The Burlingame City Council discussed a handful of new tax measures Monday evening, signaling approval for taxes on gross receipts business licenses and cannabis businesses, and exploring a potential office space tax or special tax district along the Bayshore to fund infrastructure addressing rising sea levels.
The council will gather more information before making any final decisions, and all tax measures would first require voter approval. Discussion comes as the city’s general fund revenue has taken a massive hit during the pandemic, with about $48.6 million flowing in for the 2020-21 fiscal year compared with $72.4 million in 2018-19. Burlingame gets a good percentage of its revenue from its hotels, which faced high vacancy rates because of the pandemic.
“I’m not all about raising taxes, I think we have to be careful when we do it, but we have to come up with solutions on how we are going to fund these things,” Vice Mayor Ricardo Ortiz said, referring to the seawall project among others. “It’s going to be a tough go and we just have to keep some options open.”
The business license tax would replace the current flat rate with one based on gross receipts, a move that would adjust how much a business pays based on its size. Many other neighboring jurisdictions already tax based on gross receipts or number of employees, while Burlingame’s $100 flat rate charge has not changed since 2005, according to the city.
Burlingame collected an estimated $589,737 in business license taxes in 2019, while Foster City, which collects based on gross receipts and has a similar population size, collected north of $1.7 million the same year, according to the city.
As for cannabis, the tax would be levied as an additional business tax, and while a rate was not decided on, it was noted that neighboring cities charge between 4% and 10% of gross receipts. Though the city does not yet have any cannabis retailers, there is one in the works waiting on a conditional use permit.
The council discussed multiple options for obtaining funding to address sea level rise. The council favored a special assessment district for businesses near the Bayshore, but also agreed to further explore a parcel tax for commercial office space above a certain threshold.
Councilmember Emily Beach pointed to East Palo Alto’s Measure HH from 2018, which levied a $2.50-per-square-foot tax on buildings larger than 25,000 square feet, as a potential model for the parcel tax.
Further noted was that any local measure would need to mesh with county or state options that could appear on the ballot. The county, for instance, is looking at bringing a parcel tax to address the issue to the ballot next year, Councilmember Donna Colson said.
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“I would advise, and I think consultants who do this for a living would advise, that we not go at the same time, because it’s really confusing for voters,” Goldman said. “We don’t want to have either one go down in flames because people got confused about it.”
Colson expressed concern around overlapping taxes, recommending that the city choose either an office space tax or special district tax and avoid overlapping the two.
“You have to pick which one you want to do, and to me the overlay district is a little bit more pinpointed, in that we can target the Bayfront as opposed to the downtown office buildings,” Colson said.
Mayor Ann O’Brien Keighran added that funding for the Broadway grade separation project was still needed. Money for the project could be roped into a funding mechanism for sea level rise infrastructure.
“This is something we’ve been trying to get money for for years,” Keighran said, adding that there has been difficulty obtaining federal and state help for the project.
Among other discussions was an increased utility tax and Transient Occupancy Tax. TOT taxes apply to hotels and short-term rentals. Both proposals were unanimously rejected by the council.
Wait a second, just last week, didn’t I read that Burlingame was proposing to increase sewer rates about 10%? And Burlingame wanted to allow off-premise massage services in the hopes of securing more fees? I’d recommend that new businesses should look elsewhere besides Burlingame, unless Burlingame gives you a sweetheart deal by waiving fees or taxes. Now if you’re an R&D office, with no gross receipts, are you excused from gross receipts taxes since you have no receipts? BTW, no cost-cutting measures being proposed?
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Wait a second, just last week, didn’t I read that Burlingame was proposing to increase sewer rates about 10%? And Burlingame wanted to allow off-premise massage services in the hopes of securing more fees? I’d recommend that new businesses should look elsewhere besides Burlingame, unless Burlingame gives you a sweetheart deal by waiving fees or taxes. Now if you’re an R&D office, with no gross receipts, are you excused from gross receipts taxes since you have no receipts? BTW, no cost-cutting measures being proposed?
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