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Despite business objections, Palo Alto advances new tax

Original post made on Mar 29, 2022

Emboldened by promising survey results, City Council members on Monday pushed to place on the ballot a business tax and measure that affirms the practice of transferring utility funds to the general fund.

Read the full story here Web Link posted Tuesday, March 29, 2022, 12:59 AM

Comments (21)

Posted by DTN Paul
a resident of Downtown North
on Mar 29, 2022 at 12:49 pm

DTN Paul is a registered user.

Yay. More taxes. This will surely make Palo Alto a more vibrant and dynamic place.


Posted by Tom DuBois
a resident of Midtown
on Mar 29, 2022 at 1:09 pm

Tom DuBois is a registered user.

I think this story missed a very important element which is the outreach the City has made to everyone - residents and businesses, hearing their comments and adjusting the parameters of the business tax. The Finance committee listened and adopted many of the suggestions the business community asked for last night.

Many businesses are opposed to any tax and will continue to throw up objections as we head to the ballot box. However some businesses realize that Palo Alto is one of the few cities without a tax and would support a business tax that addresses their concerns. Last night they raised concerns about timing of the start of the tax, uncapped consumer price index increases and uses of funds.

On timing, the finance committee suggested the tax won't start for two years and then would phase in over the next 3 years, so businesses would have until 2027 to adjust to the full business tax. The issues being raised about short-term impacts of Covid should hopefully be years behind us at that point.

And on uses of funds, we had an extensive discussion about focusing these funds on public safety including our commercial districts, affordable housing and the unhoused, and transportation improvements and safety. These investments benefit the entire community - businesses and residences.

On uncapped CPI increases, the committee passed a motion that Council should cap the annual CPI adjustment in any one year as requested by the business community.

Hopefully the finance committee's responsiveness addressed these concerns


Posted by ALB
a resident of College Terrace
on Mar 29, 2022 at 1:49 pm

ALB is a registered user.

Palo Alto is the outlier when compared to other municipalities concerning requiring a business tax. Council member Tom DuBois has articulated well how the city has listened to residents about going forward with the tax. Funds generated from this tax will go to services including safety and hopefully housing for low income people. Small businesses are not targeted. This business tax is long overdue.


Posted by Green Gables
a resident of Duveneck/St. Francis
on Mar 29, 2022 at 4:59 pm

Green Gables is a registered user.

Many years ago (40 or more) a neighbor moved his mining engineering company AND employees, which his dad had started in Palo Alto, to Reno, Nevada because the STATE of California was not friendly to businesses. At least moving large corporations to Austin, Texas and elsewhere has yet to get the attention of the state government. A business tax would have been a good idea in Palo Alto prior to the COVID-19 issue. What is the saying about a dollar short, a day late?


Posted by tmp
a resident of Downtown North
on Mar 29, 2022 at 7:17 pm

tmp is a registered user.

Whine, whine, whine. This business tax should have been passed years ago. We are the only city that doesn't have one. The businesses around here already pay more in rents to be here and from the sound of it the business tax will be low for years to come. It is beyond the correct time for the business community to step up to pay for the services that it uses daily and in some areas more than residents. Step up and pay what you should have been for a long time.


Posted by BobH
a resident of Palo Verde
on Mar 30, 2022 at 9:16 am

BobH is a registered user.

I will vote NO for using the utility profit to go into the general fund to pay for basic city services.

Instead that money should be used improve the power distribution infrastructure so we can meet the cities goal to reduce emissions. This will require a lot of investment in power infrastructure. This includes a second high power line into the city, updates to the distribution network, new transformers that can carry higher loads, EV charging stations, and increasing the rate of putting power lines underground.

Using this money to pad the general fund is not a good use of these funds.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 30, 2022 at 10:06 am

Online Name is a registered user.

I too will vote NO to using the utility money to pay for basic services. It's absolutely shameful that the city couldn't come up with a clean proposal for a business tax after YEARS of ripping us off for $20,000,000 each and every year.

And color me shocked that business "leaders" object to paying their fair share when commuters have outnumbered us by at least 4:1 for years and shifting all the costs to US.


Posted by Bystander
a resident of Another Palo Alto neighborhood
on Mar 30, 2022 at 10:15 am

Bystander is a registered user.

The affirmation of sending utility fees to City general fund is very wrong.

