

The State is leaning hard on the City to fix the lack of housing due to our 3-1 jobs to housing imbalance. Allocating some of this tax to housing would be a great way to help address the housing gaps.

Let’s get the business tax on the ballot and let’s get it done right. I think Pat Burt frankly is a great person to help us out here. Because he is a businessman and a business owner. He and I politely disagree on a lot of business type stuff. I lean left of Pat, but I trust Pat on this. And if HE thinks we need a business tax then we REALLY REALLY do.


57 people like this
Posted by anon
a resident of Greendell/Walnut Grove
on Feb 7, 2020 at 2:30 pm

Come on ....folks rise up!
The writers of this pathetic opinion piece will go to any lengths to divorce the big tech billionaires from any
responsibility to participate in the representational democracy that they benefit from.

The writers of this opinion piece are trying to create a world of have and have nots so extreme
As to try to use government to shield the super wealthy from reasonable contributions to the common good.
In return for the right to do business in a free economy where profits are unfettered they must do so.

We all use the same public parks and streets and schools, we all benefit from a well run city with traffic laws and lights, a police force that enforces traffic and parking laws, a emergency response team that is blind to income and status when responding to emergencies, a city inspection team that makes sure new buildings won’t fall down and new gas lines won’t explode....well that takes money, and we are ready for you, Big Tech , to pay your fair share for equal protections under the law that you already enjoy.


16 people like this
Posted by Changeable candidate
a resident of Community Center
on Feb 7, 2020 at 3:02 pm

Pat Burt is very pro-resident and pro-small business while running for office.
Once on the Council, things change, alot. His advocacy for major developers was obvious for a long time.


25 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Feb 7, 2020 at 3:46 pm

Big business needs to contribute more towards local infrastructure. Definition of big business is next thing (though we know it when we see it).


32 people like this
Posted by TaxRate
a resident of Charleston Gardens
on Feb 7, 2020 at 3:55 pm

The real debate should be at what level the business tax should be. We should be comparable to our neighbors adjusted for the time those tax rates were adopted. Many cities on the peninsula have old business taxes and are considering updates. East Palo Alto is our direct neighbor with recent business tax that works out to about $700 per employee. We should be thinking of something comaparable.


36 people like this
Posted by Get down to biz tax
a resident of Adobe-Meadow
on Feb 7, 2020 at 3:59 pm

Not sure why the thread has gone sideways in going after Pat Burt because he supports the business tax which I remember he has been pushing since 2016.
I’ve followed development issues over the years. Although I haven’t always agreed with him, my two cents worth is that he has been a moderate residentialist. He led the way on the first annual office cap in 2015, which the subsequent council majority watered down. He and Holman led on the downtown office cap which Scharff, Tanaka and Fine overturned in 2017. He was also among the council majority that supported higher affordable housing impacts fees in 2016 and were then overturned by the new council majority in 2017. Granted, he’s always supported affordable housing projects, which not everyone agreed with.
Now can we get back to discussing the business tax?


63 people like this
Posted by Judith Wasserman
a resident of Leland Manor/Garland Drive
on Feb 7, 2020 at 4:01 pm

I always thought the Chamber of Commerce opposition to a business tax was disingenuous. The line was, "All the businesses would go to other cities."

The 2 faults with that thinking are chiefly, that all the other cities already have a business tax, so where would they go? and also, so what?

We could use to lose a few big businesses that are squeezing out the smaller ones.

I pay business tax in Sunnyvale every time I do a project there. It's the cost of doing business.


39 people like this
Posted by Yes on Taxing companies with lots of employees, not retail
a resident of Another Palo Alto neighborhood
on Feb 7, 2020 at 5:05 pm

I think retail should be exempt. In fact, I think we should somehow start subsidizing resident-serving retail. And any small local business like doctors and dentists that have only a few employees should be exempt.

