Listen to this note:
On July 22, the Redwood City Council will discuss at its weekly meeting whether or not to approve proposed changes to the city's business license tax with the goal of maintaining the essential services through increased revenues and reducing the tax burden on smaller businesses.
The changes to the business license tax, the city said, would help reduce a persistent annual deficit of $9 million.
The proposal was made following 20 meetings held with the business community, residents and other stakeholders to explore modernizing the city's Business License Tax, where significant feedback was obtained to restructure the tax proposal, the city said in a statement.
Based on this feedback, the proposed changes to the Business License Tax have been updated. The new proposal retains the current approach of charging businesses based on the number of employees in Redwood City rather than their gross revenue in the city; however, the structure has been adjusted to reduce the proportional tax burden on small businesses, he noted.
The full proposal and background information will be provided with the City Council agenda packet for the July 22 meeting, which has already been posted on Thursday, July 18 and is available by visiting the website www.RedwoodCity.org/CouncilMeetings.
Key elements of the proposal include:
- Continue to base business tax on per-employee rates, with different rates depending on the business category (such as retail/commercial, contractors, services, and professional services). By charging different rates for different categories of businesses, we can reduce the regressive nature of the current tax structure.
- Maintain current per-unit charges for residential rental properties without rate changes, while ensuring that deed-restricted affordable housing units remain exempt from the tax.
- Maintain current square footage-based charges for commercial rental properties, raising rates to those common in nearby cities.
“We believe this approach will balance the many interests the City has heard, including ensuring the business community pays its fair share of supporting Redwood City services while continuing to foster a business climate that is competitive with other cities,” the City Council explained.
The City Council will consider the updated proposal on July 22 in the Council Chambers (1017 Middlefield Road) at 6:00 p.m. Residents can participate in person (including by providing live public comment) or watch the meeting online.
The city said it is important to note that the City Council's role is to decide whether to put a ballot measure before voters to update the Business License Tax, so the city does not make the final decision on the changes.
If supported by the City Council, the measure would be on the November 2024 ballot for consideration by Redwood City voters.
The city noted that, like many communities in California and the Peninsula, the economic fallout from the COVID-19 pandemic permanently reduced funding for services and “sIn an increase in income, deep budget cuts will be necessary”.
In this regard, he explained that these reductions would degrade the services prioritized by the community, including public safety, street and sidewalk maintenance, and flood control.
You may be interested in: “The fight is not over!”: Options explored as vote against rent control proposal in Redwood City is on ballot
