Attachment E
OTHER REVENUE MEASURES NOT CONSIDERED –
GENERAL FUND
In addition to the Business License Tax, Utility Users Tax and Parcel Tax, there are several revenue measures that were not considered to address the City’s General Fund revenue shortfall in future years. They are summarized in the sections below.
Local Transactions and Use (Sales) Tax
Voters in the City of Pacifica approved Measure Y, a ½ Cent Local Transactions and Use (Sales) Tax (TUT) at the November 2022 General Election. This local tax generates $2.6 Million per year. It was collected for the City by the State starting in April 2023 for a period of 9 years.
The City will need to bring this ½ Cent TUT back to the voters prior to the sunset date in 2031 if the City wishes to continue to collect this tax. The 10 Year model reflects the ½ Cent TUT ending on the sunset date.
The base Sales Tax and TUT rate in San Mateo County is 9.375%. Twelve of the country’s 20 cities have received voter approval for a TUT in addition to the base Sales Tax and TUT rate.
Under State Law, the amount of Sales Tax and Local Transactions and Use Taxes levied by cities, the county and local transportation agencies are capped.
In San Mateo County, the cap is currently 9.875% and can only be increased by a vote of the legislature and the signature of the Governor. With the approval of the ½ Cent TUT in Pacifica, the City’s tax rate is now at the cap, as it is in several neighboring cities as shown below.
There is the potential for two local TUT measures to be on the November 2026 ballot. The first is a regional TUT tax to support transit in the Bay Area. If passed by the voters, the tax would be set at a half-cent in Alameda, Contra Costa, San Mateo, and Santa Clara counties, with San Francisco having the option to increase its rate to 1% to provide additional support for Muni.SB 63 is on the Governor’s desk awaiting a signature or veto.
The second is a potential extension of the ½ cent Countywide Measure A Transportation Tax adopted by the voters in 1989 and extended in 2004 with a sunset date in 2033. This could be on the November 2026 General Election ballot along with a second proposal to increase the Measure A tax from ½ cent to ¾ cent (the increase would need approval by the State Legislature and the Governor.
Transient Occupancy (Hotel) Tax
Voters in the City of Pacifica approved a 3% increase in the Transient Occupancy (Hotel) Tax or TOT at the November 2024 General Election. This local tax was collected for the City by the State starting in January 2025.
TOT is charged to renters of hotel, motel, and short-term rentals. The TOT is charged in 430 of the 483 cities in California. 15 of the 20 cities in San Mateo County charge TOT (the other 5 cities in the county do not have hotels). The trend for TOT in the Bay Area is for cities to increase this rate from 10% to 12% to 14% to 15.5%.
The City’s TOT rate of 15% matches the TOT rate in neighboring Half Moon Bay and is 0.5% below the 15.5% TOT rate in Palo Alto and Menlo Park, the highest TOT rates in the State as shown in the table below:
TOT Rate City
15.5% Menlo Park
15% Half Moon Bay
Pacifica
14% Brisbane
East Palo Alto
San Bruno
San Carlos
San Mateo
South San Francisco
13% Daly City
12% Belmont
Burlingame
Colma
Foster City
Millbrae
Redwood City
TOT revenues in Pacifica are estimated at $2,358,000 declining to $1,580,700 in fiscal year 2027- 28 due to Council approved changes in the ordinance surrounding short-term rentals. An increase of the TOT rate by 0.5% in Pacifica would generate $78,600 in the current fiscal year (if in effect) and would then decline to $52,690 in fiscal year 2027-28.
The small amount of revenue from this option and the resulting status as one of the state’s highest TOT rates charges make this option not worth pursuing.
Real Property Transfer Tax (Charter Cities)
Charter Cities in California may adopt property transfer taxes which are in lieu of the state statutory documentary transfer tax applicable in general law cities. The City of Pacifica is a general law city.
To have voters consider this revenue option it would be necessary for the City to propose a ballot measure (or measures) that would a) convert Pacifica from a general law city to a charter city and b) propose a property transfer tax as a Charter City. In November 2024, two cities (Benicia and St. Helena) proposed such a change and tax and both measures did not pass. However, two existing Charter Cities (Berkeley and Mountain View) did propose an increase to their property transfer tax which voters approved. Raising $4 Million per year in Berkeley and $11 Million per year in Mountain View.
It is also important to note that a proposed State Ballot Initiative that prohibits property transfer taxes may qualify for the November 2026 General Election ballot. This revenue option is not recommended for further consideration.