Foster City OKs new business license tax ballot measure

Other models proposed by staff would have increased the maximum amount from the current cap, roughly $28,000, to $500,000, which did not receive council support. The limit that will be on the ballot will increase the cap to $250,000.

Updating the BLT revenue stream has been a frequent topic of discussion among several Peninsula cities as of late — including South San Francisco, Belmont and Redwood City — especially as budget deficits abound and other income sources, such as property-tax-in-lieu-of-vehicle license fees, were recently put in a precarious position.

Foster City’s five-year projected structural deficit further accelerated the urgency for such an initiative as well.

“The city is anticipating a five-year ongoing structural deficit. This is roughly $40 million over a five-year period, with the next two years likely $5 [million] to $7 million,” Assistant City Manager Marlene Subhashini said.

The current rate, 75 cents per $1,000 in gross receipts, is applied across all businesses, no matter the industry or size, and it generates on average $1.7 million per year. Staff and the council have agreed on multiple occasions that the amount paid by businesses, including maximum limits, should be increased, as they haven’t seen substantial changes in about a decade.

But several public comments, representative of the city’s large businesses, such as Gilead, cautioned against excessive increases.

“We believe that raising the business license tax will dramatically and negatively impact investing in research and development in Foster City. This increase will discourage future investments, leading companies to relocate, resulting in major job losses for this city,” Jenny Bach, spokesperson for California Life Sciences, said during public comment. “We oppose each of these proposals due to their potential to undercut Foster City’s long-term economic health.”

With Councilmember Sam Hindi recusing himself from the discussion — due to a conflict of interest — the council initially had difficulty coming to a majority consensus, though they ultimately all voted to move forward with the initiative.

Mayor Patrick Sullivan and Councilmember Art Kiesel expressed skepticism over the proposals, citing, among other issues, the apprehension of the city’s large businesses and that the additional revenue won’t make a large dent in the deficit regardless. But Vice Mayor Stacy Jimenez and Councilmember Jon Froomin noted the importance of moving the needle on budget reconciliation, especially as the deadline to include the initiative in November’s ballot is fast approaching.

“The only way to rectify a structural deficit is reduce expenses, which we didn’t do, or increasing revenue,” Froomin said. “Taking no action today means our next bite of the apple is two years from now. Two years from now … we’ll have spent $14 million, maybe, in reserves between now and then.”