Details on Palo Alto Measures Establishing a Business Tax & Affirming the Natural Gas Utility Transfer

To Be Considered by Voters on the November 8 General Election Ballot

At a special meeting on August 10, the City Council continued their fiscal sustainability discussions. At this meeting, the Palo Alto City Council passed a motion to place two measures before voters on the General Election ballot this November 8: one to establish a new business tax, the other to affirm the decades old practice of annually transferring a percentage of revenues from the natural gas utility to the City’s general fund. The measures would generate approximately $16.6 million in gross revenues annually. Read the following blog to learn more.

Find election materials at www.cityofpaloalto.org/2022ballotmeasures.

Business Tax Ballot Measure: Measure K

The Business Tax Ballot Measure is projected to raise approximately $9.6 million annually for general government services and programs. The measure would levying a tax on businesses in the City of Palo Alto at a monthly rate of 7.5 cents per square foot occupied by a business, for non-exempt businesses above 10,000 square feet. The measure caps the amount any single business will pay at $500,000 annually. Both the rate and the cap will be increased annually by 2.5% beginning fiscal year 2026–2027.

The City Council also adopted advisory spending guidelines indicating the Council’s intent to spend the tax proceeds on train crossing and rail safety, affordable housing and unhoused services, and public safety services.

Affirmation of the Natural Gas Transfer Ballot Measure: Measure L

The Affirmation of the Natural Gas Transfer Ballot Measure affirms the City’s decades-long practice of annually transferring revenues from the natural gas utility to the general fund to support general City programs and services. In keeping with longstanding prior practice, the measure would allow a transfer up to 18% of the gas utility’s gross revenues. Passage of this measure would not result in any change in customers’ natural gas utility rates. This measure is projected to raise gross revenues of approximately $7 million annually for general government services and programs.

The City Council vote followed extensive and ongoing Council focus and staff work, including discussions with key stakeholders through the Council adopted Community and Stakeholder Engagement Plan.

During the month of June, an Ad Hoc committee of council members was appointed and engaged in collaboration with the business community through August to discuss business tax elements for Council consideration. The Ad Hoc committee consisted of Mayor Patrick Burt and Council Members Tom DuBois and Eric Filseth. Dan Kostenbauder, Vice President of Tax Policy for the Silicon Valley Leadership Group, which is a part Palo Alto Community and Business Alliance, and Charlie Weidanz, President & CEO of the Palo Alto Chamber of Commerce, represented the business community.

More Online Resources

For more details, go to www.cityofpaloalto.org/fiscalsustainability

To find election materials, go to www.cityofpaloalto.org/2022ballotmeasures