In November, Benicia residents will vote on two tax measures, one of which depends on the passage of a third measure that grants local control over a property sale tax.
Measure X
One of the initiatives before voters is Measure X, a restructuring of the city’s business license tax that lowers the tax rate for small businesses and hikes rates for others. Under Measure X, businesses reporting less than $100,000 a year in earnings will no longer pay a license tax.
Currently, local businesses are taxed between $0.55 to $0.75 per $1,000 in earnings. The tax rate depends on the size and kind of business, which in Benicia ranges from cafes and trailer parks to import activity at the Valero refinery.
Measure X proposes new rates going from $0.25 per $1,000 in earnings for retail shops to $1.25 per $1,000 in earnings for gas stations and similar enterprises. The measure also includes a new tax of 3% of all earnings reported by shipping-related businesses in the Benicia port.
If approved, Measure X will be effective Jan. 1, 2027, and could add an estimated $1,612,000 to the city’s general fund in 2027 alone.
According to ballot arguments, if Measure X passes, around 1,900 businesses will no longer be required to pay the tax, and 2,228 businesses will end up paying less. No arguments against the initiative were filed.
Measures Z & Y
Measure Z proposes to increase taxes on property sales, called a property transfer tax. However, the increase depends on voters’ approval of Measure Y, which enables Benicia to gain local control of the tax rate.
As a general law city, Benicia’s property transfer tax is set by the state at 0.11% of a property’s sale price. A charter city, on the other hand, designates its own property transfer tax rate. Measure Y seeks to wrest control away from the state, granting Benicia the power to draft a charter that enables a transfer tax increase. According to the city, the charter would be limited to the tax, and not change any other city functions.
Measure Z, in turn, would up the property transfer tax rate to between 0.4% and 0.8%, depending on the sale price.
Under Measure Z, a house built in 2027 that sells for $850,000 would include a tax of $3,400, to be paid by the buyer or seller. A city analysis estimates that the tax would net around $230,000 in added revenue each year for the city’s general fund and could grow to $3 million a year by 2050.
The proposed tax hike comes ahead of a couple major land sales, according to a City Council resolution that put the measure on the ballot.
One is a 527-acre private property where a 1,600-unit housing complex is planned and the other is the 900-acre Valero refinery property, which could eventually become a sprawling mix of commercial businesses and thousands of residential units after the facility completes closing in April 2027.
Ballot arguments in favor of Measure Z and Measure Y, filed by Benicia Mayor Steve Young, Vice Mayor Trevor Macenski and a handful of residents, say the tax increase protects most local homeowners. Among other exemptions, the tax increase wouldn’t apply to homes built before Jan. 1, 2027, that sell for under $2 million, and it wouldn’t apply to a property that changes hands within a family.
Opponents of the property transfer tax, including a real estate attorney and several retired utility and insurance executives, say that if approved, Measure Z will make it more difficult for Benicia residents to buy or sell homes, citing the impact of inflation on housing costs.
The same group said in a ballot argument that the establishment of a charter for the city is itself a “Trojan Horse.” The charter, they say, could be expanded any time the city wishes, opening the door to “major changes” to Benicia’s organizational structure.