Redwood City trying to sell first business tax since 1995 

Cold comfort: Ice cream trucks are among the businesses that would see tax increases, and owners say business already is hurting and money is tight. (Niko Kyriakou/The Examiner) - COLD COMFORT: ICE CREAM TRUCKS ARE AMONG THE BUSINESSES THAT WOULD SEE TAX INCREASES, AND OWNERS SAY BUSINESS ALREADY IS HURTING AND MONEY IS TIGHT. (NIKO KYRIAKOU/THE EXAMINER)
  • Cold comfort: Ice cream trucks are among the businesses that would see tax increases, and owners say business already is hurting and money is tight. (Niko Kyriakou/The Examiner)
  • Cold comfort: Ice cream trucks are among the businesses that would see tax increases, and owners say business already is hurting and money is tight. (Niko Kyriakou/The Examiner)

Just about every enterprise in Redwood City will see its costs increase if voters approve a business license tax hike in November, making life tougher for an unusual array of small businesses such as fortunetellers, Christmas tree sellers and ice cream truck drivers.

If passed, the measure should generate $825,000 in additional annual revenue, said city spokesman Malcolm Smith. Such licenses currently raise $1.4 million.

The city hasn’t raised its license fees since 1995. City voters rejected an increase roughly equal to the one currently being proposed in November 2009.

This time around, officials have cleaned up the language that will appear on the ballot, shifting the emphasis from what voters will pay to what they get — preservation of “funding for general city services such as libraries, parks, and public safety.”

The measure is supported by a group known as Redwood City Residents to Protect City Services, which has already received donations of about $2,800 from the Police Sergeant’s Association, and various council members, said councilwoman and supporter Rosanne Foust.

“We did significant outreach to the business community to explain why we were doing it, walked them through the general fund, and showed them what it supports,” she said.

Foust called the fee increase “relatively modest” and said it would put Redwood City in the middle range of other Peninsula cities that charge for licenses.

Over the next three years, three quarters of businesses would see their base license fee jump $21 and pay $15 more per employee. Some businesses, however, could see steeper hikes.

Residential and nonresidential properties with more than three units will see fees go up from $13 to $21 per unit or per 1,000 square feet, respectively. And the tax measure sets aside an unusual range of businesses such as carnival operators, Christmas tree lot salesmen, pawnshops, car-wreckers, junk collectors and fortunetellers, which will see their fees increase from $364 a year to $579 in 2014. And that has made some business owners very angry.

“Everything goes up; they try to kill us,” said Max Valdovinos, whose family has run two ice cream trucks for five years. “The government always knows where to look for money but sometimes they go too high.”

Valdovinos said he already spends more than $1,200 annually for parking, health, license and other fees to the city and county.

“It’s a very bad change now, when there’s not much business,” said Miguel Melandrez, owner of a homemade icy and fresh fruit stand. Melandrez said he already pays about $2,000 in city and county fees.

Foust said the new system is designed to be “equitable,” with larger businesses paying their fair share. But fees paid by the largest businesses, such as Oracle, will cap out at $4,811 per year, as of 2014. After that, more modest fee hikes will be tied to the Consumer Price Index.

“It isn’t a huge hit compared to other overhead,” said Luis Bertelsen, the city’s business license tax handler.

Officials say the city needs the money after barely balancing its budget this year through benefit and pension concessions made by city employees. “We cannot cut anymore,” Foust said.

nkyriakou@sfexaminer.com

Money matters

Current business license tax for most companies
- $37 base tax
- $24 per employee

Proposed tax (phased in over three years)
- $58 base
- $39 per employee

Effect on revenue
- $825,000 additional annual revenue that will be generated in fiscal year 2012-13 if the measure passes
- $1.4 million annual revenue generated by the tax in fiscal year 2010-11

Fortuneteller, pawnbroker and carnival operator license fee
- $364 current yearly
- $579 annual by 2014

Coin-operated device activity
- $7 per device (current fee)
- $11 by 2014

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Niko Kyriakou

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