Carmel council discusses sales‑tax and transient‑occupancy tax measures; directs drafting and legal review

The Carmel-by-the-Sea City Council spent substantial time on May 4 discussing two potential revenue measures to help address the city’s infrastructure needs: a 0.375 percentage‑point increase to the transactions and use tax (TUT) and a 2% increase to the transient occupancy tax (TOT).

City attorney Brian reviewed the draft TUT ballot question and legal steps required to place a general tax on the November 3, 2026 ballot, and noted that a council resolution requires four affirmative votes to proceed. He read draft ballot language that described raising the TUT rate by 0.375% to a total of 1.875% and removing the 20‑year sunset provision. Brian said the total 1.875% rate was illustrated in staff materials with a larger aggregate figure and that the 0.375 increment would generate roughly $1.9 million annually in the city’s staff estimate.

Council members asked whether other countywide agencies could “use up” the remaining tax increment; Brian said a countywide or special‑district measure could preclude the city from using that increment if passed first, prompting discussion of “use‑it‑or‑lose‑it” timing considerations. Several council members said they prefer to continue both measures in parallel through June so staff can refine language and obtain a state review; others emphasized the risk of ballot crowding and urged clear, parallel phrasing so voters can compare increments.

The council voted to authorize staff to submit the draft sales‑tax ordinance to the California Department of Tax and Fee Administration for review and directed the city attorney to work with Council Members Delves and Bueter on final ballot question language and the 300‑word pro arguments, with the item to return for possible adoption at the June 2 council meeting. The council gave parallel direction on the TOT item and indicated the matter would be teed up for action in June if council chooses to move forward.