As a member of the Gilroy City Council, one of my responsibilities is to look carefully at how we fund the services our residents depend on while being mindful of the financial pressures facing local families.
That is why I believe it is important for Gilroy residents to understand what is—and what is not—being proposed with Measure B, the City’s Transient Occupancy Tax (TOT) measure on the Nov. 3 ballot.
The proposal would allow Gilroy’s current 9% hotel tax to increase to an initial rate of 11%, while allowing the City Council, at a public meeting, to adjust the rate up to a voter-approved maximum of 13 percent.
The tax is paid by people staying in hotels and other short-term lodging establishments—not by residents simply because they live in Gilroy. At the maximum 13% rate, the city estimates the measure could generate approximately $700,000 annually (about $300,000 at the initial 11%) for critical services, including police and fire response, street and pothole repair, parks and recreation and emergency preparedness.
That distinction is important. As a city, we welcome visitors. They come to Gilroy for business, tourism, family, events and recreation. They stay in our hotels, use our streets and infrastructure and benefit from the public services that help make Gilroy a safe and welcoming community.
The proposed increase would ask those visitors to help invest a little more in the community they are visiting.
Consider the numbers. As of Sept. 17, 120,303 hotel rooms had reportedly been sold in Gilroy since the beginning of the year. Using an average daily room rate of $125, those rooms represent about $15 million in lodging revenue.
A two-percentage-point rate increase—from 9% to 11%—would mean $2.50 more on a $125 hotel room; a full four-percentage-point increase to the 13% maximum would mean approximately $5 more on a $125 hotel room. If applied to those 120,303 rooms, that represents roughly $601,500 in additional revenue.
The city’s official estimate of approximately $700,000 annually reflects additional revenue assumptions and projections.
From a city-government perspective, that is meaningful money for essential services.
Every year, the city must balance the cost of maintaining streets, responding to emergencies, supporting public safety, operating parks and recreation programs and preparing for events such as flooding, storms and wildfires against the resources available to pay for those services.
Those decisions are never easy.
Gilroy’s current 9% TOT has been in place for decades, and the city has identified it as one of the lower hotel-tax rates in the county.
At the individual level, the proposed increase is relatively small: a visitor paying $125 for a hotel room would pay $2.50 more in TOT at the initial 11% rate, or about $5 more if the full 13% rate were adopted.
For a visitor, that is $2.50 to $5.
For Gilroy, multiplied across thousands of hotel stays, it can become hundreds of thousands of dollars that can be directed toward police and fire response, street repair and parks and recreation that affect our entire community.
As a councilmember, I believe our responsibility is to examine every reasonable revenue source, understand who pays it and what it can accomplish, and be transparent with residents about the tradeoffs.
Measure B presents voters with one such choice: whether visitors staying in Gilroy should contribute more toward the public services and infrastructure that support the community they are visiting.
Whatever decision voters ultimately make, I believe they should consider the measure not simply as a tax increase, but in the context of who pays, how much they pay and what those additional dollars could provide for Gilroy.
For a community working to maintain strong public safety, reliable infrastructure, parks and essential services, those are important questions worth considering.
Kelly Ramirez
Gilroy City Councilmember
