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New Business Tax Increase Receives Mixed Reviews

Local merchants and residents express frustrations with fee increases in Redwood City.

Residents, business owners and elected officials expressed mixed opinions regarding the new business license tax in Redwood City in the wake of .

On Tuesday, 55% of voters approved Measure M which will increase the city's business license tax from the current $37 to $58, over the course of a three year span.

Over that same time period, the city will also impose a $38 fee on business owners for each full-time employee, which is a $14 increase from the current fee. And the fee for part-time workers will increase by $7 to $19 per worker.

After the three year lifetime of increases, the tax will rise annually based on the consumer price index.

City Councilman Jeff Gee applauded voters for approving the tax, and said that increasing tax revenue is part of a three-pronged approach to solving the city's long term budget woes.

"I'm pleased with the results," said Gee of the tax being passed. "This gives us breathing space for financial sustainability."

The tax, combined with the newly passes hotel tax, is expected to generate $1.5 million for the city annually, according to a city report.

Gee said the additional tax revenue combined with the city receiving bargaining concessions from city labor unions and identifying other income sources and savings will go toward achieving financial solvency for years to come.

Yet still, some Redwood City residents do not share the councilman's same enthusiasm about the tax passing.

Laura Whittaker commented that rather than raise taxes, it was the responsibility of the city staff and council to slash spending in order to achieve a sustainable business model.

"Our city council needs to do their jobs and make the cuts needed to balance their budgets," she said on the Patch site.

Resident Beth Mostovoy and small business owner of Honeybear Prints wrote on Patch's Facebook page, "It is DEFINITELY a hardship for small business... especially when there is even smaller busines happening!"

Meanwhile, local merchant Mary Albitz, owner of in Redwood City, shared a more reserved sentiment.

She agreed that businesses in Redwood City should probably be taxed more, noting that the local rates are lower than other cities in the region. But she expressed frustration regarding how aggressively the tax increases over the course of a short amount of time.

Albitz suggested that she might prefer to pay a lower percentage tax on a bi-annual basis as an alternative to what was passed. 

In response, Gee noted that the tax will be phased in over the course of a three year span, and that 1994 was the last time the business license tax was increased.

But Albitz also said that she believed the city staff and elected officials could have done a better job considering the input of local businesses when conducting public outreach to gain support for the taxes.

She said that she did not see any signs from city representatives that would indicate either staff or council members seriously took into consideration any suggestions made by local business owners regarding the tax prior to its approval.

"They set up meetings under the guise of getting feedback, but the plan never changed the entire time," she said. "My interpretation is that they didn't really care what our feedback was."

Gee said that though he was not part of the outreach process, he agreed that there could always be improved communication between the city and its residents and local businesses.

Gene Firpo November 10, 2011 at 09:31 PM
When only 22% vote in RC elections....What a shame, then you get what you get!
Zeke Mead November 11, 2011 at 01:55 PM
RWC business owners that don't live here can't vote.... but still get the rewards of our services. Why did they choose RWC in the first place then? Lower taxes relative to other peninsula cities? RWC government is definitely working to make downtown a destination and that will create momentum for business. If your business model can't handle another $21 a year, I don't think the problem is taxes.
Jennifer Tegnerud November 11, 2011 at 02:50 PM
Well said Cliff! And only a 22% turnout, that's really sad. As for Mr Mead's comment, our family business has been on El Camino here in RWC since 1968, so we have a lot of experience and our business model works for us. The point is, everytime people just blindly vote to increase taxes means an easier way for the government not to have to curb their spending. I think my Dad bought his first business in RWC because it just worked out that way for the industry he started in, and RWC was a different place back then. I know the Council is pushing their downtown plan and having lived here myself for 11 years it's nice to be able to walk to nice restaurants and entertainment, however not all business are located in the few blocks of downtown. I could go on and on but I'll just leave it at this, a business tax like this is going after Oracle and EA but what about the small business owners. $21 might not seem like a lot, it's the principle of raising taxes period!
Steve Hayes November 11, 2011 at 05:01 PM
It is almost cowardly to ask the majority to approve higher taxes on the minority like this - easy to do but wrong.It would have been better to either make tough choices to balance the budget or go for a tax on everyone.
Lou Covey, The Local Motive November 11, 2011 at 09:46 PM
It's difficult tto realize that one's opinion is actually in the minority, but many businesses, including the Chamber of Commerce, were in favor of this tax because we have seen a steady degradation in services. The city has cut its budget by almost 70 percent, laid off dozens of employees and reworked union contracts. As a city, we are at the point that the only choice is new revenue. Two years ago, the tax failed by a single digit, even with broad business support. We needed to do this. I'm a small businessman too and am pinching many pennies, but I was in favor of this measure.

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