Measure EE and FF: Santa Rosa business and lodging tax measures lead in early returns

Two Santa Rosa tax measures that would increase rates charged to businesses in the city and to overnight guests at local hotels were leading in early returns.

Approval of Measure EE and FF, as the taxes are known, would generate an estimated $4.2 million annually to boost city coffers as the city looks to trim expenses and raise revenues to address a growing deficit.

Measure EE would update the city’s business license tax that is charged to nearly 13,000 retailers, service providers and contractors registered to do business in the city, increasing the maximum tax charged to big businesses from $3,000 to $10,000.

With 41% of the total potential vote counted, it led with about 65%, according to preliminary results posted shortly after polls closed at 8 p.m.

The lodging tax measure, Measure FF, which would increase the transient occupancy tax by 2 percentage points, also led with 67%, based on the same share of the total potential vote counted.

Both need a simple majority to pass.

Neither tax has been updated in 30 years and the campaign behind the measures, led by Mayor Natalie Rogers, Vice Mayor Mark Stapp and supporters that include labor officials and small business owners, says the increases would ensure businesses and visitors pay their fair share into city services without tapping individual residents for more money.

Initial results released Tuesday include mail-in ballots that were processed prior to Election Day and early in-person voting. The count did not immediately reflect ballots cast on Election Day or mail-in ballots dropped off or postmarked by Tuesday.

There are 103,949 registered voters in Santa Rosa.

Generally, The Press Democrat relies on information from election officials and campaign officials before naming a winner, as not everyone who received a ballot will have voted in the contest.

Under Measure EE, the city would institute a new tiered minimum business tax structure and raise the cap to $10,000 for the largest businesses.

Businesses that generate $100,000 or less in gross receipts will pay a minimum of $200. Businesses that generate between $100,000 and $500,000 will pay $500 and those that report gross receipts between $500,000 and $1 million will pay $800.

Larger businesses whose gross receipts are more than $1 million will pay a minimum $1,000 plus an additional rate for gross receipts over $1 million up to the $10,000 cap.

The maximum tax will be adjusted annually for inflation, with a cap of 4%, to ensure more gradual increases over time.

Short-term rental operators will be required to pay the business tax going forward.

Measure FF would increase the city’s transient occupancy tax rate from 9% to 11%.

The tax is charged to guests staying overnight at Santa Rosa hotels and other lodging establishments like vacation rentals.

Two additional, existing fees charged in the city to help pay for tourism promotion would put the new overall lodging tax at 16%, if Measure FF passes, the highest in the county along with Healdsburg.

Opponents have argued the increases will burden small businesses and deter visitors from coming to Santa Rosa, both hampering the local economy.

No on EE and FF, led by Santa Rosa resident Eric Fraser, contends the increased business costs will force businesses to close or relocate and costs will be passed on to residents.

The group also argues revenue from the two measures will be mismanaged and that the city needs to do more to handle its fiscal issues rather than trying to balance its budget off the backs of local businesses.

The Yes campaign has characterized the group’s arguments as misguided and said the measures won’t disincentivize business growth or tourism.

The new rates will go into effect in January if the measures pass.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.