As Laguna Beach struggles with significant tourism impacts, city officials and local stakeholders are working together to consider ways to offset some of the associated costs.
Proposals to increase the transient accommodations tax and increase the business license tax were presented to the City Council Tuesday night, but the committee did not act on either.
A two-thirds majority of the City Council was needed to put either tax before voters in November, and city staff set an Aug. 9 deadline to submit ballot language and an unbiased analysis from the city attorney.
The proposal also included increasing the room tax, also known as the hotel occupancy tax, from 12% to 13%. A 1% increase could bring in an additional $1.75 million in revenue in the first year, but there are concerns about hotels staying competitive, according to a staff report.
As for business license taxes, city staff said the structure of such taxes has not changed significantly since 1996. At a July 11 City Hall meeting, it became clear that local residents are interested in focusing on bars and restaurants to bring in more revenue from tourists.
After some discussion, there wasn’t enough support for either tax among the five-member board, so the items were effectively abandoned.
The City Council isn’t scheduled to meet until Aug. 13, meaning the tax under consideration likely won’t be on the ballot until at least November 2026. Such measures can only be put on the ballot in a general election.
Some City Council members refrained from supporting the business license tax because of the additional cost to residents.
“We’re trying to get money back from tourists, and then to tax residents, we’re taxing residents on tourist issues, and that’s one thing we want to avoid,” Mayor Sue Kemp said. “That’s one of the things that bothers me. [that] We don’t have an easy way to raise a lot of money.”
Councilman Bob Whalen said he would like to see a business license tax levied on voters, adding that the city needs to keep its options open in terms of revenue generation.
“We’re currently in the process of developing a facilities master plan and will have a ton of numbers coming back on the facilities needs,” Whalen said. “We’ve heard from the community that they want more policing, and that costs money.” [for] We need people to enforce this. I think it’s wrong for the city council to say that increasing parking fees is the only avenue they should pursue to collect more money from visitors.”
Instead of acting on the proposed resolution, the City Council decided to continue with its public education approach. A task force consisting of Councilman Mark Orgill and Councilman Whalen will continue to explore options to address the financial challenges the city faces as it seeks to maintain services while investing in emergency preparedness, public safety programs and infrastructure improvements.
The task force was formed Feb. 27, and appointed council members worked with staff to gauge whether residents would support increases to sales taxes, hotel taxes and business license taxes.
Orgill saw further education and town hall meetings as a way to garner potential support for future measures.
“I think it’s an education issue,” Orgill said. “I know this whole idea might be two years away, but I think it’s worth waiting, educating, engaging the community, and having them have a say in this whole effort.”
“I think it’s important to understand that at the end of the day, we want to succeed, so if this bill is on the ballot, we want it to pass.”
