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Mtn. View moving toward more taxes on cannabis sales, business licenses

Flush with tax revenues from the flood of development in recent years, the city of Mountain View has a budget surplus this year and a projected one for 2019. It’s what happens after that, however, that has driven city officials to seek additional revenue sources.

As a result, voters in the Nov. 6 election could see ballot measures for taxes on cannabis sales and, perhaps more controversial, significant increases in business-license fees. The Mountain View City Council June 5 took major steps in that direction, opting to move the proposals forward. The council could finalize the items for the ballot by June 26, though city leaders have until Aug. 10 to qualify for the Nov. 6 ballot.

The business-license discussion drew the most diverse responses. In the end, the council opted to poll residents on their preference for a tax that would generate an estimated $5.9 million in annual revenues for the city. For more on the business license fee issue, see the article on page 28 in today’s Business & Real Estate section.

Cannabis

The council also opted to poll residents on whether they would support a general-purpose tax of up to 9 percent on marijuana sales, in addition to the 15 percent state tax already in place. A 9 percent tax would bring in approximately $1 million annually.

Although voters passed Proposition 64 in 2016, legalizing cannabis across the state, marijuana sales are currently illegal in Mountain View. Distribution, however, is legal. The city is working on an ordinance governing sales that could come before the council in October, said City Manager Dan Rich. The sales-tax framework is being worked on in parallel with the ordinance.

One “big caveat,” Rich told council members, is the possibility of a statewide initiative that could eliminate a majority vote in local elections for a cannabis tax and require instead a two-thirds majority vote to pass a measure. If passed, its effect would be retroactive to Jan. 1, 2018.

No hotel tax increase

Perhaps the most straightforward of the council’s actions last week dealt with the transient occupancy tax, or “hotel tax,” as it’s often called. The council agreed not to increase the tax, which is currently 10 percent. The tax impacts guests staying overnight at city hotels up to 30 days. It currently generates approximately $7 million annually.

Six cities – including Los Altos at 11 percent – currently have a higher hotel tax than Mountain View, which hasn’t increased the tax since 1991.

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