Los Gatos officials approve sale tax ballot measure

Los Gatos’ sales tax could reach its limit after the November election if the majority of voters pass a revenue-generating measure intended to fund some of the town’s top issues.

The Los Gatos Town Council voted 4-1 earlier this month to approve putting a 1/8-cent sales tax on the November ballot after reviewing positive community polling, with Vice Mayor Matthew Hudes voting no. The tax must pass by at least 66.7% of the vote and could generate roughly $1 million annually for three key areas: traffic infrastructure, police and emergency preparedness for disasters such as wildfires, according to town documents.

The bump would raise the tax from its existing 9.25% to 9.375% — the cap for the West Valley town, according to officials. The measure, which will cost roughly $60,000, must be submitted to the Santa Clara County Registrar of Voters by Aug. 9 to be eligible for the upcoming election. San Francisco-based NBS Government Finance Group will finalize the ballot language and conduct public outreach before November to educate Los Gatos residents about the measure.

Councilmember Rob Moore, who voted in favor of the tax, said the bump is crucial to maintain city services ahead of an anticipated budget deficit. The town expects a roughly $2 million shortfall for fiscal years 2025-26 and 2026-27, according to the town’s five-year forecast.

Moore said the tax could help the town expand its bandwidth for traffic projects, the No. 1 issue he heard residents talk about when campaigning.

“As a financial steward for the town, I feel an obligation to look out five years ahead and say, ‘Wow, if we want to just maintain the good service we currently have unfortunately, I think we do have to raise revenue,’” he told San José Spotlight.

Officials said if the town decided not to put a sales tax on the ballot, another government entity could impose its own tax — similar to Measure B, the half-cent sales tax Santa Clara County voters passed in 2016 that funds VTA projects — and reach the sales tax cap in Los Gatos.

Councilmember Rob Rennie said he thinks there is a possibility the county might want to push a sales tax measure to cover a project, and the town should capitalize on its own needs first if it can.

“These merchants are going to end up having the tax anyway at some point in the future, but by Los Gatos doing it we can get at least some share of that,” he told San José Spotlight.

The hike could bring Los Gatos’ sales tax up to par with neighboring San Jose and Campbell, which have a 9.375% tax, according to the state’s Department of Tax and Fee Administration. It could also raise it higher than nearby cities, including Cupertino and Mountain View, which have a 9.125% tax.

Local business owners aren’t so sure about the tax.

Susan Testa, who has owned Los Gatos clothing store Romantiques for 30 years, said she’s concerned about the higher tax driving potential customers away. She said if the town reached out to the business community and informed them more about what the tax will do, she could support it.

“They always have the best (interests) at heart, but there’s always unintended consequences,” she told San José Spotlight.

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X, formerly known as Twitter.