CITY OF SAN MATEO
RESOLUTION NO. __ (2026)
SUBMITTING TO THE VOTERS A MEASURE TO INCREASE THE GENERAL TRANSACTIONS AND USE (SALES) TAX RATE BY AN ADDITIONAL ONE-QUARTER PERCENT (0.25%) UNTIL ENDED BY VOTERS,
THEREBY INCREASING THE TOTAL TRANSACTIONS AND USE TAX RATE TO ONE HALF PERCENT (0.50%), TO BE ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE
ADMINISTRATION, TO BE VOTED ON AT THE GENERAL MUNICIPAL ELECTION ON TUESDAY, NOVEMBER 3, 2026
WHEREAS, the City of San Mateo is committed to maintaining the high quality of life and essential municipal services that support the health, safety, and welfare of this community; and
WHEREAS, the City recently commissioned two independent community surveys to better understand community priorities, which found that residents are highly satisfied with the overall quality of life in San Mateo and support continued investment in essential City services and infrastructure; and
WHEREAS, despite maintaining balanced budgets and implementing a Financial Sustainability Plan that includes expenditure reductions, improved cost recovery, pursuit of grant opportunities, economic development strategies, and revenue enhancements, the City continue s to face a long-term structural budget deficit because the cost of providing essential services is increasing at a higher rate than revenues; and
WHEREAS, the City faces significant long-term fiscal challenges as the cost of providing essential City services continues to outpace revenue growth, compounded by the loss of state and federal funding and increasing costs to maintain and replace aging infrastruct ure and public facilities; and
WHEREAS, the City of San Mateo has over $350 million in unfunded capital improvements and infrastructure needs, affecting the City's ability to maintain and improve city streets, sidewalks, parks, public facilities, stormwater infrastructure, and other critical public assets; and
WHEREAS, additional locally controlled revenue will provide the City with a stable funding source to help maintain essential City services and address critical infrastructure needs while ensuring that funds generated in San Mateo remain under local control and cannot be redirected by the State; and
WHEREAS, San Mateo Municipal Code (SMMC) Chapter 3.50 currently imposes a Transactions and Use Tax of one quarter percent (0.25%) that expires on March 31, 2048; and
WHEREAS, pursuant to Revenue and Taxation Code Sections 7251.1, the combined rate of all transaction and use taxes imposed by the City and county is capped at 2%, there is remaining capacity within the local transactions and use tax cap of one quarter percent (0.25%), and the City is authorized to impose the tax contingent on voter approval; and
WHEREAS, the San Mateo City Council has determined to submit to the voters a measure to approve new SMMC Chapter 3.51 that would increase the Transactions and Use Tax rate by an additional one quarter percent (0.25%) until ended by voters, thereby increasing the total Transactions and Use Tax rate to one half percent (0.50%); and
WHEREAS, if the proposed additional Transaction and Use Tax is approved by the voters, is estimated to generate approximately $7 million annually in locally controlled funding for general
governmental purposes; and
WHEREAS, revenues generated by the measure could be used to support City services and infrastructure, including maintaining neighborhood streets, sidewalks, parks, recreation facilities, and public spaces; repairing potholes; supporting police, fire, paramedic, crime prevention, and emergency response services; improving traffic safety; and other general governmental purposes consistent with community priorities.
NOW, THEREFORE, THE COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA, RESOLVES AS FOLLOWS:
1. Pursuant to California Constitution Article XIII C, Section 2(b), Government Code Sections 53723 and 53724, Revenue and Taxation Code Section 7285.9, and Elections Code Section 9222, the City Council hereby calls for an election at which it shall submit to the qualified voters of the city a measure, that if approved by the majority of voters voting in the election, would adopt and impose a transactions and use (sales) tax of 0.25%. The election shall be held in the city on November 3, 2026 .
2. The City Council hereby approves the Ordinance authorizing the levying of the transactions and use tax for general purposes as set forth in Exhibit A attached hereto and its submittal to the qualified voters of the city during the November 3, 2026 election in accordance with Government Code Sections 53723, 53724(b) and Revenue and Taxation Code Section 7285.9. The Ordinance specifies that (i) the rate of the sales tax shall be one quarter percent (0.25%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in the city or otherwise within the base of the transactions and use tax, (ii) the rate of the sales tax shall be one quarter percent (0.25%) of the sales price of such tangible personal property, and (iii) that upon the Operative Date of the Ordinance, the California Department of Tax and Fee Administration shall collect the tax from retailers that are subject to the tax and remit the funds to the City.
