Council Corner: How Passing Measure P Can Strengthen Foster City

By Foster City Vice Mayor Art Kiesel

When you view the ballot for the upcoming Nov. 8 election, along with the election of members to the City Council, you will find Measure P.

Measure P is a measure in which only Foster City voters will be casting votes. You will be choosing whether or not to raise the Transient Occupancy Tax (TOT), the taxes paid by travelers staying at one of our two hotels.

As with all issues related to increasing taxes, the voters affected by the measure must approve it by a majority -- 51 percent or more.

If approved, the TOT would take effect on Jan. 1, 2012. Due to provisions of Proposition 218, the next available window to place a similar tax measure such as Measure P would be in two years, in 2013.

The Cities of Atherton, Colma, Hillsborough and Woodside do not have a TOT ordinance. The Cities of Belmont, Daly City, Menlo Park, Redwood City, San Carlos and South San Francisco, along with San Mateo County, currently have a 10 percent TOT ordinance, which generates approximately $13 million per year in tax revenue. South San Francisco alone generates $5.8 million per year. The Cities of Brisbane, Burlingame, East Palo Alto, Half Moon Bay, Millbrae, Pacifica, San Bruno, and San Mateo currently have a 12 percent TOT ordinance, which generates over $24 million per year, of which Burlingame reaps over $10 million per year.

Even with a rate as high as 12 percent, Burlingame receives substantial revenue from its TOT. In contrast, Foster City currently has an 8 percent TOT ordinance, which generates about $1.18 million per year, and is 2 percent lower than any other San Mateo County TOT taxing agency.

Since 2009, eight cities in San Mateo County have initiated a TOT increase, and all have passed. In 2009, Burlingame and South San Francisco initiated TOT measures that passed with a 77 percent margin, and San Mateo’s initiative in the same year passed with a 74 percent margin.

Passage of Measure P will bring Foster City more in line with these other cities in San Mateo County. By raising our rate to 9.5 percent, Foster City will still have the lowest TOT rate in the county.

To demonstrate the progressive posture of prior Foster City leaders, the current TOT rate of 8 percent was implemented in 1982 and was noteworthy enough to make the Wall Street Journal because of having a TOT tax before there was a hotel in Foster City!

Foster City began Fiscal Year 2011-12 with a $4.8 million structural deficit and at that rate, the entire General Fund Reserve would have vanished by Fiscal Year 2015-16. The City Council voted to reduce the deficit from $4.8 to $2.8 million in Fiscal Year 2011-12 by reducing $2 million in expenditures and increasing its master fees and charges to add about $150,000 in revenue. Another action that the City Council took was to explore additional revenue sources, and the TOT was identified. It is estimated that raising our TOT rate to 9.5 percent will generate approximately $250,000 per year. The increased rate would be imposed on only those staying at our hotels and, more importantly, not paid by Foster City residents.

When dealing with budgets, there are trade-offs and alternatives. The Foster City Staff put together some interesting and thought-provoking alternatives in their staff report. The impact of Measure P not passing could have the following impact on service reductions:

2 experienced Police Officers – or
2 experienced Firefighters – or
3 ½ experienced Parks Maintenance Workers – or
7 months of street maintenance – or
6 months of lagoon and levee maintenance

An enlightening thought, indeed.

Both police and fire employees have agreed to a wage freeze and a reduction in pension benefits from 3 percent at 50 years of age to 2 percent at 50 for all new hires after Jan. 1, 2012. Management employees, along with other non-management employees that are represented by the American Federation of State, County and Municipal Employees (AFSCME) have a salary freeze for Fiscal Years 2011-12 and 2012-13, after which the current agreement will expire.

There are other actions to address the deficit that include the sharing of services with neighboring cities, as we have done with the position of fire chief. There is a three-year plan in place to consolidate fire management, administration and fire prevention services with those in San Mateo.

Measure P is an important issue for Foster City, and voters should be mindful of that importance when voting this November. Your vote can make a positive difference in the financial strength of the city in these challenging economic times.

I would appreciate your comments on this and other issues by e-mailing me at akiesel@fostercity.org.