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The Pleasanton City Council directed staff last Tuesday to begin discussions with regional hotel stakeholders and municipalities about the possibility of placing a transient occupancy tax/hotel tax increase on the November ballot next year.
The council majority did not signal staff to move forward with polling efforts to determine if there is community interest in other revenue sources such as a sales tax increase, general obligation bond or a parcel tax, citing reasons including a lack of unanimous support for the polling efforts and overall disinterest in pursuing those other revenue options following the failure of Measure PP.
“I definitely have an appetite for discussion around (the TOT tax), but things beyond that seem so volatile and it seems so fresh after the last election — we’re not even a year out — that I’m frankly afraid that we’re going to get an even stronger pushback than we already had the first time,” Councilmember Matt Gaidos said during the Aug. 19 meeting.
Aarón Zavala, assistant to the city manager, told the council that the city continues to face an ongoing projected structural fiscal deficit in upcoming budget cycles. He said there have been significant reductions made to the city’s budget during the adoption of the current two-year budget, including economic development initiatives and a comprehensive municipal service in the works that will identify additional efficiencies within the organization; but there is still a need for additional revenue sources.
Staff presented the council with a proposal to conduct professional voter opinion polling to get residents’ thoughts on potential revenue measures for the November 2026 election. The proposal comes after a council majority in July halted plans for the city to become a charter city, which in turn also halted plans to implement a voter-approved real property transfer tax.
According to Zavala, the polling would have provided data-driven insights and testing on initial support levels for multiple proposed revenue measures. The cost for the polling would have been anywhere between $31,000 to $50,000, Zavala said.
Staff said, as they have during past council meetings, that the city must continue to look into other revenue sources in addition to the work they have been doing to balance the numbers through other means, especially as staff continue to predict a $6 million to $9 million budget deficit every year for the next few years — despite having a balanced budget for the next two.
“You never know what’s going to happen and the city may need to add other services to support the community,” city finance director Susan Hsieh said. “There may be changes to financial conditions that we did not include in the (financial) forecast. The $6 to $9 million that I mentioned earlier is assuming there will not be significant changes to economic conditions down the road.”
And City Manager Gerry Beaudin said with Measure PP having lost by only about 4% in the 2024 election, another potential revenue measure wasn’t entirely outside the realm of possibilities for the city.
“A lot of work to be done but we know enough today to tell you as the elected body — and we have been saying it for quite some time — that we have a structural deficit and we do need to find new revenue, expense reductions and to work on that longer term, medium term economic development programmings,” he said.
The four top revenue measures that the city proposed for polling included a transient occupancy tax/hotel tax increases; sales tax alternatives; parcel taxes for specific services; and general obligation bonds for infrastructure.
The transient occupancy tax, according to staff, could potentially be increased from 8% to up to 12%, which could rake in nearly $3 million in revenue while the city’s sales tax could possibly go up to 10.75%, which could produce around $10.8 million in revenue. The city doesn’t currently have any parcel or general obligation bonds but each of those, as laid out by the city, could bring in anywhere from $9.7 million to $10.2 million a year.
The last two options would need a two-thirds voter approval while the first two would need a simple majority.
Vice Mayor Jeff Nibert was the main voice on the council who supported polling residents about the potential measures because he said the city needs to take immediate action in order to ensure its fiscal sustainability.
“I think we owe it to ourselves to get as much information as we can,” Nibert said. “We need to act with urgency. Our structural deficit has not gone away and will not go away.”
While economic development is great and welcomed, he said it is unpredictable and that the city really needs predictable sources of revenue so staff can develop a budget without cutting services.
“I don’t think our residents want to live with constant cuts to services and deteriorating infrastructure for years to come,” Nibert said. “If that’s where we’re headed, I think the community deserves a direct say.”
However, the rest of the council had mixed feelings about polling residents.
Gaidos agreed with Nibert in acknowledging how Pleasanton’s infrastructure is aging and there will be future repair and replacement problems — he pointed to the water system as an example — that will cost the city money.
However, Gaidos remained hesitant on the city going out to poll residents on new potential revenue measures because he said it will be very hard to get residents to pass any such ballot measure without the unanimous support of the entire council.
Councilmember Julie Testa echoed similar sentiments. While acknowledging that she hates the idea of having to make future cuts to services, she said, “I do not support going forward with any of these unless we have unanimous support, and I don’t believe we have that on our council.”
“I think it’s sad because we are going to have significant community impacts — it was really hard to sit up here and listen to the concerns of our community during our last round of cuts — but we’ll have it again and it’ll be worse but I don’t think we will be successful putting anything forward without unanimous support,” she added.
Councilmember Craig Eicher was also on the fence as he said he could understand why the city should poll its residents on how they would feel about the idea of new revenue measures but as someone who voted against Measure PP, he still thought the city should work on living within its means.
Pleasanton resident Debbie Wallace said during public comment that polling to gauge residents’ views on another sales tax increase, or any tax increase, would be a waste of peoples’ tax dollars.
“Measure PP was defeated, which in itself — I believe — indicates the answer you would get from asking residents for another tax increase,” Wallace said.
The council ultimately came to agreement on supporting continued discussions about pursuing a hotel tax increase, which staff said wouldn’t need community polling because it affects hotel stakeholders and residents don’t usually pay those taxes — it’s the visitors staying in those hotels who pay them.
The council also directed staff to speak with other cities in the region so that other Tri-Valley hotels could possibly implement such a tax.
Mayor Jack Balch noted throughout the meeting that with the city’s recent efforts to balance its budget and introduce various strategies to improve its financial status, the city is building its credibility so that in the future, it might be easier to get residents on the same page regarding any revenue measures.
Balch said the credibility of any future ballot measure depends on whether or not this council can demonstrate “that we have modernized operations, that we have streamlined the processes, that we have actually changed how we do business”.
“That credibility then leads us to help the community understand that we have belt-tightened, as proven in the budget we’ve just passed, and we’re doing something different so that we’re not just throwing cash at the problem and going back to them,” Balch said. “That we are using prudent measures going forward.”
He said while he also supports pursuing a hotel tax increase, the city needs to see how its recent efforts to improve things like economic development will affect its financial forecast, which will then signal whether or not the city will need to pursue revenue measures in the future.
“I think we’ve got to perform,” Balch said. “I think we’ve got to see some of our initiatives perform and I think that will build credibility.”
Despite being on board with considering an increase to the hotel tax, Nibert said he was disgusted by the overall discussion Tuesday and vehemently disagreed with the council’s decision to not poll residents on the other measures.
“We’re talking about polling,” Nibert said. “We’re not talking about placing items on the ballot yet. We’re just talking about getting information … What’s the matter with asking our residents their opinion?”