As it is, we are unable to reduce our utility bills significantly other than not using most of the utilities. However, some charges are unable to be reduced. As an example, we cannot put a vacation hold on our garbage pickup so if we are away for a month we still pay full fees? Is that fair? If we are away for a month we are likely using very little gas, electricity and water and producing no garbage, yet we still pay. Likewise, if we reduce our garbage down to one can per month due to recycling, reusing and composting, we still get charged for a weekly pickup of the back can? Where is the incentive to reduce waste when we still get charged even if we don't put the black can out until it is full?

Now it could be argued that our utilities charge is a tax since it cannot be reduced (except by using a small black can which most homes already do). Since excess funds are transferred to the general fund, it sounds even more like a tax.

I would say vote no on this.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 30, 2022 at 11:45 am

Online Name is a registered user.

I'm not sure the affirmation is very strong given the consistent problems with responding to city surveys, the inability to change our passwords, the lack of customer service / response from the city when complaining...

But hey, they think they can provide customer service for a fiber-to-the-home network that can compete with the big boys.

Correct me if I'm wrong but it seems our "leaders" are smoking that old substance that they don't want in our borders in spite of the overwhelming vote in support of it that would help our city finances...


Posted by Annette
a resident of College Terrace
on Mar 30, 2022 at 11:47 am

Annette is a registered user.

Agree this should have been done years ago, but it wasn’t. This, and the staggering jobs:housing imbalance are the legacy of past Councils that had a majority that favored developers and big business regardless of impact on residents (particularly those with “normal” income) and small retail. Now this Council is stuck addressing the messes created by preceding Councils.

We should have a business tax but not like this. Timing is terrible and the plan to let revenue flow to the general fund is, too. Promises are too easily broken. And we still have an enormous pension obligation. What’s to keep the funds from being used to meet the pension obligations and projects future Councils value instead of specific (and chronic) critical needs such as improving the power grid and affordable housing?

It is harder to pass a specific tax but taxes should be hard to pass. If a specific tax passes, that tax has wide support. A general tax can pass with “just enough” support which these days can be bought with slick mailers and a targeted campaign.



Posted by Nayeli
a resident of Midtown
on Mar 31, 2022 at 6:31 pm

Nayeli is a registered user.

I really wish that there was a way to cap the taxation in this state. It's like the state and many localities are making the effort to chase away businesses (and tax-paying employees) from this state.

When all things are considered, I suspect that this state has the highest overall per capita tax rate in the country.


Posted by Nayeli
a resident of Midtown
on Mar 31, 2022 at 6:33 pm

Nayeli is a registered user.

By the way, I was called by a pollster about "issues concerning our community." I think that it was for this business tax increase. The questions were very puzzling, fuzzy and ambiguous.


Posted by Rob
a resident of Midtown
on Mar 31, 2022 at 9:12 pm

Rob is a registered user.

This week the Post headline described how Palo Alto was lagging behind with the economic recovery compared to other surrounding cities. The very next day the the headline was about the approval by the Palo Alto council to put a business tax on the ballot??? This will just perpetuate the anti-business climate that prevails in Palo Alto that's why after 35 years of being suffocated by every fee and regulation I sold my business and got out like many others PA vacancy rate @ 14.1 % leading the valley. I would like to know who conducted the study that showed residents in favor of the illegal utility tax transfer to the general fund? I can't wait until it goes on the ballot the city is in for a rude awakening because you can't tax yourself out of Pension purgatory and blame business for all the problems. As a 59 year resident I've seen it all.


Posted by Larry
a resident of Downtown North
on Apr 4, 2022 at 11:30 am

Larry is a registered user.

I was surprised to learn from my friend at CPAU that they have a paid senior staffer working full time to get the Utilities Transfer measure passed. This makes it seem like the City is less interested in representing its residents' wishes than manipulating them.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Apr 4, 2022 at 1:29 pm

Online Name is a registered user.

@Larry, that's absolutely outrageous. Write City Council. Write the City Manager. Write letters to the Editors.

I'm so tired of them stealing $20,000,000 from us each and every year and STILL not opening the libraries, short-changing Animal Services so each new pet owner has to spend $1,000 to spay/neuter their animals AND still not having full hours at Animal Services.

Re other cities recovering so much faster than Palo Alto, maybe that's because they're not office parks dependent on the commuters who over-run us. Maybe it's also because they ignore resident-serving businesses while allowing companies with their own cafeterias to destroy nearby restaurants.

