In response to pleas from the business community, the council shot down the potential ballot measures that would have asked voters to consider possible tax increases for the transient occupancy tax and the business license fee on the November ballot. In a 4-3 vote, Mayor Julia Miller, Vice Mayor Tim Risch and council members Fred Fowler and John Howe voted against raising either tax at a special council meeting on August 6.

The taxes up for discussion were both directly related to the Sunnyvale business community, who asked the council not to raise taxes without further study.

Tom Bryant, of Network Appliance in Sunnyvale, said raising the hotel occupancy tax (same as "transient occupancy tax") to the proposed 10% would adversely affect his business. "It's the larger businesses in this city that are the predominant payers of this tax. Network Appliance is one of the larger hotel consumers in Sunnyvale." Bryant estimates that the company spends $20,000 to $30,000 on the hotel occupancy tax per year.

The company would have to recover that money in one way or another, possibly by hiring one less person or conducting less business in Sunnyvale, Bryant said.

Suzi Blackman, president and CEO of the Sunnyvale Chamber of Commerce, said that the council should consider the overall effect that raising the two taxes would have on businesses. "Fees have just been increased across the board. The perception that businesses in Sunnyvale are somehow not paying their fair share is a disservice to the 8,000-plus businesses in Sunnyvale," said Blackman.

Leslie Lawton, owner of a small business called "We Produce," a word-processing and transcription service in Sunnyvale, said she has seen her business decline by half. "My office rent and business insurance has increased. But I've never felt comfortable passing [the increases] onto my clients," Lawton said. Lawton recommended that the council consider an incremental increase over the years.

The proposed measure would have raised the business license fee by 500 percent for small-business owners and 3000 percent for large-business owners.

However, many still consider the current business license fees to be outdated. Sunnyvale's current business license tax assesses most business owners anywhere from $10 to $300.

The proposed business license fee would have cost $30-$50 for small-business owners and a maximum of $9,500 for large businesses.

Council member Jack Walker said the business license fee increases were fair and long overdue.

Risch, who voted against both tax measures, said the city needed to find a solution that does not rely on businesses to solve the tax problem.

Two months ago the city council created a 17-member ad hoc advisory committee to examine increasing existing or establishing new local taxes. The committee met seven times during a two-month period and ultimately recommended that the city council should not consider raising existing local taxes or establishing new local taxes.

The special election to place the measures on the November ballot would have cost the city up to $27,000.

City staff estimated that the business license fee and the transient occupancy tax increases would have netted the city $830,000 and $900,000 per year, respectively.