Wednesday, July 11, 2012

Business License Tax Increase Still In Limbo

At the Study Session Tuesday night the Costa Mesa City Council - minus Gary Monahan, who missed his third recent meeting tonight -  spent 90 minutes hearing from a half-dozen concerned residents and Finance and Information Technology Director Bobby Young discuss the possible options for placing an increase in the Business License Tax on the November ballot.  The end result was for this issue to be discussed again at the next council meeting on July 17th - next week.

Young presented much of the information contained in the staff report, HERE, providing the council with several potential options.  Mayor Pro Tem Jim Righeimer, in a warm-up for the next meeting in a couple hours, attempted to drive the discussion.  At one point, as other council members were engaging Young in a discussion of some points he had made, Righeimer interrupted the conversation and asked Mayor Eric Bever to "move the discussion along".  Of course, very shortly thereafter HE proceeded to dominate the dais with HIS ideas - sound familiar?

Bever made one of the more curious statements last night.  He asked if "we had identified the purpose for this tax?"  For a guy who fancies himself some kind of a financial guru, this seemed like a very peculiar comment. 
I found myself wanting to yell out - "To raise more revenue, dummy!" - but I didn't.  After having been party to the struggles for the past seven years to balance the municipal budget, and having participated in gutting the city staff to find savings, somehow finding additional funding sources seemed to have escaped him. 

 One of Righeimer's ideas was to get rid of the Business License Tax altogether, citing our inability to properly police compliance and difficulty collecting the fees.  I guess he's ready to blow off around $800,000 in annual revenue, not to mention the potential increases that might be derived from an increase.  These fees have not been adjusted since 1985!

Although Young was ready and able to respond to the council's options to his proposals - he had the spreadsheet all fired up and ready to go - none of them seemed interested in playing "plug and play" with the numbers to see if they could cobble together an acceptable solution.

Instead, Young was sent off with marching orders to ascertain how Costa Mesa might implement a plan similar to that of Newport Beach, which counts heads, not gross sales, for their calculations.  This was Righeimer's idea.  So, it's back to the old drawing board for Young, his staff and the consultant he has working for him right now.

Most residents who spoke were in favor of some kind of an increase, but two resident business owners, Larry Weichmann and John Hawley, expressed concern for ANY kind of tax increase.  Of interest to me was the fact that no representatives of business organizations - the Chamber of Commerce or the Convention and Visitors Bureau - were present to make their views known.  In fact, there was an amazing lack of interest generally on this issue.

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Blogger Larry Weichman said...

Geoff, I could not speak on behalf of the Chamber last night as we are taking a vote this week to either back a slight increase or no increase at all. You know where I stand, I will be attempting to rally all those that will be taxed to show up at the next meeting.
Larry Weichman
Costa Mesa business owner & Chairman of the Costa Mesa Chamber of Commerce

7/11/2012 04:19:00 AM  
Anonymous president of board said...

You say Larry Weichman was there but no representative from the Chamber of Commerce? Hmm...Larry is ....oh well, you don't attend enought Chamber events obviously.

7/11/2012 07:48:00 AM  
Blogger The Pot Stirrer said...

Actually, per the above, Larry was there and made it clear that he was NOT speaking on behalf of The Chamber - yet. Hence, NO voice from The Chamber, smart aleck.

7/11/2012 08:12:00 AM  
Anonymous Raise Revenues liks a flag said...

This is a great opportunity to increase revenues. We need to increase revenues. We need raises. We need to be competitive and hire only the best.

This Council needs to raise revenues so they can Cancel the Layoffs?

We need to elect leaders that will raise revenues, so Staff and Public Safety can be well compensated.

Did you know that Nordstrom only pays $200 in Business License.

We are putting forward suggestions to raise revenues. It is not as much a tax as it is a way to raise revenues.

7/11/2012 09:12:00 AM  
Anonymous Mary Ann O'Connell said...

I own and operate a small business in the city and would be happy to pay more in business tax if it would keep this city as a great place to live and work - and attract more people who want to do business here.

7/11/2012 09:40:00 AM  
Anonymous Tom Egan said...

From the looks of things, there is no way these councilmen will vote to increase taxes.

