Measure X: Scotts Valley business license tax measure explained

Scotts Valley’s business license tax has not been updated in over 30 years. As a result, city officials say the fees that businesses pay — a flat $50 per business and $40 for each employee — have not kept up with the cost of running local government and are flawed in treating small and big businesses the same.

This year, Measure X on the November ballot seeks to update that business license tax and introduce new rates that correspond to the amount of revenue each business generates. If passed, the measure would raise the base rate of the tax to $150 from $90 and implement a sliding scale to determine how much a business would pay annually. Those would go as follows:

• Businesses with annual gross receipts less than or equal to $500,000 would pay between $150 and $250.

• Businesses with annual gross receipts between $500,000 to $1 million would pay between $250 and $750.

• Businesses with annual gross receipts between $1 million to $5 million would pay between $750 and $6,350.

• Businesses with annual gross receipts above $5 million would pay a minimum of $6,350 and $1.80 per $1,000 in gross receipts.

• People operating self-service storage facilities would pay $5 per $1,000 in gross receipts, with a minimum of $150.

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A “yes” vote is a vote in favor of the new rates, while a “no” vote is against. Should the measure be voted down, the current business license tax that has been in effect since 1992 would remain. A simple majority of the city’s approximately 8,838 voters is needed to pass the measure.

The measure, placed on the ballot by the Scotts Valley City Council, is expected to raise about $1.1 million annually until ended by voters. The revenue would be allocated to the city’s general fund, and may be used for any legitimate governmental purpose the city council approves. Those include repairing roads, maintaining parks and open space and administering activities like wildfire prevention programs.

Scotts Valley Mayor Randy Johnson said that because companies with higher gross receipts would begin paying more than smaller businesses under the proposed measure, it is “more equitable.” He also said that while small businesses will also see a modest increase in the amount they pay, the city doesn’t think it is an “overly burdensome” amount.

“Tax revenue is needed to run a city, and we are forced to get it from a myriad of sources,” Johnson said. “The current tax brings in around $350,000 and this would generate around $1.1 million, so again, as a city, we’re looking for sources.”

Johnson pointed to funding law enforcement, city staff positions and traffic improvements as things that citizens want to see, and this measure is “one way that we can bring in the revenue to meet those service requests.”

There is no organized opposition to Measure X, and no argument was filed against it. Johnson said he credits that to the city’s efforts to connect with businesses with clarity regarding what the measure entailed and why it was heading to the ballot.

“A ballot argument against is something you don’t want to see if you believe in what you’re putting forward to the people,” he said. “I think we were fortunate when that did not happen, but there was a lot of legwork done with our business community.”

Given what he believes to be a fair, well-thought-out measure, Johnson is optimistic about its prospects in the November general election.

“It’s largely supported by the business community and the chamber of commerce, and having no formal opposition was a big plus,” he said. “We look forward to its passage.”

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