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Palo Alto proposed business-license tax was soundly defeated by voters Tuesday, with 56.43 percent casting their ballots against Measure A.
The tax proposal fizzled after months of debate, with critics calling it too messy and complicated to enforce and too onerous on already struggling businesses.
Skip Justman, who led the campaign against the tax, said he was surprised by how many small-business owners and entrepreneurs told him they were worried about intrusion from the city. He attributed the defeat of Measure A to the many voters who have part-time jobs but are also “working quietly at home.”
Justman, whose group called itself Small Business Against Taxes, said he was pleasantly surprised by the votes. As of 11 p.m., only 4,278 voters supported Measure A, while 5,538 voted against it.
“We had to fight an uphill battle,” Justman said. “We had to go against the City Council, City Hall and the downtown establishment and we were able to succeed.”
But City Manager James Keene said the voters’ rejection of Measure A would only make future decisions about program cuts more difficult. The city is facing a “structural” budget gap of at least $10 million, meaning long-term cuts need to be made. Keene was hoping to use the roughly $3 million in projected revenues from the new tax to narrow the budget gap.
“There’s no light at the end of the tunnel,” Keene said Tuesday night. “We’ll have to revisit ou possibilities and consider other ways of raising rrevenue.”
Larry Klein, who was reelected to the council on Tuesday, called Measure A’s projected defeat “unfortunate but not surprising.” All three local newspapers have come out against the measure, as have nine of the 14 council candidates.
Opponents of the measure have consistently argued that the ongoing recession is a horrible time for a new tax. Greg Scharff, who opposed Measure A and won election to the City Council Tuesday, said he would prefer to see the Palo Alto “invigorate its business climate” and generate more revenue by promoting more growth.
“I think we really need to increase revenue,” Scharff said. “I don’t think we can tax our way out of this.”
But Mayor Peter Drekmeier said he expects some of the voters who rejected Measure A to have second thoughts when programs and services start getting cut.
The council has already compiled a short list of possible cuts. The city’s shuttle service, the Fire Department’s disaster-preparedness program and the Police Department’s four-officer traffic-enforcement team, school-resource officer and crime analyst positions could all be on the cutting block.
“This means there will have to be more cuts made,” Drekmeier said Tuesday night. “I think it’s really going to sink in when people’s favorite programs are gone.”
Small businesses in Palo Alto are already seriously hurting right now (if they indeed still survive!) thanks to the economy. An attempt to further gouge them via a poorly-worded and overly-punitive tax measure only would make things worse. This measure was a crass attempt to convince voters to squeeze an already very vulnerable and suffering segment of the population to increase city revenue. Initial “reasonable” rates were completely open to (inevitable) soaring revisions at whim, and the penalties would include felony(!!) prosecution. What insanity.
Next to this, paying over 200% in penalties on Alarm fees after a rash of “careful failures”, pales by comparison. (Frankly, people aren’t buying that the Postal Service is so incompetent that these alleged “optional” payment-due notifications were “somehow never delivered” to so very many Palo Alto residents, and for the “responsible city-employee parties” to suggest that people intentionally forgoed paying low reasonable fees in full expectation of a certain high penalty later is disgusting.) Frankly, the city already has enough underhanded methods of coercing innocent (and already financially strapped) citizens into grossly overpaying for many things. Enough is enough.
I have lived in other towns, and paid their reasonable and well-crafted business taxes, particularly regarding small businesses as opposed to large ones. This measure, however, was not merely poorly timed, it was truly frightening in its open-endedness on increases and jurisdiction, and its threat of heavy-handed major criminal sanctions for even failing to realize one might owe the tax.
Even the wording of the measure on the ballot irritated the bejezzus out of me. Worded to favor a “yes” vote, as if a no vote kills revenue for the city, which is, of course, as usual, Orwellian designed to fool the ignorant.
Luckily Palo Alto saw through it somehow, and realized that the more you tax a good thing, business, the less business/employment/tax revenue a city/State/Fed govt gets. Tax a behavior, you get less of it…reward a behavior, you get more of it. Basic human nature.
Now for the rest of the nation to wake up. ( which seems to be starting)
What Peninsula cities don’t have a business license tax?
