Prodded by a ballot measure that would increase the city’s business tax, San Jose officials trotted out an alternative plan that’s less costly to local companies.
The changes would double business tax revenue to more than $25 million a year, according to a proposal up for consideration at Tuesday’s City Council meeting.
San Jose State University Professor Scott Myers-Lipton got the city talking about modernizing the business tax, which hasn’t been updated for 30 years, when he filed a ballot initiative back in January. Under his proposal, the city would remove a $25,000-a-year cap and tie the business tax to gross receipts instead of the number of employees.
Revenue, the initiative author suggested, would pay for police, fire and road repairs. The basics.
Business groups and Mayor Sam Liccardo reared into action, opposing the initiative as a potential jobs-killer. In March, the mayor proposed a compromise: have the city drum up an alternative to prevent the Myers-Lipton measure from landing on the November ballot.
For the past few months, city staffers have been working out the details of that compromise. As outlined, the compromise measure would raise business tax revenue from $12.7 million to at least $25.4 million in the first year (probably 2017).
The compromise measure would also increase the base tax, make the incremental tax more progressive, up the cap, revise the application of the tax and factor inflation into the mix.
On the other hand, Myers-Lipton’s initiative would generate more revenue—an additional $40 million a year. The university professor, who led a successful citywide minimum wage hike in 2012, claims a broad base of support for the ballot measure.
A study by city-hired consultants earlier this year found that the ballot measure would affect only 12 percent of businesses—mainly the largest employers. Meanwhile, 87 percent of small businesses would see no change in their tax bill.
Below is a look at how tax revenue would change under the city’s alternative plan.
More from the San Jose City Council agenda for June 21, 2016:
- The Valley Transportation Authority is still scrambling to catch up with construction of a rapid bus route through the Alum Rock corridor after a fallout with a contractor last year over safety problems.
- San Jose may continue giving developers a dicount on park fees beyond the originally set sunset date this month.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260