New Taxes on Local Businesses

Councilman Charles Morales floats proposal that could recover
lost revenues
Gilroy – When candidates for city council discuss the city budget, most talk cutbacks and fiscal restraint. But one long-time councilman running for re-election this fall is looking to the revenue side of the city ledger in hopes of plugging up budget shortfalls.

Councilman Charles Morales, who is running for his fourth term on the city’s top governing body, has proposed generating new funds for city coffers by asking businesses to pick up a bigger share of public safety costs.

Morales floated the idea at Tuesday night’s Chamber of Commerce Candidate Forum.

In an interview afterward, Morales said he would like to find ways to “recover lost revenues” by assessing a fee on business owners as part of a wider business improvement district (BID), potentially stretching from the downtown corridor to the outlets and new shopping centers east of U.S. 101.

Morales did not detail how the public safety assessment would work, but said in response to a Dispatch questionnaire that a significant share of fees could be passed on to customers. He justified the assessment based on the view that “a significant number of our police calls are utilized throughout these business corridors in traffic enforcement, robbery, theft, etc.”

Later, he added: “We have to be creative as far as offsetting loss of revenues. I’m trying to explore whether we could find a nexus between BIDs and a public safety assessment district.”

Typically, business improvement districts require a group of business owners in a specific area to levy a fee against themselves to support advertising, street-cleaning, or other projects and services that benefit their area.

Business owners and their advocates have met the idea with a mix of curiosity and skepticism.

Sue Thurman, owner of Country Clutter in the outlets, said she has never heard of a public safety assessment district.

“If it meant me trying to come up with another tax on myself, it would be real hard for me to support that,” she said. “We need to make a living here.”

Susan Valenta, president of the Gilroy Chamber of Commerce, said Morales raised “an interesting concept” that left her with a slew of questions.

“How does a neighborhood create a police and fire safety district?” she asked. “Do they say amongst themselves we want a dedicated police officer in our neighborhood?”

She also worried the assessment would amount to a second tax on businesses for services they have already financed.

“Businesses are the ones generating sales taxes that go into the general fund and make it possible to provide service to residents,” she said. “It could create a situation where the business community is not only creating those taxes and investing in the community, but then getting dinged again.”

Downtown business owners had a BID in the early ’90s, but the program fell apart as owners began questioning the use of the money, according to City Planning Manager Bill Faus. He predicted that any attempt to resurrect such a business district would have to nail down the details from the start.

“I think businesses are open to these discussions, but you need to be very clear as to what your objectives are,” Faus said. “I think businesses are saying ‘If you’re gong to collect more taxes from us, we need to know up front what we’re buying into.’ “

In order to re-activate the downtown BID, he added, merchants representing 50 percent of assessed property in the area would have to submit a petition to City Hall.

Morales plans to raise the issue of BIDs and a public safety assessment district Friday, as part of informal policy discussions during a city council retreat.

Those discussions will take place starting at 10:45am at City Hall, 7351 Rosanna St.

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