What Do You Know About Measure U - Foster City's Business License Tax Measure?
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What Do You Know About Measure U - Foster City's Business License Tax Measure?

Questions About Elections

Q. What is Measure U?
A. Measure U is the City of Foster City ballot measure that would amend Title 5, Chapters 5.04 to 5.40 of the Foster City Municipal Code by increasing the business license tax by raising the maximum and minimum tax amounts over 3 years.  Measure U would also clarify various provisions relating to the imposition, administration and issuance of business licenses.

Q. When is the City election?
A. The election is Tuesday, November 5, 2013.  Polls open at 7 AM and close at 8 PM.  Measure U is one of many items on the ballot. Information about all the items is available at www.shapethefuture.org.

Q. What percentage of the vote is needed to pass the measure?
A. A simple majority of "Yes" votes (at least 50% of voters, plus one).

Questions About The Business License Tax

Q. What is the Business License Tax?
A. It is a city tax paid by all businesses that operate in Foster City.

Q. How is the Business License Tax determined?
A. The business license tax is based on the amount of revenues ("gross receipts") that a business generates in a year. The tax rate is $0.75 per $1,000 of gross receipts earned by a business and the rate is subject to a minimum and a maximum tax amount based on a "gross receipts limit" or "cap."

Q. What is the minimum tax paid by a business and how will it change under the proposed tax measure?
A. The minimum tax currently paid by most businesses is $25. For General Contractors, the minimum tax is $50.  Under the proposed tax measure, the minimum tax will increase over a 3-year period as indicated in the following table.

MinTax - BLT

Q. What is the maximum tax paid by a business and how will it change under the proposed tax measure?
A. The current maximum tax is based on a gross receipts limit of $5,000,000. Therefore, the maximum tax amount is $3,750.  If the proposed measure were approved, the gross receipts limit (and, thus, the maximum tax amount) would increase according to the following table.


Questions about Business License Tax Uses

Q. What are business license tax revenues used for?
A. The business license tax is one of several general taxes used for police, fire, parks and recreation, lagoons, levees, street maintenance, and a host of general City services. The business license tax is not dedicated specifically to any one of these services, but is used to support all of the services listed above.

Q.  How much will the new tax structure generate?
A.  The business license tax generated $620,000 in fiscal year 2012-2013.  The new structure is estimated to generate an additional $225,000 in 2014, $450,000 in 2015, and $700,000 in 2016 and every year thereafter.

Questions about Business License Tax Changes

Q.  When was the last time the business license tax was changed?
A.  Foster City's business license tax rate has not been changed since it was originally adopted in 1972. Since that time, the City's costs for providing services have increased nearly 600%.

Q.  How does the proposed tax structure compare to other cities?
A.  This structure is similar to other cities in the region, and at or below the median for many business categories.

Q.  Why change the businesses license tax structure?
A.  The change will increase available funding for City services.  By paying the business license tax, businesses help fund the cost to provide services to them (fire, police, medical emergency, streets, levee maintenance etc.).

Q. How was the business community part of the discussion of the changes in the business license tax?
A. The Foster City Chamber of Commerce and individual businesses provided input that had a direct impact on the proposed changes to the ordinance. The Chamber of Commerce Board of Directors has provided to the City a letter with their opinion that the business license ordinance as proposed is reasonable.

Q.  Where can I get more information about the business license tax election?
A.  Visit the city website www.fostercity.org or call City of Foster City Assistant City Manager Steve Toler at 650-286-3214.


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