San Jose City Council Rejects Sales Tax Measures

Update 5 p.m.: A divided San Jose City Council voted against all of the tax measures Tuesday afternoon. While 10 out of the 11 members said they wanted a quarter-cent sales tax increase, the members could not decide how the money should be spent.

Mayor Chuck Reed, Vice Mayor Madison Nguyen and council members Sam Liccardo, Rose Herrera, Pete Constant and Johnny Khamis wanted to earmark the estimated $34 million a year from the tax increase to public safety. Council members Ash Kalra, Don Rocha, Xavier Campos and Kansen Chu wanted the money to go to the general fund. Councilman Pierluigi Oliverio voted against both tax proposals. Tax measures need a supermajority, or 8 votes, to pass.

The council will not have another to chance to put a general tax measure on the ballot until 2016.

Two measures meant to soften some provisions of Measure B, the city's controversial 2012 pension reform plan, also did not go through. The initiatives would have allowed police officers to return to the city at their pre-Measure B pension rates, and streamlined the process for injured police and firefighters to go on disability.

A proposition to hold union negotiations in public also stalled. The council directed city staff to continue the meet with unions on employee pensions and public bargaining. Council members unanimously voted against a measure that would have increased the marijuana business tax from 10 percent to 20.

The only measure to go through to the ballot? Allowing the city's retirement boards to hire a CEO.

Original story:

The San Jose City Council must decide on Tuesday night what measures to place on the November ballot. Potential candidates include a quarter-cent sales tax for public safety and modifications to Measure B, which voters in favor of pension reform passed in 2012. It's still mired, however, in legal disputes between the unions and the city.

Sales Tax Increase

The City Council will debate three potential quarter-cent sales tax measures: a general purpose sales tax, a sales tax dedicated to public safety and a sales tax dedicated to road repair and maintenance.

The tax increase would raise an estimated $34 million a year. San Jose's current sales tax is 8.75 percent.

In a poll funded by the City Council, 67 percent of respondents favored the general sales tax, 71 percent the public safety tax and 65 percent the road repair tax.

While the general sales tax measure has the least support, it's also the easiest to pass. Special-purpose measures need a two-thirds majority while general taxes need only a majority. So, both the public safety and road repair measures would need 67 percent voter approval to pass.

"We're considering a sales tax just for public safety because that's the highest priority for our voters," San Jose Mayor Chuck Reed said. "Whether or not it's strong enough to win is always an important question."

Councilman Sam Liccardo, whom Reed has endorsed, favors the public safety measure, according to the San Jose Mercury News. Santa Clara County Supervisor Dave Cortese, Liccardo's mayoral rival, favors a general tax.

Measure B-Related Initiatives

Measure B, enacted by nearly 70 percent of voters in June 2012, required existing city employees to make additional contributions to their pension plans or pay up to 16 percent of their paycheck into a retirement fund. The measure allowed employees to avoid the extra fees by opting into a less generous plan with smaller payouts and later retirement ages. New employees must pay up to 50 percent of their pension costs.

Unions, including the police, quickly sued, saying that their retirement benefits were previously approved in their labor contracts. Last year, a Superior Court judge ruled that San Jose can't cut the pensions just because they've become costly. But city officials can cut workers' pay instead. The ruling was appealed.

Reed would like to the case to go the California Supreme Court.

"I think it's important for the people of California to be able to do that and get clarity on the law, so that we're not in this straitjacket of never being able to fix things when we get into fiscal problems," Reed said.

The proposed changes to Measure B would guarantee a city job to police officers or firefighters who are injured on the job and make it easier for officers who are unable to work for more than a year to qualify for disability.

"This is a couple of minor changes to what the voters appealed," Reed said. "There's been a lot of confusion about what it takes to qualify for disability retirement in San Jose, so we just wanted to make it real clear that if an officer is injured on the job and can't work, they're going to get a disability retirement."

Another measure would give San Jose police officers who left the department the same benefits they had if they return by January 2017.

A third measure would allow public access to employee bargaining negotiations.

However, the changes do not address several of labor's concerns, including the amount workers must pay toward their pensions.

Marijuana Tax and Dispensaries

Reed also wants to increase the marijuana business tax from 10 percent to 15 to 20 percent. The extra money would go into the general fund. New regulations for the city's medical marijuana dispensaries went into effect in June, giving dispensaries a full year to pay for a license and move away from schools, homes and businesses.

Opponents of San Jose's dispensary regulations failed to collect enough signatures to get on the ballot.

Mina Kim contributed to this report.