I am thrilled by the defeat of measure A. It was a well deserved slap in the face to Mayor Drekmeier, Larry Klein and the rest of the council, as well as to former Mayor Burch, Who was one of the leaders of the disinformation campaign to try to get this poorly written measure to pass.
Drekmeier claims that people will have second thoughts when services and programs are cut–how about the city trying to be more careful with how they spend our money–just yesterday they okayed an addition $250K for Destination Palo Alto. The city can start by stopping the subsidy to the PA Children’s Theatre.
“What Peninsula cities don’t have a business license tax?”
Only ones with poorly worded measures on the ballot.
They should immediately cancel the $240,000 for Destination Palo Alto, that’s 1/12th of the deficit closed immediately. And, they should definitely cut all subsidies to the Children’s Theatre before they cut the shuttle. This council is unbelievable.
“What Peninsula cities don’t have a business license tax?”
Many do, and one that was reasonably worded and not burdensome to comply with very well might have passed. This one one was designed to fund lawyers and accountants as well as stab at small business owners.
I am disappointed Klein was reelected; I hoped backlash would have taken him down. This was his doing more than anyone else’s.
How about a flat fee $200 to register a business here, or maybe throw in a couple of tiers. This one was overly complex and full of holes.
But yes, the answer to the City’s problems are spend less (more wisely) and foster businesses to increase revenue.
Tax Tax Tax I for one voted against it we have way too many stupervisors in this city lets get rid of some of them do we really need 1 supervisor for every 2.5 employees and oh yes we would have needed to hire another one im sure to oversee this silly tax
I Know of no other City that doesent have a business Tax We are special lets keep it that way
Measure A was justly defeated. It would have taxed every business regardless of revenue, even my one-person business that has had no revenue yet this year. It was a terrible idea in the midst of a recession.
For our Mayor to now seek revenge by threatening to cut police and fire services is the height of irresponsibility. We need to insist that our SEIU member city workers share in the sacrifice we have all been making. Retirement at 55 with near full salary and free medical benefits for life is a wonderful thing, but nobody in the private sector gets that and we certainly can’t afford it as a city.
The stables at City Hall have to be cleaned out first before any new taxes are imposed.
It seems many of us agree that a well crafted tax is reasonable. “when people’s favorite programs are gone” is a sad and predictable knee-jerk response from our mayor, whom I enthusiastically supported in his candidacy to council. A more statesmanlike response would be to propose ways to attract businesses to Palo Alto while carefully managing our current income. I disagree with cutting PA Children’s Theatre as it is a community resource that reaches may more than only children or their families. Definitely cut back on city employee perks. I count many long term city employees as friends, but they seem to be reasonable about changes to benefits and co-pays.
Reasonable–I agree with you comments about our mayor’s response. This is not unexpected given his disconnect with reality and those that have to work for a living. However I think in these tough times, what little resources we have need to go for maintaining critical infrastructure and programs–the Children’s Theatre is not one of them. In fact continuing to fund the PACT, while not funding other worthy child-related programs is unfair
Broom out the stables from the top down. Then rewrite Measure A to be more reasonable. Palo Alto voters will respond affirmatively.
“For our Mayor to now seek revenge by threatening to cut police and fire services is the height of irresponsibility.”
This is an unfair and misleading characterization. The proposed cuts have been on the table for six months. Hardly a knee-jerk reaction based on “revenge.”
This is where the conversation turns to “Oh, no you can’t cut that, that’s my favorite program. I use that service, cut that other one isntead.” JFP want’s the shuttle, not the childrens theatre. I’m sure many agree. And just as many would prefer the childrens theatre to the shuttle.
You are all going to have services you value cut. You call for heads to roll in City Hall but you can’t fathom not having (insert name of favorite program here). It doesn’t work both ways.
Concerned Citizen: Not all managers at city hall manage employees. That is a designation given to them so that when they have to work overtime they don’t get paid overtime – and many of them work a lot of overtime. If you get rid of them the city will have to pay the hourly employees to do the work and it will cost more. The actual designation is “professional employee” not manager – they just happen to be exempt from over time. And, for the record, many hourly employees actually make more money than many of the “professional employees”. Inform yourself a little better before you randomly decide whom to cut. If anything the city would be better off cutting more hourlys and bleeding the managers for more work, after all they can stay ’til it’s done and not make any more money than they already do.
