Tuesday, June 11, 2013

Leece Vs. Mensinger On Business License Fees

For those of you who do not subscribe to the Orange County Register, last Wednesday, June 5th, two commentaries by Costa Mesa council members appeared side-by-side on page 6 in The Current, the Register's Costa Mesa/Newport Beach supplement that appears Monday through Friday.  If you missed it and DO subscribe to The Register, it is still available in the online archives of The Current.

Under the headline, "Keeping Costa Mesa Out of the Red", commentaries by councilwoman Wendy Leece and Mayor Pro Tem Steve Mensinger presented their views on the issue of possibly increasing the Business License Fees in response to a much-needed revenue source as the City faces a $12 million budget deficit - which will be discussed in the Study Session this afternoon beginning at 4:30 p.m. in City Council chambers.  You can also view it live on CMTV.

I cannot provide you with what Leece and Mensinger wrote word-for-word without violating The Register's copyright, but I will give you a few comments and my opinion of the issue.

Leece begins her commentary with this  question, "Which should be more binding, a pledge given in a campaign or the duty to serve Costa Mesa and make the best decision considering all the facts?"  She then goes on to explain that, in her view, the City Council should ask the Finance Advisory Committee to study the current Business License Fee structure and recommend alternatives that might generate new revenue for the city.  She explained, as many of us already know, that the Business License Fee structure in Costa Mesa has not changed since 1961.

Anticipating the council majority rejecting her suggestion, she wonders, "Why wouldn't the council majority want to have the committee analyze this?  Or have they already decided they know what is best without looking at all the facts?"  She then ends by saying, "Reminds me of the saying, 'I've made up my mind, don't confuse with the facts.'"

In fact, this item was considered as part of the Consent Calendar at the meeting on Tuesday, June 4th 2013.  The staff report on that item is HERE.  Leece "pulled" it for separate discussion and, as she tried to give her reasons for doing so Mayor Jim Righeimer attempted to quash her comments, stating that this was, "just a simple Consent Calendar item that only requires a yes or no vote."  Of course, he was way, way out of line by doing that.  He did allow public comments and Mensinger to comment and the item was passed on a 4-0 vote, with councilman Gary Monahan voting NO.  So, the Finance Advisory Committee WILL study this issue and report back to the council at some date in the future.

In his adjacent commentary Mensinger began with this observation, "As Calvin Coolidge once said, 'Collecting more taxes than is absolutely necessary is legalized robbery.'"  He then asks, "So what is necessary?"

His next statement is bizarre, so I'll include it verbatim.  He says, "The purpose of a business license is to determine whether a business is operating within the applicable federal, state and local laws.  It ascertains that businesses maintain a safe environment for the general public.  It also ensures the location is properly zoned for the activity to be conducted."  Actually, the purpose of the Business License Tax - that's what it is, a tax - is to generate revenue for the City, some of which MAY be used to regulate the businesses through fire, police, code enforcement and monitoring of use permits and the like.  The rest goes into the General Fund to provide for public safety and pave streets.

Mensinger, condescendingly uses the term "the usual suspects" when he implies that advocates of an increase in the Business License Fee are doing so "to pay for ever-increasing public pension costs".  Once again, he demonstrates the disdain he holds for the many residents who study the issues and take the time out of their busy lives to step up and speak to the council on them.  It's clear that he thinks he knows what's good for us, and we shouldn't dare to challenge his views.

He goes on to say that, before hiking fees, "we first should make sure that the current system works and that each Costa Mesa business has a license."  I fully agree with him on that issue.  Until the  City recently purchased software to aid in the analysis, there was virtually NO attempt to insure that (1) all businesses in the city are licensed and, (2) those that are licensed are paying proper fees.  Mensinger mentions the purchase of that software in his piece.  Our municipal code provides for penalties for unpaid taxes, so tracking down and billing scofflaws could result in a one-time revenue jump.

That, however, does NOT mean the Finance Advisory Committee shouldn't proceed with their assignment and do an analysis of our current structure and make recommendations to the City Council on whether they feel adjustments are in order, and how those adjustments should be made.

Mensinger closed his piece by stating, "We can all agree that Costa Mesa is a great place to do business. Let's keep it that way.", assuming a modest Business License Fee would change that perspective.  During her presentation Tuesday night Leece read, in part, a letter from Ed Fawcett, Director of the Costa Mesa Chamber of Commerce, that suggested we, in fact, should study the issue before placing it on the ballot.  Apparently Fawcett isn't too worried about the results of a study.

Daily Pilot columnist Jeffrey Harlan recently wrote a commentary that discussed this issue, HERE.  He addressed these two commentaries from his perspective as a Costa Mesa resident and professional land planner.  I think you'll find his observations interesting.

Last year, when the issue of increasing the Business License Fees came up, the staff presented the council with some options to consider, one of which spoke of a highest fee of $10,000!  That single comment, in my humble opinion as an observer of these meetings, drove a stake in the heart in the effort to consider alternatives to our current structure.  That number was pulled out of the air as an example, but the results were catastrophic.

I hope the members of the Finance Advisory Committee will do their homework and actually study this issue as directed by the council.  I'm sure they won't come up with anything quite as draconian as that "$10,000" number.

In my opinion, anyone who holds a business license in Costa Mesa should be required to pay at least a minimal fee, whether they have income or not.  It costs the city money to process the applications for renewal and those costs should be covered 100% by the fee.  That might mean a minimum fee of $25.00 - $50.00.  The committee can evaluate that.

