The Scotts Valley City Council on Aug. 7 will consider whether to put a business tax hike on the November ballot. (Marcello Hutchinson-Trujillo — Santa Cruz Local file)

SCOTTS VALLEY >> The Scotts Valley City Council on Aug. 7 will consider whether to place a business tax increase on the November ballot.

The proposal would raise the base rate for an annual business license to $150 from $90, and charge higher rates for businesses that bring in larger annual revenues. The increased rates would bring in about $750,000 more for Scotts Valley than it now collects annually in business taxes, according to a city staff report. If voters approve the tax, the city is poised to receive about $1.1 million annually.

Scotts Valley’s General Fund is about $40 million. The city council agreed to use about $4 million in reserves to cover its expenses in a city budget it adopted in June.

“Like many California and Bay Area communities, the economic fallout from the COVID-19 pandemic has exacerbated the challenge to fund the City of Scotts Valley’s critical community Services,” Scotts Valley City Manager Mali LaGoe wrote in a city staff report. 

“Without increased revenue, deep budget reductions will be required starting in Fiscal Year 2025/26. These reductions would further degrade services prioritized by the community, including street repairs, park maintenance, wildfire preparedness and public safety,” LaGoe wrote.

The rate businesses pay to operate in Scotts Valley was last set in 1992. It did not include adjustments for inflation, which has more than doubled since then.

• The proposed measure needs votes from at least 4 of the 5 council members to be placed on the ballot.
• The deadline to place measures on the ballot is Aug. 9.
• If placed on the ballot, the measure would need more than 50% of the vote from Scotts Valley voters Nov. 5. 

The proposed ballot measure is called the “City of Scotts Valley Business License Modernization.” The proposed question on the ballot would be: 

“To maintain city services, such as repairing potholes/streets; wildfire prevention programs, maintaining parks/playfields; and other critical governmental services, shall a measure modernizing Scotts Valley’s 1992 business license ordinance be adopted, until ended by voters, raising the base rate from $90 to $150 per business and with rates increasing incrementally for larger businesses based on gross receipts as provided in the ordinance, generating approximately $1,100,000 annually, and all funds controlled locally?”

A four-tier rate structure for the business tax is proposed based on gross annual receipts. Businesses that bring in more revenue annually would be charged a higher rate. Storage facilities would be charged a flat rate of $5 per $1,000 in annual gross receipts. 

City staff recommended implementing the potential new rates in a two-year phased approach, with 50% of the new rates effective May 1, 2025 and 100% of the new rates effective May 1, 2026.

A proposed fee structure would charge most businesses based on annual gross receipts. (City of Scotts Valley)

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