I said keep the shuttle based on the fact that it’s a lot more useful to more people than the Children’s theater. I’m pretty sure that the theatre would do fine without city employees running it. That’s the way it’s been done in every other town I have lived in. However, if residents feel that a $1 million a year for community theater is worth more than the shuttle, that’s fine with me. Personally, given an $142 million budget, I am pretty sure a way can be found to cut $3 million without cutting services.
Bottom line: Palo Alto needs the added tax revenue.Taxing businesses makes sense. However, it must be done sensibly. In principle, I agree with levying a business tax, but voted against the one we were handed. Shame that a full year’s potential revenue will be lost because the law was so poorly crafted.
It is time to inventory and then prioritize City programs and expenditures. Then reduce spending starting with the lowest priorities. Or…carry on business as usual where we bring up each service as a separate topic and discuss them in City Council meetings that will last late into the middle of the night and continue to let the vocal minority will get its way.
We must stop trying to patch the budget: we need structural spending decreases. Stop, inventory, prioritize, cut from the bottom of the list, and get on with good business practices that will restore balance. Combined this with restructured city employee benefits that are more aligned with private sector benefits, and we will break free from an endless financial crisis.
This clarity might be rejected by those who want to manipulate for the benefit of narrow interests. Let’s have some real transparency. We cannot accept anything less.
Citizen Gray (formerly known as Candidate Tim Gray)
I was sorry to see that Measure A didn’t pass. As a small business owner in downtown Palo Alto, and a resident in South Palo Alto, I feel responsible to pay taxes for the services that the City provides. My business paid taxes in the city where we were previously located, and if we moved to practically any other city in the Bay Area, we would have to pay taxes. It’s fair to pay for services received.
I agree with the Mayer’s feeling that rejectors of Measure A will have second thoughts when their favorite services get cut.
interesting drukmyer does not consider cutting the bloated payroll (70%) of budget
the first cut should be getting rid of drukmyer he not worth the $400 a month we pay him
I agree with Citizen Gray, using common sense (which hopefully our new city council has)
Programs which affect public safety should NOT be impacted
Infrastructure programs should NOT be impacted
Programs should be cut by the amount of residents impacted (not to pick on the Children’s Theater, but I suspect more kids take the shuttle in one day then participate in a whole play)
All programs which do not affect public safety, infrastructure or help increase revenue should be considered for cuts first.
Any program/service which could be self-supporting should become self-supporting as a non-profit (Jr. Museum, Public Art, Children’s Theater are perfect examples). The impact on the city employees employed by those entities should NOT be a factor in whether they become private. Even the Rec Department could become more self-supporting by charge non-residents a premium for camps, swimming, etc.
Rethink the use of public space/resources such as some of our library branches.
Our Mayors “scare tactics” are just that, proposed cutting services which OF COURSE the public as a whole will protest.
What a wonderful opportunity we now have to cut the fat spent on needless programs, art work, “feel good” projects and the like, and help us get back to the basics of municipal government. Like a heart attack it can help change our lifestyle of over-consumption, and make us appreciate the simpler, cheaper things in life.
This likened to the “Block/ Unblock” of our neighborhoods – Stupidvisor
attitudes towards fund confiscation and misspending. I was almost ready
to suggest we consider a “Recall” of those wishing to rob our $ with ‘A’
had it passed. Once in office it’s so easy for some to figure their way
to the taking of our money, rather than fiscal budgeting and management.
To all you supporter, don’t worry, it’ll be back on the ballot next year. In fact Espinosa tried to get it delayed until next year, so the business tax is not dead, it’s only delayed.
The shuttle must stay for so many reasons. Palo Alto has no idea about public transportation and cutting out the little we have is cutting off your nose to spite your face. Without the shuttle the school commutes would be the first obvious problem and others would follow.
Public transport needs to be improved, not cut.
Mr. Clean: We just had an opportunity to “Broom out the stables from the top down..” and we failed to do it. Klein got re-elected. Price and Shepherd, who were in favor of the business tax and supported by the unions got elected. Business as usual at City Hall.
