With the business community in a rapid downspin because of the coronavirus pandemic, Palo Alto is preparing to drop its yearslong plan to place a business tax on the ballot this November.
City Manager Ed Shikada issued a recommendation to discontinue all work on the proposed tax measure, which the City Council was planning to use primarily for transportation improvements, including redesigning the city's rail crossings. In a report issued Thursday, Shikada noted that the city's economic landscape has "shifted significantly, with COVID-19 significantly impacting business."
He also noted that with the Santa Clara County Public Health Department issuing a shelter-at-home order Monday, "staff's ability to complete outreach, engagement and education related to a ballot measure will be severely hampered." Polling, he added, would likely not produce useful results at this time.
"Small businesses, such as restaurants and cafes, have closed or are seeing precipitous declines in patronage while large companies face heightened uncertainty," Shikada wrote in the report. "In addition, Santa Clara County's public health order to shelter in place makes it more difficult to solicit meaningful engagement and feedback with stakeholders, including both residents and businesses."
Shikada noted that it is unclear how long the economic, community and social impacts of this public health emergency will persist. To get the measure on the November ballot, the council would need to fully define what the tax looks like by July.
Shikada recommended that rather than pursuing the business tax, staff will work to improve and streamline the city's glitchy business registry and make sure the data in the registry is complete and reliable.
If the council accepts Shikada's recommendation, it will defer deliberating on the tax measure and consider it for November 2022 ballot.
The council discussion this Monday will come a time when the local economy is cratering, with most businesses shuttered, hotels seeing occupancy rates dwindle into single digits and restaurants either closed or limited to to-go orders by the county's Monday directive. Judy Kleinberg, president of the Palo Alto Chamber of Commerce, said the business community is "reeling from this virus."
"This is an economic crisis," Kleinberg told the Weekly. "It is a recession. It may turn into a Great Recession. We are looking at a very long, challenging economic crisis."
Councilman Greg Tanaka also offered a bleak forecast at the March 16 meeting and urged his colleagues not to move ahead with a business tax at this time.
"Right now our businesses are suffering big time — every single business," Tanaka said. "I don't think there is a single business out there that hasn't been hit hard.
Now, having a business tax in place doesn't seem like the right thing to do, given the stress that the economy is in right now. Maybe we can pick it up later once things pick up."
The City Council will consider the recommendation from Shikada on Monday night.
Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.