Mountain View has a head tax and you don't see Google moving away. The tax on larger companies SHOULD be high enough to get the larger ones to think about moving at least some or all of their workforce.

Large businesses operating in areas in which their activities of research and development do not even meet code should be asked to pay the most.

The City Council should prohibit gyms and other non-retail like company cafeterias in retail areas, and tax companies the most heavily who violate such rules.

The City's emergency csar has already said the density we already have will result in loss of life in foreseeable disasters. The City has broad powers when it comes to safety, but our safety departments exist under the planning department (it should be the other way around).

We should tax anyone who has a lot of employees not just for transportation, but also to pay for a holistic review of our city that includes safety and disaster loss prevention. In the event of an earthquake and urban fire in the closely-spaced areas, we definitely need more understanding of how to prevent loss of life. The large businesses are why we have all these problems -- and even Levy's analysis doesn't show that they're paying anything for the damage they are doing to the lives of Palo Altans. (I don't think Levy's "analysis" includes what we pay for the schools, does it? Not that you can usually trust what he says, it's generally twisted in service of what he wants.)

We limit the size of grocery stores, why can't we tax companies on a progressive scale for packing in a lot of employees?

So, if South Palo Alto were to secede and take the long hotel monoculture the City has forced on us from San Antonio to Stanford, does this mean we would get half of the sales tax income but not all the employees? Could we be the bedroom community of Mayfield, a place where it's safe to have kids, parks, and open space, and where we don't think we have to bulldoze a great place (and displace all the actual low-income people) to build expensive beehives for big companies that just HAVE to be where the "action" is?


45 people like this
Posted by Need $$$ for Affordable Housing & Grade-Crossing!
a resident of Midtown
on Feb 7, 2020 at 5:08 pm

Palo Alto desperately needs additional funding to support our city's most pressing problems: affordable housing, traffic mitigation, grade-crossing. This business tax provides a much needed income source to help pay for these costly measures. For decades, Palo Alto residents have had to burden the tax burdens ourselves. This business tax is simply asking businesses in Palo Alto to help share the cost burden.

Don't let this op-ed fool you. This business tax will exempt small businesses, and when you consider the business tax burdens in other cities, there will be no mass exodus from Palo Alto. Additionally, the argument that Palo Alto residents voted down a business tax over a decade ago is illogical. Much has changed in Palo Alto in over the last ten years, surely there is a chance Palo Altans' preference for a business tax has changed.

Thank you to Pat Burt, and the other community members, who have dedicated so much time to this fight. We need money to build affordable housing, mitigate our congested traffic, and pay for the necessary and costly grade-crossing separations.


22 people like this
Posted by Will he run
a resident of Another Palo Alto neighborhood
on Feb 7, 2020 at 5:44 pm

Don’t worry. The city will waste the money.
I wonder if Patrick Burt is planning another run for city council. Or is he trying rehabilitate his reputation after 8 years on the council and little to no accomplishment


17 people like this
Posted by Independent
a resident of Esther Clark Park
on Feb 7, 2020 at 8:12 pm

The City just had two years of budget surpluses, $59 million and $76 million. Our utility fees are higher than the cost of providing utility service. Let the city use those monies. Any business tax will be passed on as the cost of doing business - tonus, the consumer. We already pay a very high 9% sales tax in Palo Alto. Our property taxes aren't going down either - with such high valuations. City - manage and use the dollars we already give you, in taxes. Unfunded ($455 million) pension liabilities also demonstrate poor fiscal management. No new taxes.


18 people like this
Posted by Chip
a resident of Professorville
on Feb 7, 2020 at 9:55 pm

". . . 48% of sales tax revenue came from visitor spending, 41% from local employees and business spending and 11% from local households." How large was the study on which these numbers are based?

Please clarify "visitors." Are they residents of nearby Peninsula communities who come to buy @ Stanford Shopping Center? Were they hotel guests from farther away? How many of the local employees who produce 41% of sales tax revenue also live in Palo Alto?