Anon, you are absolutely right when you say, ‘This is where the conversation turns to “Oh, no you can’t cut that, that’s my favorite program. …You are all going to have services you value cut. You call for heads to roll in City Hall but you can’t fathom not having (insert name of favorite program here).’
Citizen Tim Gray has the answer. It’s clear and it’s obvious, but no council member in my memory has ever been willing to do it: “It is time to inventory and then prioritize City programs and expenditures. Then reduce spending starting with the lowest priorities. Or…carry on business as usual where we bring up each service as a separate topic and discuss them in City Council meetings that will last late into the middle of the night and continue to let the vocal minority will get its way.”
Too bad Gray didn’t get elected.
It’s amazing that hte City Manager is still thinking of ways to “raise revenue”. How loud do we have to scream that the city should CUT spending instead of raising OPM to pay for bloated city spending? Of course it’s easy to just raise OPM and not deal with spending cuts. But I certainly don’t think (at least hope) that we hired someone with high 6-figure salary and benefit package to seek the lazy-man’s route. Unbelieveable the way city management thinks.
Consolidate departments. Outsource legal work, Human Resources, and Public Works. Cut administrative fat. Eliminate unneeded management. Streamline. Make it lean. Make it efficient. Cut costs. A clean stable is a healthy stable.
Ironic as the budget issue should have been a non-issue if the likes of Larry Klein were removed. He was the one voting against Rickie’s Hyatt expanding, trading $4 million in sales and transit taxes for $140,000 in property tax revenue. Palo Alto also added a provision requiring Stanford Shopping Center to build 364 or so Below-Market-Residences [BMR’s] before they would approve Standord’s expansion plans, tabling another $3 – 5 million in sales tax revenue! Not only does this City have a spending problem, they have a revenue recognition problem!
So, instead of facing the problem THEY created, they wanted to penalize the existing business owners. Surreal…
> As a small business owner in downtown Palo Alto, and a
> resident in South Palo Alto, I feel responsible to pay
> taxes for the services that the City provides
Interesting.
The City provides a lot of “services” (but no inventory of these “services” has ever been provided by the City) at the cost of about $114K per employee per year (with pensions that will payout in the millions for ever Palo Alto retiree). This yearly cost will no doubt continue to increase, as few on the City Council seem to have the courage to talk about employee labor costs.
Do your employees cost you $114K a year? If not, why do you feel obligated to contribute to these ballooning labor costs? What do you get in terms of services that makes you feel that you owe the employees of the City even more than they are getting now?
Oh .. if the cost of the goods/services you offer become more expensive than those offered in neighboring cities .. what do you think is going to happen to your business?
Please tell us Mr. Clean, exactly which managers are not required? Quit spewing and start actually looking into the issue. Contact HR and get a list of all management and their job descriptions. Then check off the ones you think are valueless. After that you can get a list of all non-management and their job descriptions and cross reference them against the managers you just fired so you can figure out who gets what work. Then lobby your council and city manager with your brilliant, and now well backed up ideas.
I’d bet my first born you won’t do anything of the kind.
If one read the posts on PA Online only as a barometer of PA opinion one would think that Klein would never, ever, be elected even to a dogcatcher position. As much as I detest his position as regards the City Workers and SEIU, when someone pisses off both poles but is still popular enough to get re-elected you have to wonder if he is doing something right. ?
If one reads the posts on PA Onlnie only as a barometer of PA opinion one would think that Price and Shepherd also would never have been elected as they didn’t go before the virtual PA Online Inquisition and denouce SEIU and all things union.
Measure A didn’t pass, which does match up with PA Online posts. But did it fail by 9 to 1?
So is PA Online forum really just a watering hole for the political-lorn right wing of PA, with an occasional foray by others? I try to stay away at times, but then get the email newsletter…..tell myself “don’t look at the comments”…but can’t stop srolling down…….OK at least I admitted I have a problem…..
Too much management fat clogs the arteries of an organization just like too many fried foods clogs human arteries. Downsize and outsource to cut expenses.
> but is still popular enough to get re-elected
> you have to wonder if he is doing something right. ?
There are about 40,000 registered voters in Palo Alto. Just under 10K voters went to the poles. Klein got 5,275 votes, or about 12% of the registered voters.
