In crafting the work plan, Administrative Services Department staff proposed an "iterative" approach, with regular check-ins by the council and its Finance Committee. According to a new report from Administrative Services, the plan anticipates "continued review and refining of proposals," with regular polling and outreach along the way.
Councilwoman Alison Cormack lauded this method.
"I think it's the beginning of the conversation," Cormack said. "This is the opposite of the 'big bang' approach. ... We need to have some options; we all need to think about it; we need to define it as we go."
Palo Alto has explored a business tax numerous times already. In 2009, the council proposed a business license tax, which aimed to address a budget shortfall brought on by the economic downturn. The measure, which was designed to raise the general-fund revenues rather than fund specific projects, was rejected by the voters.
Former Councilwoman Karen Holman, who had opposed the 2009 measure, said Monday that it failed in part because its language was poorly crafted and its purpose was "not clearly laid out." She urged the current council not to repeat those mistakes.
In 2016, the council renewed its push for a business tax, though the effort fizzled when its Finance Committee opted to move ahead with a hotel-tax increase instead. As part of that effort, the council commissioned numerous surveys to gauge residents' interests in pursuing a revenue measure to pay for various infrastructure projects.
It also sought to create a stakeholder committee to work on a business-tax measure but scuttled that plan in May 2017 after then-City Manager James Keene warned that staff didn't have the capacity to work on it.
Despite that setback, several council members have continued to view a business tax as the most suitable way to pay for the reconfiguration of the city's rail crossings and other transportation projects. Councilman Tom DuBois, who this year chairs the council's Finance Committee, has been one of the most strident supporters of instituting the tax. Palo Alto, he noted Monday, is one of just a few cities in the region that doesn't have such a revenue source.
"I think it's important we don't get stuck in analysis by paralysis," DuBois said. "It's going to be vital that we go pretty quickly."
Mayor Eric Filseth also supported staff's proposed work plan, which he said creates "an orderly process."
"I think this will be complicated and take some careful thinking and a lot of work," Filseth said.
One of the council's most critical tasks will be getting buy-in from area businesses, which is something that the city had failed to do in 2009. Judy Kleinberg, CEO of the Palo Alto Chamber of Commerce, said businesses could potentially get behind a tax, provided the city involves them in putting the measure together and has a clear idea on what the revenues would be used for.
"We will support something that is fair, accountable and transparent and where the business community participates in the fashioning of the particular tax," said Kleinberg, a former Palo Alto mayor.
But former Vice Mayor Greg Schmid — who is now a member of the group Palo Altans for Sensible Zoning, which favors slower city growth — urged the council to give residents a significant role in shaping the measure. A retired economist, Schmid cited U.S. Census figures showing that jobs in Silicon Valley grew six-and-a-half times faster than the number of residences between 2010 and 2017. During the same period, the share of property taxes paid by businesses declined by 10 percent, he said.
"Fair share — businesses paying their fair share — is a substantial issue," Schmid said.
Palo Alto is hardly the only city to pursue greater contributions from its businesses to tackle transportation and housing problems. Just last November, San Francisco voters approved a "homeless" tax on large businesses; East Palo Alto voters approved a parcel tax on office developments to pay for housing and job-training programs; and Mountain View voters approved a per-employee tax on large companies.
Other cities may soon follow. Former Mayor Pat Burt told the council that he is part of a group of leaders and activists in other communities who are interested in putting similar measures on their ballots, in similar timeframes. Burt said the group has been concentrating on two uses for the new business tax: transportation and affordable housing.
Burt said he supported devoting much of the transportation funding to railway redesign, though he noted that the funds could also be used to expand the city's shuttle system, increase the local stock of affordable housing and expand the Palo Alto Transportation Management Association, a nonprofit that aims to give commuters alternatives to driving solo.
"We look forward to working with you on trying to support this, and we hope what you come up with is roughly aligned with what we have in mind and it will be able to become a support mechanism for a ballot measure, rather than having to put a separate measure on the ballot ourselves," Burt said.
TALK ABOUT IT
People are sharing their opinions about a Palo Alto business tax on Town Square, the online discussion forum. Join the conversation at PaloAltoOnline.com/square.
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