San Carlos half-cent sales tax to be considered for November ballot

“Costs related to goods, service and infrastructure maintenance have increased in recent years, affecting overall budget conditions and long-term planning,” Mendenhall said. 

The city anticipates a deficit between $500,000 and $1 million annually for the next decade — assuming no services are added in the meantime. However, expected population growth and incoming developments, particularly on the east side, will likely mean costs for the city will only increase. 

Increases in costs for infrastructure maintenance and capital improvement projects is a critical stress on the city’s finances. 

For example, the improvements to the Highway 101/Holly Street overpass — a long desired project to a notorious interchange — was estimated to cost $62 million in 2019. This has jumped to an estimated cost of $122 million today, Mendenhall said. 

Adding to the necessity of a new revenue source is a $200 million unfunded capital improvement project list.

Recent declines in sales taxes, transit occupancy tax and the loss of in-lieu vehicle license fee refunds has meant that annual revenue is reduced by $3 million to $3.5 million annually, Mendenhall said. 

“While these gaps have typically been addressed through one-time revenues or salary savings from vacant positions, the underlying structural imbalance remains,” Mendenhall said. 

The city of approximately 5.5 square miles and home to approximately 30,000 residents maintains 87 miles of streets, 105 miles of sewer lines, 17 public parks and open spaces and services nearly 15,000 public safety calls annually. 

Placing a sales tax on a future ballot would mean securing a locally sourced revenue source that would stay in San Carlos, something many other nearby cities have employed, including Belmont and Redwood City, officials said. 

The current sales tax rate in San Carlos is 9.375%, but only a small portion of that revenue stays in San Carlos, Mendenhall said. 

“Of each dollar collected, 11 cents is allocated to the city while the remaining 89 cents is distributed to the state, county and transit agencies,” Mendenhall said. 

As the cost of living continues to increase and revenue sources stagnant or diminish, San Carlos is not alone in its consideration of a new revenue generator. The County of San Mateo recently passed a resolution that would allow the county to seek an increase in its sales tax on a future ballot, though there has been no indication of when it may place one in front of voters. 

The Planning and Transportation Commission only heard a presentation on the possible sales tax. The City Council will consider the matter at its June 22 meeting. 

Any measure to be placed on November ballots must be submitted to the County Elections Office ahead of Aug. 7.