Businesses and non-resident property owners are not allowed to vote, although special interests and non-residents are allowed to influence the outcome of the election by contributing money to one/more candidates.
Getting the votes of 1 out of 8 registered voters can hardly be seen as “doing something right”. The problem is that Palo Alto’s electorate is “broken”. When 3 out of 4 don’t/won’t go to the polls, or even vote Absentee, then anyone who take the time to run a campaign can win a seat on the City Council.
Which in this case is “four more years of Larry Klein”.
Now that we’ve been bad voters and haven’t given an open checkbook to the city, we’ll be punished.
Perhaps the word cut should be applied the same way it is with the majority of businesses in the Palo Alto area. Cut jobs. Cut salaries. Cut benefits. Get things in line with reality of today’s economy.
Everything in the city should be opened up and examined – and – changes made to increase efficiency and productivity.
And, there are hundreds if not thousands of unemployed and very capable workers right here in Palo Alto who would love to help.
I am not sure why the editors removed my comment that Mayor Drekmeier was disconnected from reality. Let’s face it–at the State of the City Address his big priority was setting up a weekday Farmer’s Market near City Hall!! Yes, Drekmeier is disconnected from reality when he constantly wears his green, Stanford-Bashing glasses.
I was right, my first born is not in jeopardy.
Mr. Clean talks. And that’s about it.
Well, I see a lot of talk about cuts at City Hall on this thread. Dream on. What I think is much more likely, especially with the election of Price and Shepherd, is that we willinstead have more taxes on the average, not always affluent, citizen of Palo Alto. Higher utility rates (and then transfers to the general fund from utilities), and more bond measures that everybody seems gung ho about.
But a small tax on business in the form of a license fee, that nooooooo, it’s anathema.
Sad day.
Anon is right about professional employees putting in overtime and not getting paid for it.,
Measure A was indeed poorly written and deserved to be defeated.
Several years ago I rode the shuttle to find out how many used it. Based on the cost of the service given by our transportation dept., I figured it came to >$10 per person. Its real use is as a school bus. A large percentage of riders are school children who jam it during the morning and afternoon hours. I wonder why the school district doesn’t fund this use?
Pat Burt, for one, has been willing to speak to citizens outside the council chambers. Try to engage others to do so also.
Council members are flooded with e-mails, and sometimes don’t read them carefully – especially the long ones that rant. So make one point and do it briefly. Your next point can be done in a week or two.
I’ve been told a large number of Children’s Theater participants do not live in Palo Alto. Can anyone confirm that non-residents enjoy this subsidy?
I voted against the tax even though I live in Palo Alto. I also recently moved my business here. If Palo Alto wants a business tax, then they should be business friendly. A minority of residents killed the revenue raising projects Hyatt Rickeys project, the Alma Place grocery store project and the Stanford Mall expansion. There wouldn’t necessarily be a need for more revenue if allowed these 3.
For my recently moved business, we are trying to get a parking permit in the California Ave district. However, we’re on a 4-6 month waiting list to get permits forcing us to park in residential areas. The streets need repaving as well.
The city is allowing more and more housing in places where businesses should be. This reduces sales taxes which could go to the city. City workers demand more pay, pensions and benefits while private employees take cuts in pay and greater responsibility for health care costs.
So when the city and residents become more business friendly, I’m happy for my business to pay higher taxes.
This is the wrong time to raise taxes. Businesses are suffering more so than our city. Palo Alto should review the compensation packages of its employees (including safety officers and firemen) and compare them with the compensation packages of surrounding cities as well as the private industries. What I think they will find is that our beloved city has a lot of overpaid employees. No private employers provide the same level of salary and benefits that our city does. Did I hear retirement at 55 with nearly full salary and lifetime health benefits? NOBODY gets that in the private industry!
Lately I hear that the city union employees are unhappy with their labor contract. Many of them even called in sick some weeks ago I read. How dare them! I think this would be a great time for the city to clean its employees rosters–fire the incompetents and the underperformers. Let them experience the pain of finding jobs in this environment. Only then will they appreciate their city government jobs.
