Politics & Government

Council Will Continue Exploring Business Tax Increase

The City Council last night decided to continue discussing placing a business tax increase on the November 2011 ballot.

While making no final decision on adding an ordinance increasing the business license tax to the November 2011 ballot, city council members decided to continue exploring the option at their meeting Monday night.

The council first discussed a tax hike at its . At that time, members asked for more information regarding the number of large and small businesses in Burlingame, hoping to differentiate between the two rather than continuing to have each business pay a flat fee of $100.

Unfortunately, with most businesses reporting zero employees or one to four employees, it is hard to draw the line between large and small business.

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“There truly is no natural demarcation,” said Finance Director Jesus Nava.

Some councilmembers expressed reluctance to move forward with a ballot measure. Vice Mayor Jerry Deal agreed with the suggestion of city staff to discontinue discussion of a business tax hike while attempting to create support for a Burlingame Avenue assessment district.

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Funds from the district would replace aging water and sewer infrastructure and improve the streetscape.

“I think we’re piling on too much,” Deal said, adding the likelihood of a school bond or parcel measure on the ballot. “I would hate to lose support for the Burlingame Avenue streetscape over the fact that we put too much on this next election.”

Mayor Terry Nagel agreed.

“I just don’t want to sink our chances of getting the streetscape through by having too much noise,” she said.

Councilmember Cathy Baylock was more uncertain as to how to proceed. She agreed this year might be unrealistic due to other ballot measures, but said changing the business license tax needs to be done.

The tax was last altered in 1975. Everyone pays $100, regardless of if the business is a small mom and pop shop or larger corporation, such as a hotel or car dealership.

“I know the public is very tax weary, too, but this is something that just needs to be corrected,” Baylock said. “I’m looking for more equity.”

Councilmember Ann Keighran was the only member who expressed adamant support for placing the tax on the November ballot. She said the business tax impacts a minority of residents, and when residents look at a ballot, they look at how they are affected. She would like to give them the chance to make the final decision by opening the issue to a vote.

Councilmembers also discussed the tax increase producing less additional revenue than they originally believed.

According to a staff report, there are 6,384 businesses in Burlingame. Of those businesses, 544 reported employing 10 or more people and 992 reported employing 5 or more people.

If councilmembers decided to increase the tax for businesses with 10 or more employees in increments of $100--ranging from an increase of $100 to $400--additional revenue ranges from $54,400 to $217,600. If the same formula is applied to businesses with five or more employees, potential revenue grows from $99,200 to $396,800. 

Councilmembers agreed that a tiered system should be put in place for business taxation based on number of employees and potentially overall revenue. They voted to continue exploring putting the tax on the November ballot, meaning a subcommittee will compose an actual proposal, which will be floated to the public to gauge the likelihood of it passing.

The council must decide by June if it will place the tax on the November ballot.


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