Opinion: What’s City Council’s Top Priority?

By John Thomas

When asked about their top priorities, Laguna Beach City Councilmembers almost always say public safety is at the top. Yet, at the July 23 City Council meeting two councilmembers made it clear their top priority is protecting bar and restaurant profits. At that meeting, for two councilmembers, protecting restaurants and their profits was more important than generating new revenue largely from day-trippers whose negative impacts on the city budget are massive. So, we continue to be short of funds that could help our city protect the community from wildfires, fund more police, fire and marine safety personnel to protect everyone and enforce our laws, be better prepared for earthquakes and address many other resident needs.

Faced with financial demands growing faster than city revenue, council subcommittee of Bob Whalen and Mark Orgill had been working with the city manager and some citizens to identify ways to generate additional income. Knowing for years that the revenue the city receives from visitors falls at least $20 million per year short of covering the added city costs due to all those visitors, the subcommittee proposed a plan that would involve Laguna’s bars and restaurants collecting a fee for the city that would generate significant revenue from those same visitors.

The subcommittee proposed a plan to modify the city business license tax rate structure for bars and restaurants, with the revised tax passed through to their customers. Only 4% of Laguna visitors stay in Laguna hotels, and they pay over $20 million per year in hotel tax, so they more than carry their weight. However, the other 95% of visitors do not stay in Laguna hotels, and that very large group (mostly day-trippers) currently contributes little toward the huge costs they create for the city. Data indicate that about 80% of total Laguna bar and restaurant revenue is attributable to visitors, so the bars and restaurants are an excellent opportunity for the city to connect a revenue source with many of the millions of visitors who are not currently contributing much at all to cover the costs they create. A tax amounting to as little as 3% of a restaurant bill, added to the bottom of the customer’s bill like an extra sales tax, could generate over $10 million per year for the city. Those attending a recent town hall indicated overwhelming support for a fee structure like this that would generate substantial funds from these day-trippers.

Due to California laws, implementing this fee requires a measure on the November ballot, but this can only happen if four of the five councilmembers allow the citizens to vote. Then, only if most of those voting in November agree to the measure, would it become law. The council discussion centered on a tax that can pass the costs through to the customers and thus would not reduce the profits of the bars and restaurants. It would be no different for the restaurants than if the city or state had increased sales tax and the restaurants simply collected a higher sales tax.

Councilmember Bob Whalen pushed hard to persuade council to allow voters to decide if they supported this concept, and Councilmember George Weiss supported it. However, two councilmembers derailed the subcommittee’s effort to put it on the ballot because they expressed more concern about hurting bar and restaurant profits than prioritizing the needs of the residents currently paying the bill for 95% of the visitors. The arguments made by the two councilmembers included statements like: “…if we want to be a town where we don’t have cool local restaurants that’s one thing…” After hearing the opinion of one restaurant owner, the second councilmember simply said, “You don’t need the numbers” – a statement strikingly similar to “my mind’s made up, don’t confuse me with the facts.” Orgill counted noses and concluded that we should spend two more years discussing how we might generate substantial revenue from visitors.

The two naysayers’ arguments ignored two critical points that should have satisfied those concerns: A new state law allows bars and restaurants to simply add a tax like this at the bottom of the bill, so the tax would not affect menu prices or profits. Also, the proposed ordinance allows the council, at any time, for any reason, and without another citizen vote, to reduce, defer, or even fully eliminate the tax if three councilmembers conclude that the effects of the tax are too adverse for the bars and restaurants.

It’s one thing for two councilmembers to prioritize bar and restaurant profits over residents’ needs and taxpayer benefits, but what’s even worse is that these two councilmembers denied Laguna’s voters the opportunity to consider the proposal and vote on the measure.

We are a representative democracy. When you elect someone, they can do almost anything they want. This fall, the two who prevented us from voting are grooming a third vote – a majority. You might want to vote for someone who asks, first and foremost, what is best for our residents, not what is best for bar and restaurant owners and developers.

John is a long-time Laguna Beach resident, business owner, former chair of the Laguna Beach Audit Review & Measure LL Oversight Committee, board member of the South Laguna Civic Association, and member of the South Laguna Water/Sewer Advisory Committee.