Carmel council sends two tax measures to November ballot after heated debate: 2% TOT increase and 0.375% sales tax increase

The Carmel‑by‑the‑Sea City Council voted in June to place two separate tax measures on the Nov. 3, 2026 municipal ballot: a 2 percentage‑point increase to the transient‑occupancy tax (TOT) — raising the city’s rate from 10% to 12% — and a 0.375 percentage‑point increase to the city’s local share of the transaction‑use (sales) tax (from 1.5% to 1.875%).

The measures will appear with voter‑approved ballot language that staff prepared in two drafting options: a short, general‑purpose wording and a second wording that lists example uses and includes an independent‑audit provision. For both measures the council adopted the example‑plus‑'general purposes' phrasing and added language rounding the revenue estimates and an audit clause where appropriate.

Councilors and residents debated the merits of one measure versus both. Supporters said the city must act now to capture taxing authority that would otherwise be available to county‑level measures in future cycles — the so‑called "use it or lose it" risk — and to accelerate capital repairs, shoreline work and wildfire preparedness. "Raising this tax paid by non‑residents will help," Council Member Hans said during debate, while Mayor Prom Delves urged that the city keep locally generated tax authority.

Opponents and some business leaders warned that a TOT increase specifically targets the hospitality industry and could harm local lodging businesses at a time of market flux. Hoteliers urged caution and urged a careful review of rates and visitor demand; Stillwell Hotel owner Mark Stillwell argued the sales tax is a broader, less‑concentrated approach and warned that a double‑measure approach risks voter rejection of both.

After several hours of public comment — including a resident intercept survey presented to council that showed majority favor for either or both measures among a small sample of residents — councilors authorized staff to finalize option‑two ballot language and to include the mayor and all council members as authorized authors of any rebuttal argument that may be needed during argument deadlines. The sales‑tax resolution passed 4–1 (one member opposed); the TOT resolution was adopted as presented (council recorded votes during the session). Staff will file the language with Monterey County Elections and coordinate deadlines for candidate and ballot arguments.

Councilors stressed the limits on city staff political activity after measures are certified: city resources may be used only for neutral administration and dissemination of factual information; any advocacy will need to be organized and funded outside the city’s official channels. Separately, staff noted that if either measure fails, the council may revisit options for revenue, including the possibility of future ballot measures.