How were these figures measured & calculated? I'm not sure the published numbers are accurate.


50 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Feb 7, 2020 at 10:55 pm

Color me shocked that that the business lobbyists would continue to try to shift the costs from their clients to the resident taxpayers. And/or that the pro-development City Council would commission yet another slanted survey.


40 people like this
Posted by Interested Reader
a resident of Old Palo Alto
on Feb 8, 2020 at 7:02 am

I find is fascinating that the authors of the Op/Ed are making claims of who will and won't be exempt when this hasn't even been determined! The City Council is in the process of determining this right now!

So if retail and small businesses were exempt, would the Chamber and others support a tax? NO! Of course not. They want residents to continue to carry the financial burden of all of the transportation and housing needs while they continue to grow in an area with historically low businesses taxes (despite what they'd have you believe).

As was mentioned above, companies pay more per sq. ft now to stay in Palo Alto - even though going to SF or SJ would be cheaper. The authors are throwing out every excuse possible - as @ Becky Sanders pointed in the comments above.

Finally, these taxes are needed to pay for transportation improvements, including separating the train from the roads, and affordable housing. Surely, businesses can understand the benefits of paying their fair share of funding those improvements since they would benefit greatly from those projects.


40 people like this
Posted by mjh
a resident of College Terrace
on Feb 8, 2020 at 3:40 pm

When Prop 13 passed property tax revenues were approximately 50% commercial 50% residential. Fast forward to 22020 and commercial properties only pay 25% of our property taxes, continuing to decline year on year, with residents paying 75%.

This is partly because commercial real estate seldom changes hands, with a substantial percentage held for several generations and still tied to the 1975 rate plus the 2% per annum increase. And partly because Prop 13 was written with loopholes for commercial property that allows the transfer of ownership without considering it a "sale" which would trigger a new property tax assessment.

We need the larger businesses to contribute to solving the problems that they impose on our community, particularly as related to transport related impacts. In a relatively short time existing office density has increased dramatically from one employee per 250 sq ft to one per employee 80 sq ft. This has impacted our streets to the extent that the commute window has increased to three hours, and those that live anywhere near employee centers now have to pay for permits to park near their house.

A business tax should be earmarked to pay for separated grade crossings which are now required to accommodate the extra trains and traffic during commute hours. A business tax should also fund a comprehensive shuttle system all around town, especially as the VTA continues to reduce bus service.
And finally a business tax should fund the various neighborhood parking programs near employee centers that are a direct result of employee parking impacts, and particularly the costly enforcement patrols.


26 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Feb 8, 2020 at 6:59 pm

> Palo Alto desperately needs additional funding to support
> our city's most pressing problems: affordable housing,
> traffic mitigation, grade-crossing.

It’s doubtful that the author of this statement has ever read comprehensively one, or more, annual budgets, or annual CAFRs (Comprehensive Annual Financial Report). The claim that the city “desperately needs more money” is the kind of trolling that goes on every time one of the local government agencies decides to raise taxes. There is never any evidence presented for the actual need, just some "hooray" for more money. Never anything more than a lot of emotional hand-wringing and unspecified "need".

There is no one on the current Council that has any real idea about the budget. Watching the finance committee on-line, it’s clear that the staff rolls over the council members who show up to play footsie with them.

Make no mistake—the current spending model is on auto-pilot. The city has baked in a constant increase in salaries and benefits in their yearly financial forecasts without end. There currently are no caps to salaries – with pension tightly linked to these burgeoning salaries.

All over California – the pension crisis is destroying the fiscal stability of every city that has a unionized work force. Palo Alto is no different. Sadly, the people who end up as our elected officials just don’t care. They are more concerned about being “liked” by staff—then actually being in control of the long-term needs of the citizens, businesses and residents.

The idea that Palo Alto should be building, owning and operating some public housing (Cabrini Green like towers) to be paid for by Palo Alto businesses – and then ever higher parcel taxes on the residents is absurd.