3. The City Council approves the proposed ordinance set forth in Exhibit A, “AN ORDINANCE OF THE CITY OF SAN MATEO ADOPTING CHAPTER 3.51 OF THE SAN MATEO MUNICIPAL CODE TO INCREASE THE GENERAL TRANSACTIONS AND USE (SALES) TAX RATE BY AN ADDITIONAL ONE-QUARTER PERCENT (0.25%) UNTIL
ENDED BY VOTERS, THEREBY INCREASING THE TOTAL TRANSACTIONS AND USE TAX RATE TO ONE HALF PERCENT (0.50%), TO BE ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION” attached hereto and incorporated in this Resolution by this reference, for submission to the voters of the City, and orders that the Ballots for the election shall be in the form provided by law, and that the ballot question shall appear on the ballot in the following form and shall be submitted to the voters of the City:
To provide funding for San Mateo city services, such as keeping local streets, sidewalks, parks, infrastructure, and community facilities safe, clean, and well-maintained, fixing potholes, providing fire protection, paramedic, crime prevention, and 9-1-1 emergency response, and improvements to traffic safety/traffic management, shall the City of San Mateo’s ordinance establishing a one-quarter cent sales tax be adopted, providing 7 million dollars annually for general government use until ended by voters, with independent audits and all funds locally-controlled?
YES
NO
4. The City Council hereby finds and determines that the transactions and use (sales) taxes imposed pursuant to the Ordinance is for general municipal purposes and accordingly the taxes shall be approved upon a majority vote of the qualified voters of the City of San Mateo voting in the
election on the Ordinance.
5. In accordance with Elections Code 10403, the City Council hereby calls for an election regarding the above measure and directs that such election be consolidated with all city, county, and statewide elections occurring on November 3, 2026. The election shall be held and conducted in the manner prescribed by Elections Code section 10418. In all particulars not recited in this resolution, the election shall be held and conducted as provided by law for holding municipal elections.
6. The City Clerk is directed to forward the proposed measure to the City Attorney for preparation of an impartial analysis in accordance with Section 9280 of the Elections Code.
7. Arguments for and against the proposition may be submitted to the qualified voters of the City in accordance with sections 9282 through 9287 of the California Elections Code. The deadline date for submitting ballot arguments for or against the proposition shall be set by the City Clerk.
Proposed arguments shall not exceed 300 words and shall be submitted to the Office of the City Clerk.
The deadline for submitting rebuttal arguments shall be set by the City Clerk. Proposed rebuttal arguments shall not exceed 250 words and shall be submitted to the office of the City Clerk. The provisions of Section 9285(a) of the California Elections Code shall apply to the submittal of rebuttal arguments.
8. The City Council authorizes two members of that body, ____________ and __________, to file written arguments in favor of the proposition, and to change the argument until and including the date fixed by the City Clerk after which no arguments for or against the proposition may be submitted to the City Clerk. Any argument filed for or against said proposition not exceeding 300 words shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if filed on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument.
9. In accordance with Section 12111 of the Elections Code, the City Clerk is hereby authorized and directed to cause notice of the election on the measure to be published. The City Clerk is hereby directed to file a certified copy of this resolution with the Board of Supervisors and the County elections official, and is hereby authorized and directed to take all steps necessary to place the measure on the ballot and to cause the ordinance or measure to be printed.
10. The City and other City officers are directed to do all things necessary to meet the requirements of law for the November 3, 2026, municipal election.
11. The City Manager and City Attorney are jointly authorized to make non-substantive changes to the Ordinance in order to implement changes requested by the State of California, including the California Department of Tax and Fee Administration.
12. A supplemental budget appropriation of $158,000 from the unassigned fund balance in the General Fund to the City Clerk’s fiscal year 2026-27 operating budget is approved for standard election costs associated with the foregoing measure.
EXHIBIT A
CITY OF SAN MATEO
ORDINANCE NO. 2026 -__
AN ORDINANCE OF THE CITY OF SAN MATEO
ADOPTING CHAPTER 3.51 OF THE SAN MATEO MUNICIPAL CODE TO INCREASE THE GENERAL TRANSACTIONS AND USE (SALES) TAX RATE BY AN ADDITIONAL ONE-QUARTER PERCENT (0.25%) UNTIL ENDED BY VOTERS, THEREBY INCREASING THE TOTAL TRANSACTIONS AND USE TAX RATE TO ONE HALF PERCENT (0.50%), TO BE
ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION
THE PEOPLE OF THE CITY OF SAN MATEO ORDAIN AS FOLLOWS:
Section 1. In addition to the one quarter percent transactions and use tax imposed under Chapter
3.50 of this Code, the People of City of San Mateo hereby adopt Chapter 3.51 to impose a 0.25 percent transactions and use tax until ended by voters to read as follows:
Chapter 3.51
Supplemental Transactions and Use Tax
3.51.010. TITLE. This Chapter shall be known as the Supplemental San Mateo General Transactions and Use Tax Ordinance. The City of San Mateo hereinafter shall be called “City.” This Chapter shall be applicable in the incorporated territory of the City.
