San Bruno weighs business license fee tax for November ballot

It would be a change in the current tax — currently, the more money a business makes, the less it’s paying. At a July 14 study session, staff proposed a $75 flat fee for up to $75,000 in revenue, plus an additional $1 per $1,000 in income for general retail and administrative businesses, $1.50 per $1,000 for service-based shops, $2 for contractors, professional and advanced businesses, and $3 per $1,000 for property rental companies.

Councilmembers voiced concerns, however, that stakeholder businesses who’d be impacted if the new tax proposal passes are unaware of the proposal.

“I would rather stakeholders say ‘oh my gosh, if they call me one more time, or send me one more thing’ ... I’d rather hear that than, ‘I wish somebody had met with me,’” Mayor Rico Medina said.

It could be challenging for the city to show businesses simplified averages of how much additional tax they’d be paying, because it varies so sharply based on that company’s revenue, City Manager Alex McIntyre said. He assured councilmembers, however, that the city would continue outreach with stakeholders and refinement of the proposal in the next two weeks.

When voters ask about the new tax measure, they’ll likely be interested in potential impact in their own finances, Councilmember Marty Medina said.

“’When I go to the store, they’re going to raise my prices. Will they be raising my rent? Will the contractor be charging more?’” he said. “Those are the kind of questions I think, as we prepare to put this one on the ballot, that we should have better answers to.”

The business licensing fee model would also create some new taxes on currently untaxed property rentals — for example, accessory dwelling units that are being rented out. Alerting those renting out ADUs about the proposal would be an important outreach element, Rico Medina stressed.

It’s unlikely, however, that those renting out their backyard ADUs will face bank-breaking tax increases, Councilmember Tom Hamilton said, emphasizing that anyone making $75,000 or less in revenue will only pay the flat fee of $75.

“Yes, it’s new,” he said. “Is it going to break the bank for someone who has an ADU? Probably not.”

San Bruno has until Aug. 7 to file the ballot measure with the county.