Sadly—it’s the “silly political season” and every crazy idea that has been gestating under some rock somewhere is now bubbling up—looking for voices to create a faux constituency for these bad ideas.


12 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 9, 2020 at 4:10 pm

Posted by Joe, a resident of Another Palo Alto neighborhood

(makes many good points)

>> All over California – the pension crisis is destroying the fiscal stability of every city that has a unionized work force.

The good impression that most of your posting makes is diminished by the ritual union bashing. It detracts from the value of your arguments.


11 people like this
Posted by Resident
a resident of Midtown
on Feb 9, 2020 at 8:53 pm

How do we know that the tax money would be allocated to "low-cost housing in Palo Alto" or some other altruistic measure, when I keep seeing articles on here about City Council giving themselves raises?? Something just doesn't add up whenever I hear a solution to society's problems is "a new tax".
Is there any oversight that ensures the city is using the tax money the way they're supposed to?
People in the private sector don't have this type of opaque immunity -- the ability to acquire money with impunity -- and I wonder why Democrats don't pay any attention to this as they trumpet their lofty socialist ideals.
Politicians are angelic altruistic beings who deserve endless money but businessmen need to be punished? I say they're probably both corrupt, and I believe that they are bedfellows in corruption. There's no easy answer but let's not blindly vote for more taxes.


40 people like this
Posted by Curmudgeon
a resident of Downtown North
on Feb 10, 2020 at 10:34 pm

"By taxing businesses based on their Palo Alto headcount, larger companies may choose not to hire locally in Palo Alto."

Fine. Wonderful! They bring traffic congestion and high housing costs, with zero compensating benefits to the community.

[Portion removed.]

"Small and medium sized businesses would have an extra financial burden."

Help them, and hit the biggie freeloaders, via a progressive tax rate structure.


12 people like this
Posted by Annette
a resident of College Terrace
on Feb 11, 2020 at 5:47 am

Our needs are specific; why isn't this tax?


13 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Feb 11, 2020 at 6:45 am

[Post removed.]


9 people like this
Posted by @Annette
a resident of Green Acres
on Feb 11, 2020 at 9:24 am

Annette, the answer is simple. Even if everyone agrees there should be a tax, the city always pulls a fast one on the public. And the public is too naive to understand how their song and dance works.

Despite what Pat Burt says, they sell the tax with ballot language that is intentionally deceptive. Watch. There will be something about 911 emergency services being needed to justify this tax on the ballot. Bank on it.

Then, the council lie and tell you they need all this money for specific reasons like affordable housing. That’s the second part of the ruse. What nobody pays attention to is that all of this business tax money will go to the general fund...where, you guessed it, council can do whatever it chooses to do with it.

If they wanted to use funds for a specific purpose, they need to achieve a higher threshold of the vote and then once the purpose is done, they no longer collect.

Pat Burt unequivocally will run for council again and his avoidance and deception about the ballot language is as clear as day. What do you expect from a politician who wants to run for office again.


19 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 11, 2020 at 9:52 am

The tax should be structured specifically to discourage the growth of office jobs in large companies that could just as easily be done elsewhere. Small business should be excluded. I don't care what they do with the money collected-- actually, giving it to charity might be the best use. Big companies with seats to fill should fill the seats elsewhere and use much more videoconferencing for internal communication.


7 people like this
Posted by Changeable candidate
a resident of Community Center
on Feb 11, 2020 at 12:50 pm

>Pat Burt unequivocally will run for council again and his avoidance and deception about the ballot language is as clear as day.<

That has always been his way.
When someone asks him a simple direct question he responds with a long explanation of something else. He won't answer a straightforward question.


