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Palo Alto is likely one of the Bay Space’s wealthiest cities. However 4 years in the past the Metropolis Council was compelled to confront the truth that it had a significant pension shortfall on its palms. If left unchecked, the price of retirement funds for town’s workers threatened to develop from 8% of common fund spending to twenty% by 2028.
The council took the prudent motion of setting apart cash to get its future pension obligations underneath management. However then two sudden setbacks created a large finances gap. First got here the pandemic. Then a Santa Clara County Superior Court docket decide dominated that town’s decades-long apply of transferring a portion of funds from its fuel utility to its common fund constituted an unlawful tax underneath state regulation.
That compelled the Metropolis Council to make $40 million in cuts over a two-year interval, eliminating providers and dozens of full-time and part-time positions. The council was in a position to restore a lot of these providers and positions in 2021, largely as a consequence of the usage of federal stimulus cash. However that cash is working out, leaving Palo Alto with a substantial finances gap.
The Metropolis Council is placing two measures on the Nov. 8 poll to handle its finances challenges. Measure Ok would institute a brand new tax on Palo Alto companies that's anticipated to boost $9.8 million yearly. Measure L would allow Palo Alto to renew transfers of not more than 18% of gross revenues from town’s pure fuel utility to the overall fund. That's anticipated to generate $7 million yearly.
The measures require a majority vote to cross. Voters ought to approve Measures Ok and L to assist guarantee Palo Alto maintains an inexpensive stage of metropolis providers.
Measure Ok
Palo Alto is the one main Bay Space metropolis with out a enterprise tax.
Measure Ok would change that, establishing a brand new enterprise tax for 35 years at 90 cents per yr for every sq. foot of area above 10,000 sq. ft.
The Metropolis Council signifies that it desires the cash to go towards supporting public security, inexpensive housing and addressing the harmful grade-level rail crossings within the metropolis. However provided that the cash goes to Palo Alto’s common fund, it could possibly be spent for any metropolis providers.
The tax quantity was the results of compromise with enterprise leaders. The Metropolis Council thought-about placing a measure on the poll in 2020 however backed away out of fears it will damage companies already affected by the pandemic.
The council’s authentic proposal known as for an annual $1.32 per sq. foot tax and a cap of $1 million per enterprise. The Palo Alto Chamber of Commerce and the Silicon Valley Management Group threatened to oppose the tax. The 2 sides compromised on an annual 90 cents per sq. foot tax and a $500,000 cap.
Measure L
Palo Alto owns and runs its utility that gives water, electrical energy, pure fuel and wastewater disposal for residents. It started in 1896 when the water-supply system was put in. Town added an electrical energy system in 1898 and a pure fuel distribution system in 1917.
Voters in 1950 accepted language permitting town to make use of gas-utility revenues to pay for all prices related to the utility and switch the rest into the overall fund. However six years in the past, a Palo Alto resident sued town, saying the switch violated Proposition 26, handed by voters in 2010, which limits utility charges to the “affordable value” of offering service.
The court docket dominated in opposition to town. After it appealed the choice, the 2 sides reached a settlement calling on town to refund $17 million to prospects.
Now the Metropolis Council is asking voters to let it resume the transfers by updating the Metropolis Constitution to adjust to state regulation. It could enable the switch of 18% of the gross revenues from town’s pure fuel utility to assist fund fundamental metropolis providers. The choice for Palo Alto is a future with restricted providers.
Voters ought to approve Measure Ok and Measure L.