Anyone else been to First Friday in Los Altos? They have music from 6-9 with lots of musicians/bands playing on both Main and State Streets. Who organized it? The owner of the Nature Gallery who left PA for Los Altos and is happily thriving there rather than fighting the T&C landlord! Both streets were mobbed and the restaurants and stores were hopping!

Anyone else been to the Weds. night market in Menlo Park? Who organized it? The owner of Bistro Vida.

And what does our fair city do for merchants like that? Less than NOTHING. It ignores them and forces residents to campaign against the destruction of resident-serving businesses by the landlord right at the end of the pandemic when our highly paid staff couldn't even define MEDICAL/Retail!




Posted by Annette
a resident of College Terrace
on Apr 4, 2022 at 9:33 pm

Annette is a registered user.

Wait, what? Larry, are you saying that OUR money is being used to LOBBY for the transfer measure? Isn't that illegal? That's the same as lobbying against the best interests of your rate payers. And this from a utility that has a queue of residents waiting for their installed solar equipment to be turned on. Priorities are off here.


Posted by JS1
a resident of Another Palo Alto neighborhood
on Apr 6, 2022 at 8:23 pm

JS1 is a registered user.

The objection to the proposed business tax is the EXORBITANT amount of business tax that our dear City Council members have in their sights.

Most of our adjacent cities charge a very nominal business tax. Mtn. View charges approximately $10/employee. Sunnyvale charges approximately $47/employee. Fremont charges $129/year per business. Santa Clara charges $15/employee. San Jose charges $45/employee.

For a business having approximately 50 employees, it would take about 15,000 sf of space to house these employees. In San Jose, a business having 50 employees would be charged an annual business tax fee of approximately $2,250/year. This fee is on the higher end of the price scale. Palo Alto is considering imposing a business tax fee of somewhere near $0.15 to $0.20 per sq. ft. of building area PER MONTH. On a 15,000 sf building located in Palo Alto, a business would have to pay in the range of $27,000 to $36,000 PER YEAR!!

The amount of business tax proposed by Palo Alto is approximately 10X higher than the amount of business tax charged by peer cities. This I’d ridiculous beyond belief. I will move my business out of Palo Alto on Day 1 if this goes through.

The real problem with Palo Alto City Council is not the lack of incoming revenues; instead it is their inability to spend the revenues they have efficiently.


Posted by Citizen
a resident of College Terrace
on Apr 6, 2022 at 10:47 pm

Citizen is a registered user.

No tax.


Posted by Citizen
a resident of College Terrace
on Apr 6, 2022 at 10:48 pm

Citizen is a registered user.

No tax. Live within your means, like the rest of us have to do.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Apr 7, 2022 at 12:44 am

Online Name is a registered user.

@Annette, they won't call it LOBBYING; they'll call it Community Putreach or Communications while patting themselves on the back.


Mitt Romney: Corporations are people, my friend.

Palo Alto: Residents are businesses, my friend

* the city's attempt to redefine a business tax as the illegal practice of overcharging utility customers -- aka RESIDENTS -- $20,000,000+ a year

* $200,000++? and benefits for a NEW SENIOR staffer to lobby us FULL TIME that taxing us is better than the business tax

No doubt that staffer will do self-serving loaded polls that still don't work correctly showing all residents are strongly support taxing ourselves instead of businesses to fund more bureaucrats, more consultants. more pension liabilities that will require cutting more services to residents.

What a racket!



Posted by Annette
a resident of College Terrace
on Apr 8, 2022 at 8:43 am

Annette is a registered user.

Attention Voters: we've got an end run going on here. Transferring funds from the utility to the general fund was deemed to be an ILLEGAL tax. That is the result of a lawsuit that the City LOST.

Now the City wants voters to approve that practice AND approve a business tax to feed the General Fund. Double whammy. And kinda dirty business. Coffers low? Increase utility fees! Unfunded pension obligations drawing too much from the General Fund? Increase utility fees!

Why is it that Palo Alto needs to feed the General Fund with both a new business tax and affirmation of the funds transfer? Poor management? Over spending? Failure of past Councils to pursue a reasonable business tax at a time that wasn't as uniquely challenging as this?

And what's to assure that the City spends the revenue from the tax on the very needs that will be used to encourage a yes vote? Answer: nothing.

The City's consultant says there's a "sizable group" of voters who will vote to approve both measures. I can hardly wait to read the ballot measures. Some clever wordsmith will present these measures to be great, reasonable, and necessary. The utility transfer shouldn't even be on the ballot; simultaneously going after that and the tax is astounding. And an indication that the City's fiscal house is not in order.


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