5 people like this
Posted by Shaking My Head
a resident of Another Palo Alto neighborhood
on Feb 11, 2020 at 3:01 pm

[Portion removed.] I applaud the authors of this letter for addressing this topic. [Portion removed.]
The letter addresses the issue with this call to action... "Instead of rushing to place a business tax on the ballot, the City Council should invest its time in working with diverse stakeholders on alternatives that could strengthen our local economy by supporting and retaining our local businesses. We strongly urge the City Council to forego placing a business tax on the November 2020 ballot. Our community deserves a solution that works for everyone, not just City Hall.”
Now, take a deep breath, check your ego, put on your big boy/big girl pants and read it again. This time don’t embarrass yourselves with streams of silly commentary!


5 people like this
Posted by Annette
a resident of College Terrace
on Feb 11, 2020 at 4:05 pm

@Annette - polling results made clear that Palo Alto voters prefer a specific tax. That is harder to pass but it is the ONLY way to assure that the revenue from the tax gets spent on the intended purpose. Not on 911 or pensions or salaries or some pet capital project. This town will have transportation needs for decades. The grade separation work alone will absorb a significant amount of the revenue from this tax. And transportation is directly tied to business impact, making it fair. If this bond is general we could well be looking at another request for a new tax to pay for transportation projects on a future ballot.

Relying on politicians to honor their intentions isn't a responsible approach to managing public funds. I wish that weren't the case, but all one has to do is look at the # of "money ask measures" on the ballot to see that fiscal responsibility needs to be baked into the tax process from the get go. I think that if CC is serious about imposing a business tax they should revisit their recent decision and make it specific. I think voters are more likely to support that and my guess is the business community would also be more receptive to that. No one likes to have their taxes raised, but at least a specific tax would assure that the money is spent on something that is directly related to business impact. I don't blame the business community for objecting to this tax; as is it is too loose.


22 people like this
Posted by Family Friendly
a resident of Old Palo Alto
on Feb 11, 2020 at 4:21 pm

I don't think it's realistic to expect this money not to be diverted, unless there's a very very specific 911 services upgrade project that's presented to voters. Otherwise, they'll just use the money to pay for normal annual 911 technology and services expenses, and divert the money being displaced to other things -- in effect meaning that none of the money was spent on the 911 system.

I'm in favor of the business tax anyway, just because it will break the log jam of lobbying that has shifted all costs onto Palo Alto residents. It's nuts that we're the only town in the area without a business tax.


17 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 12, 2020 at 8:50 am

Posted by Family Friendly, a resident of Old Palo Alto

>> I'm in favor of the business tax anyway, just because it will break the log jam of lobbying that has shifted all costs onto Palo Alto residents. It's nuts that we're the only town in the area without a business tax.

Agree 100%. But, I think it is time for the CC to lay out specifically how small and local service businesses will be exempt.


39 people like this
Posted by Karen Holman
a resident of Crescent Park
on Feb 12, 2020 at 11:14 am

Pat Burt and others of us on the City Council started pursuing a biz tax with particular reference to local transportation. At the request of the Chamber and others, the Council agreed to hold off on a 2016 measure, and the City would begin a more deliberate process in 2017 for a 2018 ballot measure. The Council then backtracked once again with some staff saying we should wait to collect a tax later when grade separations funding was necessary. I personally disagreed stating that we should start in 2018 and “bank” the funds as the cost of separations will far outweigh short-term tax collections. I still believe that would have been the proper approach. So given the uncertainty of potential action of current Council, a group of us began to take the initiative on a business tax in 2018 to address our three big needs: traffic relief, affordable housing and grade separations.
Large business has brought a lot to our community, and among them a higher demand for housing and traffic congestion. It is only reasonable that they contribute their fair share to helping solve these issues. Pat and I agree on this.
And while Pat and I have not always agreed on everything, having served with him for some six years on the PTC and for seven years on the Council, I cannot recall a time he has deliberately misrepresented an issue. Some commenters here go beyond differences of opinion and debate of issues. Besides the inappropriate and anonymous personal attacks of another individual in these posts, a logical conclusion to draw is that some are concerned Pat will run for Council…and win. For one, I hope he does run.


