Op-Ed: Why Richmond voters should reject Measure U

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Proposed Richmond business tax change faces pushback
Richmond City Hall (Photo credit: Mike Kinney)

By James Lee

Richmond businesses are not opposed to a revision of the current Business License Tax. In fact, the Richmond Chamber and the Council of Business & Industries provided recommendations for appropriate rate increases which the City chose not to consider. Businesses are very concerned about the process in which the City approved the tax and the negative impacts it will have on Richmond’s small businesses and economic development.

With election day quickly approaching, Richmond residents are receiving their ballots in the mail and being bombarded with political ads and mailers seeking to increase or propose new taxes on Richmond businesses. Most residents and businesses are unaware of this new tax or its impact on a community already devastated by the COVID-19 pandemic. This is why we’re encouraging businesses to download the tax calculator and compare the old fee rates with the estimated new tax.

The City Council approved placing a business license tax (Measure U) on the November ballot amid a pandemic-induced recession. Richmond residents are being asked to approve a tax the majority of councilmembers acknowledged is so flawed that they included language that allows flexibility to “fix” rates after the elections…with the hope of engaging businesses to understand the impacts and get the rates correct—two very important steps that should have occurred before going to the voters.

To date there still has been zero city staff engagements with the LatinX community of businesses represented by the 23rd St. Merchants. These businesses have had some of the greatest impact due to the COVID19 crisis, and, loss of revenues due to the impact on other businesses in the area.  The City also did not engage the Chamber and COI until the week before the council’s final vote on August 5.

Councilmembers acknowledged there was insufficient engagement with Richmond businesses, there was no economic impact study done, and that city staff abdicated its responsibilities while still in labor negations to “Lift Up Richmond” —sponsored by SEIU (the union representing most City employees) and comprised of organizations such as the Richmond Progressive Alliance, Alliance of Californians for Community Empowerment (ACCE) and other “community” groups—while still in negotiations with labor unions.

As a result, child care centers, educational services and medical providers could be taxed at the second highest rate, which would increase cost for Richmond families that rely on these services. The higher tax on grocers will disincentivize grocery stores from moving into Richmond, further keeping the city as a food desert. Small businesses operating in commercial buildings could see their rents increase, resulting in increasing costs for Richmond customers or the small businesses moving to a neighboring city.

How did we end up here? For years, the City has been balancing its budget but continues to have a structural deficit. In 2019 the City Council unanimously voted to direct staff to look into revenue generating options that would address the structural deficit—an issue which existed long before the COVID-19 pandemic. As businesses were forced to close and family daily routines halted as a result of the shelter in place orders, the City now faced the reality of losing revenue and reducing costs while in negotiations with labor unions.

On May 5, the City Council unanimously voted to authorize $50k for city staff to conduct polling and identify potential ballot measures for the council to consider, but nothing was done. Instead, city staff delegated the job of deciding what tax measure to promote to the union-sponsored “Lift Up Richmond” which excludes Richmond businesses. The organization conducted a poll mid-June, publicly committed to run an aggressive campaign, and prepared an ordinance for city staff based on one so radical that even Oakland declined to place on its ballot. The first time most councilmembers, the general public and businesses viewed the ordinance was during the July 21 council meeting.

The history of this proposed Business License Tax is emblematic of its problems. Richmond has more than 9,000 active business licenses in the city; none of which were engaged until July 28. The final draft tax rates were posted just 3 business days before the August 5 Council meeting- not allowing adequate time for review or discussions with the business community at-large. The proposal that is before the voters in November is deeply flawed and will result in irreparable harm to Richmond’s economy.

Richmond has a need for additional municipal revenue, and Richmond’s Business License Tax is ripe for re-writing. But let’s let everyone in on the discussion of how the tax should be applied and by how much it should be increased. Let’s take the time to consider it carefully.

James Lee is president of the Richmond Chamber of Commerce

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