Laguna Beach city leaders continue to grapple how best to tax visitors to match their impact on the beachside community.
The council has until August 9 to submit ballot text.
During a town hall meeting earlier this month, residents focused less on hotel guests but rather more on day-trippers, people who visit their beaches or restaurants and bars.
“The clear message that came through from the emails and town hall is the desire to get more money from the people that come here daily,” said Councilman Bob Whalen at this week’s city council meeting.
“The hotel guests, we’re already getting $21 million dollars from that group. There is no perfect vehicle to get money from the day-trippers. I think putting a tax on bars and restaurants is the most efficient way of capturing money from visitors.”
According to a staff presentation during the meeting, the hotel tax last changed in 2016 when it increased from 10% to 12%. The current rate being proposed would be an increase of 1% for the upcoming election. The staff report reads that the revenue from increasing the tax is an estimated $1,750,000 annually.
[Read: Laguna Beach Considers Asking Voters to Increase Hotel Tax]
A presentation during the council meeting showed that the city is looking for new revenue sources to cover rising costs of things like maintenance and construction costs and to boost programs like wildfire mitigation, affordable senior housing and improvements to facility and infrastructure.
The proposed fiscal year budget for 2024-2025 estimates operating revenue at $145.6 million but a proposed operating and capital appropriation at an estimated $1 million less.
The other revenue option being explored is an increase in business permit taxes, a burden restaurateurs are saying would end up hurting their businesses.
Cary Redfearn, owner of Lumberyard restaurant, said he lowered prices before the summer and that most of his business comes from locals of Laguna.
“The last thing I want to do is raise prices,” Redfearn said at the meeting. “For me to add an extra charge either at the bottom as a service fee or to raise my prices in order to pay for this, which is substantial, is something I just don’t want to have to do.”
Businesses are required to renew their license every year. There are different categories of types of businesses which affect how they’re taxed. According to a staff report, these taxes currently add up to about $1 million in revenue annually.
The business permit tax has not been changed since 1996.
Other public commenters at the city council meeting argued that they wanted hard data showing who the patrons were with some saying it is mostly people from out of town. Mayor Sue Kempf said she frequents the restaurant and that Redfearn knows his patrons.
“I’d like to get money purely from the tourists,” Kempf said.
Councilman Alex Rounaghi, who was not in favor of the tax, said the local spots are what made Laguna unique and if they wanted to continue to see local businesses they shouldn’t add taxes to them.
“We spent a lot of time looking at alternatives and we’ve boiled it down to what came back here tonight,” Whalen said. “Overall I think it’s been an interesting process to go through and I think a productive one in terms of getting a lot of input from the community.”
Gigi Gradillas is a Voice of OC Tracy Wood Reporting Fellow. Contact her at gigi.gradillas@gmail.com or on Twitter @gigigradillas.
•••
Can you support Voice of OC with a donation?
You obviously care about local news and value good journalism here in Orange County. With your support, we can bring you more stories like these.