8 people like this
Posted by Recurring Theme
a resident of Fairmeadow
on Feb 12, 2020 at 12:09 pm

[Portion removed.] Why doesn’t council put on the ballot a specific tax? Just come out and say it Karen. Don’t give a political answer that does everything BUT answer the question.

Repeat after me...”council does not go for, and neither would I or Pat, a specific tax because it is harder to pass and it unnecessarily restricts the council to spend the tax money for the very specific purposes I just identified in my post”.

At least be honest with the public. Say what you want about Greg Tanaka, but that guy is a fiscal straight shooter. You want money to address specific issues but are so afraid you can’t pass the tax as a specific tax that you have to trick the public into thinking it’s passing something else (with use of deceptive ballot language) and do not have the honesty in you to say where this business tax money will go - the general fund. The public should know what the difference is except everyone is tripping over themselves to scream that there must be a business tax.

Ok. Have a business tax. Can you achieve that and use the money for specific purposes? Would you or Pat support money going towards specific purposes? Doubtful. Can you admit that? No, because you’re a politician who thrives on people not knowing the difference.


9 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 13, 2020 at 9:43 am

[Portion removed.]

>> Ok. Have a business tax. Can you achieve that and use the money for specific purposes? Would you or Pat support money going towards specific purposes? Doubtful. Can you admit that? No, because you’re a politician who thrives on people not knowing the difference.

My preference for the use of the business tax would be to pay the SCC Sheriff's Department to keep at least 8 deputies on the streets in Palo Alto at all times doing traffic enforcement. Big business has flooded us with traffic, and, frustrated and aggressive drivers are pushing the boundaries all the time. It is a constant irritation to have to deal with all the dangerously aggressive drivers. With a hefty tax on big-business head count, we could reduce traffic and increase enforcement at the same time.


7 people like this
Posted by Recurring Theme
a resident of Fairmeadow
on Feb 13, 2020 at 10:26 am

[Portion removed.]
Politicians, with the exception of Tanaka, will never answer for you why they support a tax a certain way. It matters. They do not want specific taxes to address the community’s specific needs. They want indefinite taxes to support whatever it is they please. They just need a revenue source under the guise of solving the community’s problems.


4 people like this
Posted by BusinessOwner
a resident of Downtown North
on Feb 13, 2020 at 12:39 pm

I've owned a small business in Palo Alto for almost 25 years. We're paying $750 per employee just to park on the street, and a business improvement district tax already for zero benefit to anyone and I've had enough. Our lease is up at the end of this year and we've started preparing to move. And when we move, we'll be replaced by a business with 10x the number of employees, 10x the traffic, and twice the prices. We wish you all the best of luck.


13 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 13, 2020 at 12:40 pm

Posted by Recurring Theme, a resident of Fairmeadow

>> Politicians, [...] just need a revenue source under the guise of solving the community’s problems.

You continue to ignore the most important point regarding this tax. Properly structured, it will provide a significant signal to developers that the city doesn't need any more office space, and they should plan their developments elsewhere. If they take the money and invest it in California municipal bonds, that would be fine with me. The point of the tax is to discourage further growth of big-business jobs that could easily be located elsewhere.


23 people like this
Posted by mjh
a resident of College Terrace
on Feb 13, 2020 at 2:00 pm

@BusinessOwner

I haven't spoken to anyone yet who supports more than a nominal per head fee for retail businesses, and other businesses that serve the public. Or for small or individually owned businesses. Also, good luck with finding another town that does not charge a business tax. Palo Alto is now the exception in not charging any kind of business tax.

It is the offices that have brought in this influx of workers because beginning about fifteen years ago existing office space density has increased three or even four times.

