San Jose hotel tax on track for victory

A measure to increase taxes on San Jose hotels appears to be on an easy path to victory.

More than 65.6% of votes tallied so far are in favor of Measure A, which would increase the city tax levied on hotel guests from 10% to 12%, according to election returns released Wednesday evening. Officials with the Santa Clara County Registrar of Voters said they expect to receive more than 348,000 ballots in the June 2 primary election. About 229,000 have been counted as of 5 p.m. Wednesday.

The ballot measure needs a simple majority to pass and would take effect Oct. 1 if approved.

San Jose officials project the transient occupancy tax increase would generate roughly $10 million in additional revenue each year. The money would go to the city’s general fund, leaving it up to future City Council deliberations to determine how it will be spent.

Measure A’s commanding lead in early returns has come as a relief to city leaders who have warned the measure’s failure would deal a major blow to San Jose’s budget priorities, as it seeks to balance a $50 million deficit for the coming fiscal year starting July 1. Councilmembers are expected to vote on a final budget on June 9.

“No question — Measure A’s passage is a major win for San Jose, protecting our ability to invest in a safe, clean and vibrant city,” District 6 Councilmember Michael Mulcahy told San José Spotlight. “Without it, we would have faced painful cuts to core services.”

The cash infusion from the tax hike would provide a crucial financial buffer for the city. Under a draft budget plan released in May, San Jose is already facing about $19 million in cuts to city services. But that budget relies on the projected Measure A funds. Without them, budget officials have warned the city would be forced to eliminate the equivalent of an additional 50 full-time positions, with some of the deepest cuts landing on public safety programs and the library system.

“I think that Measure A passed because of the city unions who put in the resources to educate voters about what was at risk if we don’t have more general fund investments to protect core city services,” Jean Cohen, executive officer of the South Bay Labor Council, which endorsed the measure, told San José Spotlight.

Meanwhile, opponents of Measure A have argued that adding any more taxes to the city’s already struggling tourism industry would make the sector less competitive, further weakening the local economy.

Silicon Valley Taxpayers Association President Mark Hinkle, a vocal critic of Measure A, also objects to the fact that the measure seeks to generate tax revenue from non-residents, who never had the opportunity to weigh in on the policy.

“It’s kind of sad,” Hinkle told San José Spotlight. “The voters basically said, ‘Hey, let’s tax somebody else, not me.'”

San José Spotlight reached out to several local hotels, but no representatives were immediately available for comment.

Backers of the proposed hotel tax — which include Mayor Matt Mahan, the Santa Clara County Democratic Party and San Jose Chamber of Commerce — have pointed out that even at 12%, San Jose’s levy would still remain below levels imposed in other major cities. San Francisco and Oakland have set their hotel taxes at 14%, according to a city memo.

However, San Jose hotels also face a number of fees that substantially increase their effective tax rate.

Santa Clara County Democratic Party Chair Bill James said he’s glad to see Measure A on course for victory.

“Visitors use and benefit from city services, and the modest increase in the hotel tax will keep San Jose competitive with other big cities in the area,” James told San José Spotlight.

Contact Keith Menconi at [email protected] or @KeithMenconi on X.