Then, they could simply recommend quadrupling the remaining fee structure, with a maximum fee of $800, up from $200.  These fees have remained stagnant for more than a half-century and I doubt if those in the highest brackets - the Nordstrom's, Sax Fifth Avenue, Tiffany and the like - will balk at $800.  Such a modest change could generate more than $3 million in additional revenue for the city and allow us to hire more police officers and fully staff the fire department, for example.

I'm looking forward to seeing how this analysis proceeds, and what kind of recommendations the committee generates.  They have plenty of time for this project - an increase in the Business License Fee must appear on a General Election ballot and the first one available is November, 2014.

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Blogger just wondering... said...

I posted this under another topic, but it fits here better. There are at least several hundred UNLICENSED "landscape" businesses in town. Granted, most likely not legal immigrants, however, they should still be made to take out a license and pay the fee. Why should they be exempt? We are missing out on several thousands of dollars.

6/11/2013 05:08:00 PM  
Anonymous Wyatt Earp said...

I have to agree with Steve that any business that operates with a home base in Costa Mesa should pay the appropriate business license fee. However, he is clinically insane, irretrievably stupid or too tied to the OCGOP/Grover Norquist crowd to think Costa Mesa should continue to operate off any fee schedule from the early 1960's. Whatever business Steve is working for or has worked for would go bankrupt and fail miserably if that company worked off any kind of revenue model from the early 1960's. I suspect Steve is neither stupid or insane.

Further, does anyone really think any business would flee the city should the council/taxpayers increase the fees? Even half as high as Newport Beach levels? Of course they wouldn't leave. Heck, even prospective businesses would continue to settle here knowing that even at $800 the fees are half those in Newport Beach. Common sense.

6/11/2013 07:58:00 PM  
Anonymous 1961 prices on 2013, and CM is still rich said...

Wow what a moronic response from the chestbumper. Hes talking about having $150,000 code enforcement inspectors chase after $25.00 business license fees.

Lets take a look at how surrounding cities so it. You mean to tell me Newport charges high end retail giants only $200 a year? Does Irvine charge their high end stores at the Spectrum $200? No. Have they increased their fees since 1961? Yes. Why? Because they're not moronically stupid. Lets remember Righeimer and Mensinger are both failed business owners. Theyre only at Costa Mesa to play politics.

They want to act like a business when its convenient like calling a city manager a CEO. Folks, do we know of any business that hasnt raised their fees since 1961?

Come on...lets get real already.

6/11/2013 08:43:00 PM  
Blogger zz said...

There are professional persons who audit businesses to determine whether they are paying the proper amount of business tax. They take as their fee a percentage of whatever amount they recover above what the business paid. So enforcement would not be an expense to the city. Of course, the city would have to set the tax at a level that would make it worth the time and effort of such a professional.

6/11/2013 10:40:00 PM  
Anonymous why the hate for biz? said...

comments posted: FAILURE

6/12/2013 06:37:00 AM  
Anonymous Conned-Stituent said...

The business license tax is currently $200 for most CM companies. It's been that way since 1961, or 1985 depending on the various City Staff Reports.

Does Council Member Mensinger know that $200 in 1961 is equal to $1540.95 in 2013 according to inflationcalculator.com which is a 4% inflation rate over the past 52 years.

Apparently, every long-time CM business operator such as lucrative South Coast Plaza anchors Nordstrom, Saks, Macy's, etc. have actually been paying less and less over the years because this nominal tax has never been adjusted for "inflation".

Every past City Council has denied the CM voters the opportunity to decide what's best for their city's financial stability, as well as sustainability. It's time to let us, your constituents, vote on a NOMINAL increase to the business license tax once and for all!

Also, just a few years ago, the CM voters agreed that a nominal increase to the TOT tax was necessary. And that specific "tax increase" did not make any hotel owners "leave town". It actually provided for a significant increase of their CM Brand promotions. And it has directly increased their revenues over the past few years during the current "Great Recession". Plus, the City has gained extra revenue from this tax, so that it can continue to sustain vital city services to it's residents.

6/12/2013 12:08:00 PM  
Anonymous Get OUT!!!! said...

Im so angry I cant even type.

The carpetbaggers on the council need to get real, but most importantly, GET OUT!!!

Stop using our city as a political stepping stone!

6/12/2013 01:34:00 PM  
Anonymous anti mall said...

I say forget the huge amounts of sales tax south coast plaza gives us. we can get MORE! let's stick it to the capitalists, don't go after the gardeners illegally working without licenses. get the ones we know about. if someone is hiding then they must need the money, leave them alone. get Nordstrom especially. they pay 75 bucks in Irvine. lol

6/12/2013 07:11:00 PM  
Anonymous do i look happy? said...

I am so angry I cannot even tell you how I feel.

6/12/2013 07:12:00 PM  
Anonymous give me your money to redistribute said...

so, no councils in decades thought it was necessary to raise the license fees and NOW, all of a sudden, it is time to stick it businesses because the economy shows a little uptick?
Or is this for a Leece legacy? She has none after more than 6 years. Is this for her ? A tax raise?
Just get the ones that are not paying the current tax first.
We have not needed a raise this long, we don't need it now.

6/13/2013 07:05:00 AM  
Anonymous How stupid can camp piggy be?! said...

So camp piggys response is to have $150.000 code enf guys go after $25 gardner licenses? Do they know how stupid they sound?

6/13/2013 10:50:00 PM  

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