Los Gatos voters will be asked to decide this fall whether to approve a one-eighth cent sales tax hike.
The Los Gatos Town Council voted 4-1 Tuesday, with only vice mayor Matthew Hudes dissenting, to put the tax hike on November’s ballot. The vote comes after the town council heard a report earlier this month on polling conducted by the NBS government finance group that found a majority of voters are supportive of the sales tax hike.
The council’s vote aligns with recommendations from the town’s finance commission, which recommended that the council only put the matter to the voters if it is presented as a specific tax – which needs two-thirds of the vote to pass – instead of a general tax which would need only a simple majority. A specific tax funds targeted budget items rather than going into the town’s general fund.
If voters approve the measure, the sales tax hike would add $1 million in additional revenue for the town, according to staff.
“While costs of providing services and programs for residents have significantly increased over the years, town revenues have not kept pace,” a staff report from the council’s previous meeting reads. “Los Gatos is facing the same economic pressures as many other cities and businesses, including inflation and the uneven recovery from the pandemic.”
The council’s decision on May 21 authorizes an increase to the the town’s contract with NBS, which was previously not to exceed $44,600. The contract is now capped at $105,000, with the ballot measure costing roughly $60,000.NBS is set to return to the council in June with proposed language for the ballot measure.
The council largely agreed on the need to put a sales tax hike on the ballot to avoid the possibility of another entity like the county implementing a sales tax hike that would affect Los Gatos residents but wouldn’t all go into the town’s coffers.
“If there’s a one-eighth cent sales tax that is going to be levied against our residents and our visitors, the town of Los Gatos should be the municipality benefiting from that,” council member Rob Moore said.
But council members disagreed initially over whether to pursue a general tax or a specific tax. Some expressed concerns over the likelihood of a specific tax passing with two-thirds of the vote.
“I have my doubts about whether even this would pass at a 50% threshold,” Hudes said.
But others expressed concern that members of the finance commission would not publicly support the sales tax campaign effort if the council went with a general tax, since it would go against the group’s recommendation.
Moore initially expressed support for a general tax given its increased likelihood of passing, especially in light of the narrow support that the Los Gatos-Saratoga Union High School District parcel tax ballot measure received earlier this month. But he went on to vote in favor of a specific tax after other council members expressed optimism that enough residents would support it.
“I think if you do a general tax, you will have some members of the finance commission campaigning against it,” council member Rob Rennie said. “So you’ve already made some ground.”
