After spending several months and thousands of dollars developing plans for a potential sales tax hike in Los Gatos, the town council voted unanimously at a special meeting on July 1 against putting the issue before voters in November.
Town staff brought the issue to the council last October in light of a forecasted budget deficit. Council members in recent meetings had largely supported the possibility of a sales tax hike due in part to concerns that another entity like Santa Clara County might first implement a similar tax that would affect Los Gatos residents but wouldn’t directly go into the town’s coffers.
But town staff said at the July 1 meeting that they identified legislation that went into effect in January that largely eliminates the possibility of the county levying such a tax and barring the town from implementing a similar one.
Rochelle Lewis, a consultant with NBS, apologized after council members questioned why they were not aware of the new legislation sooner. The town contracted with NBS for up to $105,000 to help with possible revenue-generating ballot measures,
“We regret that we did not pull in legal counsel right from the beginning of the discussion, and so we apologize for that,” Lewis said at the meeting.
“There are amendments to the revenue and taxation code pretty much on an annual basis, and I was not aware of this change to the revenue and taxation code,” town attorney Gabrielle Whelan said at the meeting. “But when I did become aware of it, I brought it to the council’s attention.”
Community support for the sales tax measure also appeared to be impacted by this news. While the town’s finance commission had initially expressed support for the measure, commission chair Phil Koen wrote in a public comment that council should disregard its previous endorsement.
“It is clear the finance commission had been provided inaccurate information and had not been informed on a timely manner of the statutory changes that were enacted Jan. 1, 2024,” Koen wrote.
The Los Gatos Chamber of Commerce, which had also previously expressed support for the measure, similarly submitted a written public comment before the meeting expressing a desire to table the matter for a later time in light of the new information.
“The Chamber of Commerce believes it would be wise to take additional time for more broad outreach and garner strong support for the measures to ensure their success, and consider it on a future ballot,” Chamber board member Jim Foley said in an email to the council.
Mayor Mary Badame made the motion to take no action on a resolution to place the measure on the ballot. “The misinformation that we got – I know we got an apology, but that’s a time consuming, costly process for a lot of us including our residents that show up for these meetings,” she said.
The measure needed at least a 4-1 vote to make it to the ballot this fall, support that it had in recent council meetings. Though council voted 3-2, with Badame and Vice Mayor Matthew Hudes dissenting, to authorize polling for the measure at a February meeting, they voted 4-1 to support putting the measure on the ballot in May.
The proposed ballot measure had gotten held up in recent meetings over a debate on whether the sales tax should be a specific tax, which directly outlines where the estimated $1 million in revenue would be spent, or a general tax, which leaves that spending up to town leaders.
Council members had been leaning toward the general tax measure, along with an advisory measure indicating where voters wanted the revenues to be spent, because it would have taken only a simple majority to be approved, whereas a specific tax would have taken a two-thirds majority.