Milpitas to survey residents about extending sales tax

Milpitas is hoping to hold on to a revenue stream dedicated toward city services and keep its budget from falling into the red.

The Milpitas City Council on Tuesday unanimously approved a resident survey to gauge support for a ballot measure this November that would extend Measure F, a citywide quarter-cent sales tax which sunsets in April 2029. Officials don’t want to lose this reliable revenue stream, which supports multiple municipal programs, while they explore other funding sources.

The survey will be conducted in April, with survey results and recommendations going to council in May. The deadline to place the measure on the ballot is Aug. 9.

Voters originally passed Measure F by more than 60% in 2020. It generates about $7 million annually toward the city’s $129 million general fund for fiscal year 2023-24. Milpitas has a balanced budget this year, but a 10-year projection anticipates a deficit growing from $1.2 million in 2027-28 to $5.9 million in 2028-29, when the tax expires.

Assistant City Manager Matt Cano said there are additional revenue measures that the city will need to consider in the future.

“We need to plan in advance,” he told San José Spotlight. “We need to make sure we have a financially sustainable future and that we can continue to serve our residents.”

Milpitas’ sales tax is 9.35%. By comparison, San Jose and Campbell both have a 9.375% sales tax, and Los Gatos has 9.25%. All other cities in the county have a 9.125% sales tax, according to the state’s Department of Tax and Fee Administration.

The quarter-cent tax puts the city at its legal sales tax limit. Cano said at the meeting that letting the tax end runs the risk of having another governing body, like the county, take advantage of the tax sunsetting and could go to voters with another ballot measure covering that quarter-cent amount. That would bar Milpitas from adding any future sales taxes earmarked for the city.

Late last year, the city surveyed residents about another potential ballot measure — a general obligation bond to fund renovating city buildings, such as the public works building and Fire Station No. 3. City employees presented the survey results showing only 46% of voters would support the bond, far less than the two-thirds majority required for infrastructure bonds.

Cano told San José Spotlight extending Measure F will increase the city’s fiscal sustainability and allow it to focus on developing other revenue sources in the future. The  details of the measure will be built around survey feedback.

“Extending Measure F isn’t the only solution to creating a fiscally viable city for the future,” Cano said. “However, it is one big piece of that puzzle.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.