First, probably all four of them have signed the Grover Norquist Pledge never to raise taxes, as they all appear to want to stay in politics. (Republican politicians, nationwide, who have broken the Pledge have suffered political death, courtesy of the Norquist/GOP machine.)

Second, the last thing these councilmen want to do is save city jobs. They DON'T want to find any more sources of revenue. Since Righeimer took over the Council, every act has been to reduce the number of public workers in order to hire private workers. Remember the layoff notices for over half the city employees, issued before they had any idea of which, if any, services would make sense to be outsourced? Reading the tea leaves, lots of employees fled to other cities, taking with them precious corporate memory and training.

Third, these councilmen appear to want to drive the city into bankruptcy so they can further screw employees by repudiating contracts. Righeimer and McCarthy have long touted the idea that a city should be run like a business. Well, a familiar tool that businesses use to “manage” their finances is bankruptcy. Bankruptcy is one of the tools that developers, especially, use frequently. Hint: Righeimer and Mensinger are developers.

(btw, have you noticed that it’s the CHARTER cities (Stockton, San Bernardino) that are going bankrupt? Hmmmmmmm!)

Fourth, these councilmen manufactured a fiscal crisis to have a cover story for all their slashing and burning. Their favorite mantra was the “unfunded pension liabilities” that “Your kids and my kids are going to be paying for well into the future.” But have they been paying off those liabilities with all the money they have accrued by cutting programs (such as the ABLE helicopter program) and people? Not a dime. Besides, Righeimer has lately been saying publicly that money is not a problem; that there’s plenty of money from South Coast Plaza and other businesses. So much for the supposed “fiscal crisis.”

Fifth, they are spending all the seed money for matching grants that Allan Roeder and staff patiently built up over many years. Spending for what? For a flashy splurge on potholes and cracked sidewalks. (You can tell when a politician is up to something when he spends your tax money on highly visible projects that aren’t high priority.) This means Costa Mesa won’t have the matching funds in the future to win grants from County, State, etc. for infrastructure projects. Then the councilmen will be able to add another log to the fire and say “Look, folks, we don’t have enough money to fix our streets, so we need to fire some more employees.”

The list goes on, but just one more: The fact that there was only one businessman testifying against the increase in business license fee tells me it’s already a non-starter. The fix is in.

Bottom line: the study session was just kabuki theater; highly stylized song and dance, yes, but fictional to the core. It was a bone thrown to citizens who want to see their council working to find more revenue in order to keep Costa Mesa as it used to be.

Bottom bottom line: this is more evidence that these councilmen are intent on applying “creative destruction” to our city. Creative destruction may be healthy for the business world, but it’s inappropriate for a city. Businesses care about profit; cities care about service.

7/11/2012 12:16:00 PM  
Anonymous Marshall Krupp said...

I believe the City is moving in the right direction in considering a business license fee that generates revenues comparable to the impacts of the purpose of the business license. It should not be an arbitrary fee, unilaterally created by the City Council, but rather one that is fair and developed in collaboration with the business community. In discussing the fee, Mr. Righeimer stated “What has impacts is employees, not revenue.” That is an incorrect interpretation of what the purpose of a business license is. The common understanding of cities is the purpose of a business license fee includes determining if businesses are operating within applicable laws and ordinances; maintaining safe environments for the general public and employees; making sure that zoning/building codes are enforced; maintaining a list/database of commercial activities for public access; ensuring that sales tax is reported and remitted equitably and properly; and providing additional protection to the citizens and visitors from fraud and misrepresentation in transactions, etc. In essence, it is revenue of the City to offset costs associated with such City services. Legally this is described as “nexus” . . . there is a reasonable relationship between the fee and the costs. The larger the business is in terms of the various purposes of the fee, the greater the cost, the greater the fee may need to be. So number of employees may be only one factor when considering the costs of City services. In implementing a fee that does not pay for the impact costs, the additional burden is directly placed on the backs of the citizens of the City through fewer services and facilities or the need for additional revenue to balance the budget. What does that say about fairness to all (residential and commercial) who benefit from the services and facilities of the City? What is needed is a professional independent study that correlates the impact costs of the purposes of a business license fee with the various business types and sizes in the Community. Making decisions by shooting from the hip does not serve the City, the business community and the citizens.

Marshall Krupp, Candidate for Costa Mesa City Council

7/12/2012 06:37:00 AM  

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