3.51.020. OPERATIVE DATE. “Operative Date” means the first day of the first calendar quarter commencing more than 110 days after the adoption of this Chapter, the date of such adoption being the date the City Council declares that a majority of the City’s voters have approved this Chapter.
3.51.030. PURPOSE. This Chapter is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes:
A. To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose.
B. To adopt a retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.
C. To adopt a retail transactions and use tax ordinance that imposes a tax and provides a measure therefore that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes.
D. To adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the
Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this ordinance.
3.51.040. CONTRACT WITH STATE. Prior to the operative date, the City shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this transactions and use tax ordinance; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.
3.51.050. TRANSACTIONS TAX RATE. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of 0.25% of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this Chapter.
3.51.060. PLACE OF SALE. For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.
3.51.070. USE TAX RATE. An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the operative date of this Chapter for storage, use or other consumption in said territory at the rate of 0.25% of the sales price of the property. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made.
3.51.080. ADOPTION OF PROVISIONS OF STATE LAW. Except as otherwise provided in this Chapter and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this ordinance as though fully set forth herein.
3.51.090. LIMITATIONS ON ADOPTION OF STATE LAW AND COLLECTION OF USE TAXES. In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when:
1. The word "State" is used as a part of the title of the State Controller, State Treasurer, State Treasury, or the Constitution of the State of California.
2. The result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this Ordinance.
3. In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:
a. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or; b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.
B. The word “City” shall be substituted for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 and in the definition of that phrase in Section 6203.
1. “A retailer engaged in business in the District” shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this state or for delivery in the State by the retailer and all persons related to the retailer that exceeds five hundred thousand dollars ($500,000). For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code and the regulations thereunder.
3.51.100. PERMIT NOT REQUIRED. If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this Chapter.
3.51.110. EXEMPTIONS AND EXCLUSIONS.
A. There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any state- administered transactions or use tax.
B. There are exempted from the computation of the amount of transactions tax the gross receipts from:
1. Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government.
2. Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the City shall be satisfied:
a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of business out-of-City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address.
3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter.
4. A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this Chapter.
5. For the purposes of subparagraphs (B)(3) and (B)(4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
C. There are exempted from the use tax imposed by this ordinance, the storage, use or other consumption in this City of tangible personal property:
1. The gross receipts from the sale of which have been subject to a transactions tax under any state-administered transactions and use tax ordinance.
2. Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.
3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter.
4. If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of this Chapter.
5. For the purposes of subparagraphs (C)(3) and (C)(4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
6. Except as provided in subparagraph (C)(7), a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City under the authority of the retailer.
7. “A retailer engaged in business in the City” shall also include any retailer of any of the following:
vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of
the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City.
D. Any person subject to use tax under this ordinance may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax.
3.51.120. FISCAL ACCOUNTABILITY PROVISIONS.
The amount generated by this new general purpose revenue source and how it was used shall be included in the annual audit of the City's financial operations by an independent certified public accountant. In addition, there shall be a committee consisting of five members of the public to review and report on the receipt of revenue and expenditure of funds from the tax authorized by this chapter.
The committee shall review the annual auditor's report and shall make recommendations to the City Council on the use of the tax revenue. The committee's recommendations shall be completed by a date to allow for it to be considered as part of the annual budget process. The committee members shall serve four-year terms and shall be the same as the committee established by Section 3.50.160.
Section 2. AMENDMENTS. All amendments subsequent to the effective date of this Ordinance to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this Ordinance, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this Ordinance.
Section 3. ENJOINING COLLECTION FORBIDDEN. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this Ordinance, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.
Section 4. SEVERABILITY. If any section, subsection, phrase or clause of this Ordinance is for any reason held to be unlawful, such decision shall not affect the validity of the remaining portions of this Ordinance. The People of the City of San Mateo hereby declare that they would have passed this and each section, subsection, phrase or clause of this Ordinance irrespective of whether one or more sections, subsections, phrases or clauses are declared unlawful.
Section 5. ENVIRONMENTAL DETERMINATION. In accordance with California Environmental Quality Act (CEQA) Guidelines section 15378(b)(4), submission of the tax to the voters is categorically exempt from CEQA because it involves the creation of a government funding mechanism which does not involve any commitment to any specific project.
Section 6. PUBLICATION. This Ordinance shall be published in summary in a newspaper of general circulation, posted in the City Clerk's Office, and posted on the City's website, all in accord with Section
2.15 of the City Charter.
Section 7. LEGISLATIVE HISTORY AND EFFECTIVE DATE. This Ordinance was introduced on _____ , and adopted, subject to voter approval, on ______ . This Ordinance relates to the levying and collecting of a City transaction and use tax and shall take effect ten days after certification of election results by the City Council certifying that the Ordinance was approved by a majority of the voters voting at the general municipal
election to be held November 3, 2026. The Operative Date remains as stated in section 3.51.020 of the San Mateo Municipal Code as amended by this Ordinance.