Should Big Business in Emeryville Pay Their Fair Share?

May 16, 2011
By

For years, the City Council has given the city’s biggest businesses the biggest tax breaks.

Residents and small business owners in town have begun to ask why. On Tuesday, the City Council will decide whether to put an initiative on the November ballot asking voters to decide whether the city’s multi-billion dollar businesses should pay what every other business pays.

Here’s the story on the city’s current business tax:
Every city has a business license tax and every business in Emeryville grossing more than $5,000 must pay this tax. Businesses pay a percentage of their gross receipts whether they earn a profit or not.

But the city’s big business — Pixar, Novartis, and Bayer, to name a few — which make billions in profits every year, are required to pay tax only on the first $146 million they earn. The rest is entirely tax-free. The pat reason given by the City Council majority is it must provide incentives so as not to lose big business to other cities. Yet Emeryville is among the most desirable places to do business in the Bay Area (see story in Business/Economy section on Santen moving its US headquarters to Emeryville).

So, the City Council majority is not willing to ask big business to pay their fair share, but is willing to cut staff and community services to make up a projected budget gap of $1.66 million and $1.42 million for the next two years, respectively. Emeryville is the only city in Alameda County that places a cap on the maximum business license fee.

In a memo to the City Council in March 2010, Emeryville resident Brian Carver, Assistant Professor at the UC Berkeley School of Information, offered an easy solution, one that would actually let the City Council continue to afford big business special treatment:

Don’t eliminate the city’s one-of-a-kind cap. Just make a modest increase from (the 2010 cap) of $115,774 to $400,000. That increase would generate an additional $1.7 million in revenue — completely eliminating the projected budget gaps for the next two years, AND providing a modest surplus. The change would only affect those businesses whose gross receipts are greater than $144.7 million annually.

However, at a recent city Finance Committee meeting, Carver said has changed his position. Since learning that voters have to approve an increase in the cap, he supports the city authorizing a ballot measure to simply eliminate it. Otherwise, the city will be required to return to the voters each and every time it wants to raise the cap. Doing away with the cap will also bring Emeryville in line with every other city in the Bay Area, none of which put a maximum on their business license tax.

Read the story about Brian Carver’s memo here.

Read an opinion piece by long-time Emeryville resident and small business owner Scott Donahue here.

And come to Tuesday’s City Council meeting to offer your two cents — it could save the city millions.

Tracy Schroth is editor of The Secret News and a member of RULE (Residents United for a Liveable Emeryville). She has lived in Emeryville for eight years.

One Response to Should Big Business in Emeryville Pay Their Fair Share?

  1. walt watman on May 19, 2011 at 8:55 pm

    Once again, it is broken record time…. While it is true that great sums of money are involved in the matter of business paying more of their share commensurate with their profits and that same is a good idea, i do not want to lose sight of the cuts to staff and services that have been implemented. The council continues to ignore the excessive salary and benefits of the city mgr and the city attorney and the matter of opening their positions to competitive bidding…

    The fact is the budget deficit is the responsibility ultimately of okeefe, the city mgr and he steadfastly refuses to take that responsibility while still earning triple digit salary and considerable benefits…His failed performance continues to be ignored; he is not fired; his position is not opened to competitive bidding… Biddle, the city attorney, has the chutzpah to ask for a gift if the voters decide to end his job and West on the council gives him that gift with our money and tells us she saved us 200k by giving him only 200k! Who buys that reasoning?

    Have biddle’s performance evaluations been made public? Has the council allowed his position to be posted for competitive bidding? Have there been staff studies of the salary/benefits/cost reductions possible?

    These glaring budget related problems go unaddressed and citizens continue to pay for them… I attention was paid to them it might not be necessary to cut services and staff to the same degree as has been done..

    I say again that, given the refusal to act on these probable budget saving options by the current council, I will offer to help candidates who run for the 3 council seats and who need campaign help to get their message out about the need to address the matters described.

    Hopefully, there will be many citizens who will volunteer similarly; perhaps those who write incessantly but anonymously will decide to participate as well…

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