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The San Ramon City Council is poised to vote at its next regular meeting on a proposed 1% sales tax measure to be placed on the ballot for city voters in the upcoming general election after providing feedback to staff and approving a draft ballot measure at the most recent meeting.
The council voted unanimously on July 9 to approve the draft ballot measure and other materials for a temporary 1% sales tax increase that would expire in 10 years with a mechanism for citizen oversight that would be determined by the council following its adoption.
The move came after an informational presentation on the projected outcomes and support for various sales tax measures at the council’s June 25 meeting, at which point they had another unanimous vote to direct staff to prepare a draft ballot measure and other material for review and discussion. This effort also follows months of discussions and deliberations on the city’s ongoing structural deficit, which reached a historic high in the current budget cycle and resulted in $8.1 million in budget cuts.
At last week’s council meeting, deputy city manager Scott Koll led a presentation on the other options city staff had considered to balance the budget and their reasoning for pursuing the sales tax measure.
“This year is not the first time that we have encountered this conversation or engaged in this topic,” Koll said. “In fact, dating all the way back to 2016, the city started a process whereby at the time they explored what options were in front of them, explored a hotel bed tax otherwise known as a transient occupancy tax, looked at different mechanisms in essence as to how to respond to the COVID-19 pandemic – ultimately those options for enhancing revenues via a ballot measure were suspended, not really pursued any further. But we are here now.”
In addition to the recent budget cuts, Koll noted that the city had increased its revenue by $1.5 million by updating its master fee schedule, a process started in 2023 when City Manager Steven Spedowfski came into the position.
“We’ve done the fee schedule, we’ve adopted that, we’ve looked to other options to cut costs this year – you all know that experience going back to the end of May, which leads us now to where we are, which is exploring a revenue measure,” Koll said.
The revenue was one of the four different pathways city staff had explored for balancing San Ramon’s budget according to Koll, with the first option being an increase in the city’s property transfer tax.
“Some cities see a lot of transactions where homes are sold, where commercial properties are sold – you’ve all heard in the news that Oakland is balancing their budget by exploring the sale of the coliseum,” Koll said. “That is a mechanism – you can generate some revenue by the sale of properties. Cities do leverage that as one of the outcomes.”
Koll said that while that option continued to be worth exploring for the city, doing so would add an additional $1 million to the current budget, with potential revenue projected to be the same amount.
“Challenges that we face are of course that sales are unpredictable, and in our case in San Ramon, it’s a good thing that people are not selling their homes frequently,” Koll said. “It’s a good thing that it’s community orientation, that it’s building community, but we don’t see a lot of those transactions happening. So for that reason we opted to explore other options.”
Option 2, Koll said, was the possibility of increasing the city’s transient occupancy tax (TOT). While he noted that it could still be a pathway worth exploring, it was also insufficient for addressing the city’s current deficit.
“The current rate is 7.25%, so just as a thought experiment, if we were to double that rate to make it 14.5%, in theory we would double that revenue, which would be right around $4 million, $4.5 million,” Koll said. “We had a structural deficit of $17 million, so as you can see it doesn’t really hit the scope appropriately for addressing the deficit that we faced.”
He also noted that the current projection was based on assumptions that shouldn’t be taken for granted, as well as that doubling the TOT rate in San Ramon would make the tax one of the most expensive in the state, right in between San Francisco and Anaheim.
“It was just not something that we thought was a viable option at this point,” Koll said.
Another potential option explored by city staff was transforming San Ramon’s business license fee into a business license tax, which Koll said was another potential pathway in the long run, but not something that would address the city’s budget issues in the immediate future.
“The amount of groundwork and outreach that must be done when you restructure from a fee to a tax is considerable, and wasn’t something that would fit in our timeline of where we were and the challenge that we faced,” Koll said.
That led to the primary topic on the table currently, which is the proposed ballot measure increasing sales tax by 1% – or one cent per dollar spent – in the city for the next 10 years.
“Ultimately we are seeking your authorization to finalize the packet with any corrections or edits you would make tonight,” Koll said, addressing the council.
The council received only one public comment that evening from San Ramon resident Viresh Patel, who critiqued the proposed sales tax measure, said it wouldn’t pass, and called on the council to explore other ways of balancing its budget.
“I can’t say anything more than the fact that a city like us can’t come up with savings of $16 million,” Patel said. “I’m happy to provide you my service pro-bono – I’ve been a CFO of large public companies and startup companies managing budgets from $5 million to $3 billion – this is not a plug for a job – I’m happy to look at your budgets. To raise 1% sales tax, it’s like anything else. There’s so much money in the state, but there’s always a shortage of revenue coming in. So I would encourage the councilmembers to take a hard look at the budgets in the city,” he said.
“Look at this Taj Mahal as I call it,” Patel continued, gesturing at the council chambers. “Does the city really need something like this?”
Vice Mayor Scott Perkins said that Patel and other members of the public were invited to review and provide feedback on the city’s current budget, but noted that the council had already made difficult decisions in the $8.1 million in cuts to the current year’s budget, including the decision not to fill six empty SRPD officer positions and the freezing or elimination of more than 20 positions throughout the city’s departments.
“I assure you that this council did not make easy decisions on where we’d cut, and we looked at four different funding mechanisms to try and make up most of the difference going forward,” Perkins said.
“I’ve been on the council now for almost 21 years – Dave (Hudson) has been on for 25 years – and we have never in all that time asked the city to raise taxes. We haven’t asked for a parcel tax, we haven’t asked for a sales tax, a TOT or any other revenue measure going to the citizens,” Perkins said. “Most every other city in this surrounding area has asked their citizens to come up with something.”
“We are currently in the lowest tier of sales tax,” Perkins continued. “We are in the lowest tier of property transfer. We are in the lowest tier of transient occupancy tax. And we have done what I believe – and I think the council will back me up on this – we’ve done a fabulous job of working within the revenues we have. We do not have big sales tax generators like Dublin and Pleasanton – they have huge car dealers – those car dealers generate millions per year. Danville has the Costco, believe it or not. Our citizens fought against that Costco 25 years ago, so Costco went across the city line into Danville, and so Danville gets the revenue and San Ramon gets the traffic.”
District 4 Councilmember Marisol Rubio echoed Perkins’ sentiments and sought to further drive home the city’s message behind the proposed ballot measure.
“I oftentimes try to remind people that just the same way your cost of living is going up, our operational costs are going up,” Rubio said. “When you are faced with those costs of living going up, what do you do? Try to come up with more money – you have to find ways to earn more money. Well the city’s in the same boat, and this city has done everything possible to hold off and to push that off but there is a threshold.”
“I think it’s admirable, frankly, that these taxes have stayed as constant as they have for as long as they have,” she added. “This was not a decision we took lightly.”
Following the unanimous decision to move forward with the proposed ballot measure, the council is set to hold their vote on the final approval to place the measure on the November ballot ahead of the Aug. 9 deadline next Tuesday (July 23).
