Los Gatos voters could face small tax hike next year

Council may seek one-eighth of a cent sales tax increase, a possible $800K annual boost

Los Gatos voters may be asked next year to raise the town’s sales tax by one-eighth of a cent, which could generate as much as $800,000 annually for town coffers. If the proposed tax hike is approved by the Town Council, it would be placed on the November 2018 ballot.

The council is tentatively scheduled to discuss the general sales tax question at its Nov. 7 meeting that starts at 7 p.m. at town hall, 110 E. Main St.

But Los Gatos Town Manager Laurel Prevetti said in an email that “the actual vote to place a measure on the ballot would likely occur in early 2018.”

The town’s finance committee, which includes Vice Mayor Rob Rennie and Councilman Steve Leonardis, voted last week to recommend the proposed tax.

“The recommendation is for the entire town council to review it,” Leonardis said. “The finance committee proposed a general sales tax increase that only requires a 50 percent plus one vote majority to be approved.”

A two-thirds “supermajority” is not required since any monies raised would go directly into the town’s general fund, Leonardis said. A general tax can be used for any purpose.

“It would be very helpful,” Leonardis added.

Leonardis also said the one-eighth cent figure was chosen because the town is bumping up against the sales tax limit allowed by law. The current, statemandated sales tax rate is 7.25 percent. State law says towns and cities can only collect two percent more than that unless the legislature makes an exception.

Since Los Gatos residents are already paying a 9 percent sales tax, there’s very little wiggle room.

“The town is not legally precluded from seeking a one-quarter-cent sales tax increase, but the finance committee concurred with staff and referred a recommendation of pursuing a one-eighth-cent sales tax hike to the full council,” assistant town manager Arn Andrews said in an email.

How does one-eighth of a cent translate at the cash register? If you buy something for $100 today, it would cost $109, including tax. “If the initiative were successful, that same purchase would be $109.125,” Andrews said.

Rounding up, that means 13 cents would be added to your bill.

This isn’t the first time in recent years that Los Gatos has flirted with a local sales tax increase: The town council considered putting a quartercent or half-cent sales tax hike on the November 2016 ballot, but decided against it, largely because the Valley Transportation Authority’s countywide half-cent sales tax was on that ballot. VTA’s Measure B sales tax was approved by nearly 72 percent of Santa Clara County voters.