Remember circa 2005 the big deal in the news about Facebook's downtown offices because of the then novel concept of employees crowded around tables and on the floor in halls and stair wells with laptops so powerful traditional desks and filing cabinets had become completely obsolete?

Add in all the office construction since then specifically designed to support a density of 3x-4x employees more than the 250 sq ft per employee assumed in the outdated building code. The outdated code on which parking requirements are based.




19 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 13, 2020 at 3:24 pm

Posted by BusinessOwner, a resident of Downtown North

>> I've owned a small business in Palo Alto for almost 25 years. We're paying $750 per employee just to park on the street, and a business improvement district tax already for zero benefit to anyone and I've had enough.

Enough-- ? You don't really explain why you are leaving, and, what it would take to encourage you to stay. What are the factors at play here? Is your rent going up?

>> Our lease is up at the end of this year and we've started preparing to move. And when we move, we'll be replaced by a business with 10x the number of employees, 10x the traffic, and twice the prices. We wish you all the best of luck.

As you know, many residents of Palo Alto have been pushing for years for the city to find ways to keep small businesses that serve residents. What do you think would work?


10 people like this
Posted by Fisher
a resident of Community Center
on Feb 14, 2020 at 4:28 am

Palo Alto’s business boom has had enormous and deleterious consequences for the people that live here and work here, say particularly in the service industry, essential services and the public servants. They can’t live here anymore. That’s a big loss, because they can't invest in Palo Alto to the extent they would if they lived here. There’s so much good to be done with this tax, like building 100% affordable housing for instance and BMR housing. What if the people that serve the city could live here? Like our teachers and first responders, nurses, etc. And I’m even wondering about housing city employees so that we could continue to attract the brightest and the best city workers to make Palo Alto a better place for everyone to enjoy.Web Link


9 people like this
Posted by Gunny
a resident of Adobe-Meadow
on Feb 14, 2020 at 4:30 am

It is the offices that have brought in this influx of workers because beginning about fifteen years ago existing office space density has increased three or even four times.

Remember circa 2005 the big deal in the news about Facebook's downtown offices because of the then novel concept of employees crowded around tables and on the floor in halls and stair wells with laptops so powerful traditional desks and filing cabinets had become completely obsolete?


18 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Feb 14, 2020 at 7:15 am

Maybe the Palo Alto Chamber of Commerce "leaders" should ask sit-down restaurants owners like Il Fornaio and St. Michael's Alley what employee cafeterias like Palantir's have done to their lunch traffic for the past few years! They'll tell you it's been a disaster, with St. Michael's Alley averaging 4 -- FOUR -- tables of people at lunch now.

The impact of employee cafeterias on local retailers and restaurants has been a KNOWN problem for years. San Francusco's considering a law to ban them and Google is FINALLY considering the appeals of nearby restaurants to let them host a meal or two.

Shame on these big-business lobbyists for their tireless push to destroy resident-serving businesses.


7 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Feb 14, 2020 at 12:26 pm

> Union Bashing

Since when does telling the truth about a disruptive aspect of our government service delivery model diminish other arguments about government wasteful spending as well as corruption?

Unions have been very detrimental to every industry segment that they have infected. Have you ever traveled in the so-called “Rust Belt”? While the demise of the manufacturing sector in the East/Midwest is complicated to explain—union greed, violence and low productivity were a part of the decision to shut down these business, whose skeletons dot the land.

Web Link

In California, Unions have managed to extort vast sums out of the taxpayers vis-à-vis the lavish pensions awarded by clueless, unaccountable, elected officials:

Web Link

Union corruption knows no bounds:
Web Link

Unions were under the control of Communists, the Mafia and corrupt union bosses since the 1920s. People who “believe” in unions routinely show no knowledge of the crimes committed by their leaders. Most rank and file union members don’t seem particularly upset by the failures of their leaders—as long as they see their salaries and benefits increase.

Don’t see why this knowledge should diminish any arguments about unwise government taxes, or proposals.


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