Council Approves Business Tax Increase

The City Council of Redwood City Monday night unanimously approved moving forward with a plan to increase both the city's .

The council plans to ask Redwood City residents to approve both the taxes during the November election, in an effort to cope with the $2.6 million deficit the city is facing, and which is expected to increase to over $4 million in coming years.

According to Finance Director Brian Ponty, last night's approval was the first step necessary in the process toward getting the tax measures on ballot for the fall elections. Under the council's decision, the city staff will return to the council again in June for formal adoption.

Should voters approve the tax hikes, the city's current $37 business license tax would increase to $59 over a three year span. Additionally, fees to business owners for full-time employees would increase over the same span to $38 from the current rate of $24. Additionally, the fee for part-time workers would increase from $12 to $19 over the same time period.

After the three year lifetime of increases, both taxes would rise annually based on the consumer price index.

And under approval from voters to hike transit occupancy tax, or hotel tax, would increase from 10 to 12 percent.

In all, the taxes are slated to generate $1.5 million annually if approved, according to a city report.

The tax increases are part of the city's budget balancing plan, which also includes getting concessions during labor negotiations with employees' unions and well as finding more efficiencies in spending, according to Ponty.

Ponty said the as well as the downtown business group supported the proposal to increase the taxes.

But Councilwoman Barbara Pierce said the city staff should do more community outreach to small businesses to rally support for the taxes.

"As you look around downtown, there are small businesses that aren't thriving," she said. "And we need to be helping them to understand the situation, and what we are doing to work with them."

Mayor Jeff Ira ensured Pierce that outreach process has already began, and that it will intensify as the June deadline for formal approval of the tax increase proposal approaches.

Councilman Ian Bain said he would campaign independently for the tax. City Council members are restricted by law from gaining support for the tax while using city funds. 

Councilwoman Rosanne Foust added there has not been an increase tothe  businesses license tax in 17 years. And that even if the hikes are approved, the increase would be spread out over a three year span, and would only make Redwood City's tax rate competitive with surrounding Peninsula communities.

She said one of the city's great challenges in getting the taxes passed will be to make the community understand how important the potential revenue that stands to be generated would be to Redwood City.

"We have to show why we are doing this for the long term health of the community," said Foust.