City Council

(17)\n25-0029\nBUDGET AND FINANCE COMMITTEE REPORT relative to potential\nballot measures, options and proposals for the June and November\n2026 elections to increase General Fund Tax revenue.\nRecommendations for Council action:\n1. APPROVE the following general revenue tax options to\nStrengthen Fiscal Stability and Preserve Core Services for\nplacement on the June 2, 2026 Primary Nominating Election\nBallot:\na. Tax Measure: Transient Occupancy Tax; Current\nRate: General Fund – 13 percent, Total – 14 percent; Rate\nIncrease: 4.0 percent, 2.0 percent; Duration: 4 percent\nuntil December 2028, 2 percent thereafter and permanent;\nAnnual Estimated Revenue Impact: $89 million, $45\nmillion\nb. Tax Measure: Parking Occupancy Tax; Current Rate: 10\npercent; Rate Increase: 5.0 percent; Duration: Permanent;\nAnnual Estimated Revenue Impact: $67 million\nc. Tax Measure: Cannabis Business Tax Parity; Current\nRate: Various; Rate Increase: N/A; Duration: Permanent;\nAnnual Estimated Revenue Impact: Approximately $70\nmillion\n2. REQUEST the City Attorney, with the assistance of the City\nAdministrative Officer (CAO) and Chief Legislative Analyst\n(CLA), to prepare and present the necessary Resolutions and\nOrdinances for the proposed ballot measures stated above for\nthe June 2, 2026 Primary Nominating Election Ballot, on or\nbefore January 28, 2026, for Council adoption by no later than\nFebruary 11, 2026; and, to include a separate ballot measure to\nclose the TOT loophole regardless of the amount, as follows:\na. Revise the definitions of tax applicability to explicitly\ninclude Online Travel Company (OTC) charges and\nmarkups as taxable charges.\nb. Add a requirement that operators disclose all OTCs\nproviding payments.\nc. Add language clarifying the applicability of TOT to certain\ncommon fees and charges.\nd. Add language requiring any organized platform or\nmarketplace facilitating short-term rental of property within\nthe City to collect applicable TOT at the time of payment\nand remit the money collected to the City.\ne. How the City can address enforcement with OTCs, not\njust with the home-sharing platforms, as many of whom\nare working with the City in good-faith.\n3. INSTRUCT the CAO to engage on-call consultants to study the\nfollowing four general revenue tax options for consideration as a\nmeasure on the November 3, 2026 Ballot, or future ballots:\n​\na. Major Event Tax\nb. Shared Ride Tax\nc. Vacancy Tax\nd. Retail Delivery Fee\n4. INSTRUCT the CAO to identify funding up to $100,000 per\nstudy for each of the tax and fee revenue options selected by\nthe Council for further consideration, excluding any options\nselected for the June 2, 2026 Ballot.\n5. INSTRUCT the CLA and Office of Finance, with assistance from\nthe Department of City Planning (DCP), to provide an update to\nthe next scheduled Budget and Finance Committee and\nPlanning and Land Use Management (PLUM) Committee on\nthe status of the pending Vacation Rental Ordinance [Council\nfile No. (CF) 18-1246], including options to increase the citywide\ncap on vacation rentals, changing the geographic unit subject to\nconcentration caps from Census tracts to community plan areas\nand increase said cap, increasing the maximum number of days\nper calendar year a vacation rental may be rented, and\nimplementing a vacation rental application fee to fund\nenforcement activities.\n6. STRIKE Recommendation No. 7 contained in said CAO report\nrelative to rescinding the Council action of July 30, 2025, CF 22-\n0392-S1, which requests the City Attorney to prepare and\npresent an ordinance to amend Ordinance No. 188699 relative\nto the establishment of a Transportation Communications\nNetwork (TCN) Revenue Fund, that would allocated 75 percent\nof TCN Revenue by Council District based on the percentage of\ntotal area (square feet) of operational digital displays located\nwithin each Council District, and 25 percent for citywide\npurposes.\nFiscal Impact Statement: The CAO reports that there is no immediate\nfiscal impact on the General Fund as a result of the recommendations\nin the report; however, recommendations identify potential future\nactions that may require additional appropriations through interim\nbudget actions subject to Mayor and Council approval.\nFinancial Policies Statement: The CAO reports that the\nrecommendations in the report comply with the City’s Financial\nPolicies in that the report is for informational purposes only and does\nnot commit the City to any future expenditure of funds without further\nlegislative action.