We have a city manager who promotes his “the glass is half empty” philosophies and whose idea of increased revenues is a new tax. We have a mayor who reacts to a tax defeat by telling residents that cutbacks in public safety programs are imminent, forgetting that we the citizens will ultimately decide what if any programs will be cut. It sounds like our problem starts at the top. Good luck
anon
sounds like u may be one of those many supervisors driving around looking for something to do do you really believe we need so many supervisors and if they are only capable of managing 2.5 employees each then why do they get paid so much lets face it for that much money im sure most people could manage at least 5 people or even 10 and yes i can give a list of such supervisors after dealing with many of them over the last 25 years
Concerned Citizen,
One more time I will say that the group of people you are calling supervisors are not supervisors. Their actual designation is “professional employees”. They are considered “management” only because they are exempt from overtime. In many cases they make less than many hourly employees. They are designated as they are because their jobs require them to work more than City Hall’s standard 9 hour days. If they weren’t exempt they would have to get paid overtime. They do not supervise other employees, they do not make the salary of supervisors. I don’t know why I feel so compelled to continue telling you this same thing over and over again. Clearly you are not getting it.
I am not one of them. I just wish you would explain yourself instead of simply insulting people you don’t know with workloads you don’t understand. If you based your argument in facts and with less insults perhaps you could convince myself and others that you are right. As it is you sound like a person with a personal vendetta and little else to keep yourself warm at night.
A full houscleaning is needed at City Hall. Broom out the new City Manager. Heis a clone of the last one. Clean out all the directors and senior managers left over from the Benest era. Start all over again. Do the job right this time. Change the whole culture. Make City government work again for Palo Alto.
Db Cooper–I agree about the manager and mayor. We expect some kind of leadership from the mayor, but instead we get him saying we will have second thoughts, while him and the council waste money on their pet projects. I guess a weekday Farmers Market is a high priority for the city, instead of trimming expenses and guaranteeing infrastructure will be dealt with. Is the city council on the same page with us or are they existing in an alternate reality?
Too bad Klein got reelected — Albert your statement is right: “There are about 40,000 registered voters in Palo Alto. Just under 10K voters went to the poles. Klein got 5,275 votes, or about 12% of the registered voters.”
I would have preferred new faces — Levens, Leong, and Hackman (opposed to A) but it’s tough to win over incumbents. Newspapers endorsements still count for too much.
“But City Manager James Keene said the voters’ rejection of Measure A would only make future decisions about program cuts more difficult. “
For what are we paying you? Do your freakin’ job. We all are dealing with limited budgets in our jobs right now. If you can’t “manage” then why are you our “city manager?”
> I’ve been told a large number of Children’s Theater participants
> do not live in Palo Alto. Can anyone confirm that non-residents
> enjoy this subsidy?
About 15% of the Children’s Theater participants live outside Palo Alto.
In today’s Daily Post article about another business tax, there is a quote from Skip Justman saying that in 1987 the city told voters that if they approved the utility tax, then a business tax would not pursue a business tax. Does anyone recall this promise?
again anon
i am saying we have 1 stupervisor for 2.5 employees on average in most dept of our our city staff/workers government that is top heavy or too many chiefs not enough indians
> if they approved the utility tax, then a business tax would
> not pursue a business tax. Does anyone recall this promise?
Unless the City put that language on the ballot then, their “promises” would not be binding now.
I’m not sure about this but I think the Utility tax will be termed out in 2014. I think it was passed in 1984 for thirty years. Can anyone confirm this?
After fair adjustment are made to the structural benefits cost of City workers, the Council needs to engage the Community and prioritize services, and be ready to instruct Jim Keene to start reductions from the bottom of the priority list.
We need to start the prioritization conversation now. Will we wait and then have “California Avenue Tree” style community outreach and lose an opportunity for transparent and rational decision-making? Keene is a professional and knows how to implement changes, but that won’t happen without direction from the Council — rightfully so.
Being silent and waiting for a crisis to happen then opens the door to manipulation by the vocal minority to the detriment of the silent majority. Hey! Silent Majority — Turn up the volume! We have too much to lose.
Citizen Tim Gray (Formerly known as Candidate Tim Gray)
P.S. We also need to build a firewall around the Utility funds, or the rate payers will be the victims of another pick-pocket from the general fund — in a poorly disguised way to avoid managing our expenses.
Citizen Gray