The July 11 City town hall meeting to discuss methods for increasing city revenue was a respectful, full-house, spirited exchange between the public and city manager Dave Kiff, with councilmembers Mark Orgill and Bob Whalen in attendance.
Possible solutions are being sought for ballot initiatives for the next election. This was somewhat of a warm-up act for the upcoming July 23 City Council meeting, when funding solutions may be selected for this election’s ballot (your attendance is urged).
This event gave city officials a chance to hear the public’s feedback again. The city’s presentation only wanted to focus on increasing the TOT/bed tax and increasing the business license fees (mostly for bars and restaurants which are paying the same as small retailers, yet reaping vastly greater profits) – surprising because, in previous public discussions, residents made it abundantly clear the primary goal is to make day-trippers pay for their own expenses.
And that’s where this public discussion immediately returned.
There was a near-universal decrying about far too many day visitors (over-tourism) who are not helping pay for the roughly $20 million that taxpayers are shelling out annually for visitor services. Here are the possible solutions discussed:
-Increase the tax on bar and restaurant bills. Escalate these increases over several years, roughly from 1 to 5%. This would be a pass-along tax customers paid that cost bars and restaurants nothing.
-Increase business license fees on restaurants and bars. They’re paying the same now as small retailers, yet they’re making millions more.
-Terminate the $1.7 million annual payment to Visit Laguna. Cease all promotional efforts. We already have far too many visitors, and social media is critically compounding the problem.
-Curtail the purchase of Laguna Canyon Road for $150 million, the purchase of Coast Highway for $336 million, the building of a new parking structure estimated at $13 million (which would undoubtedly increase tourism), and do not pursue undergrounding Laguna Canyon. Instead, harden power poles against traffic crashes, without the huge expense and liability of ownership.
-Reallocate some of the millions of city dollars being grandfathered in to fund schools, as attendance has dropped 30% in the past five years.
-Cut select city staff personnel—way too many employees have been added over the last five years, yet our population has not grown.
-Put crimps on out-of-control pensions.
-Quit farming out so much city employee work to outside consultants.
-Push The California Coastal Commission for more paid parking (residents get a pass).
-Charge $1 to use city trolleys and Laguna Local taxi service.
-Charge commercial building owners a fee or tax for long-term vacancies, as they deplete sales taxes and diminish sales for adjoining businesses.
-Enforce and ticket for already established civic violations, including smoking, littering, beach pop-ups, unleashed dogs, loud vehicles, and parking (meter violations and parking in no parking areas).
Write to your councilmembers at citycouncil@lagunabeachcity.net and City Clerk amckay@lagunabeachcity.net. Attend the July 23 City Council meeting when the Council may select its funding choice(s) to put on the next election’s ballot.
Jerome Pudwill, Laguna Beach
—–“Cut select city staff personnel—way too many employees have been added over the last five years, yet our population has not grown.”
As I warned everyone several years ago, the acquisition of County facilities in So Lag might have seemed like valuable assets but came with liabilities. Local control (like the Canyon Road and/or PCH) brings major expenditures….this City used to have 3, 4, $5 million surplus, now can’t pay its bills yet wants to increase debt service indefinitely!
Including staff, municipal services, etc. My warnings went unheeded (the future expenses were manifold as I pointed out), did you and/or yours object back then? There’s oodles more to come, wait and see. No we didn’t add bodies, we added buddies who leave us with the “dine & dash” tab.
—-“Quit farming out so much city employee work to outside consultants.”
Jerome, are you asleep at the wheel? We don’t have the in-house expertise, that becomes glaringly obvious when projects needing robust CEQA review, CDP, MS4 Permits are progressed here as we’re the empowered/delefated local lead agency for all 3 processes. It’s what I do for a living, or more like scratching out one in a place, after 52 years, that I can no longer afford.
I’d include the “anointment dynamic,” i.e., that DRB & PC are political patronage, nepotistic anointees, extensions of a majority City Council agenda.
As I deal with many other municipalities & the County, I can share that this saying applies to all: “The mediocre are always at their best, they never let you down.”
The incompetent or the “go along to get along” not only are retained, but get promoted and an automatic 5% performance bonus @ the CM’s discretion. Including, in a conflict of interest, the CM. It’s crazy, all they need do is genuflect, kow tow and toe the party line. OTOH, pay peanuts, get monkeys.
—-“Push The California Coastal Commission for more paid parking (residents get a pass).”
Per my comments going back at least a decade: (A) A token, ministerial fee of say $20/resident/car/year, for City administrative costs. For ALL residents, renters and/or property owners. We’re already paying our fair share just living here, why the triple digit permits? We’re subsiding the effects of tourism that way too. (B) You only need provide proof of residency, renewals can be done remotely online via AI.
—–“Charge $1 to use city trolleys….” Ixnay, no way, nada, zilch, etc.. Locals flash legally renewed CDL, USPS mail showing the zip code, or alternative ID (like the receipt from their resident’s pass renewal program, kept in hard copy or cell phone), the one I described above? No charge, including very-to-extremely low income, like those senior citizens, dishwashers and maids? Employers can sponsor them
Holding your breath or going into City Council, a realistic and equitable resolution by our leadership?
“Picture anybody growing up so stupid he didn’t know that hope is just another phase you’ll grow out of.”
― Chuck Palahniuk, “Choke”
Jerome,
I agree with many things you have written, but need to clarify a few things that are not accurate.
A) The majority of the day trippers that are drag on our system and resources do not go to restaurants and bars. They do not pay for parking, bring in their ice chests full of their own food and drinks and leave the trash on the beach. Raising attacks on restaurants and bars will not be passed to the customers. Restaurants and bars are already hurting and will stomach the tax in order to not deter business.
B) If restaurants and bars were making millions of dollars, there wouldn’t be so many of them that closed down. While you can probably raise business fees a little, It is a false statement at restaurants are making millions and that this is somehow a source of new revenue for the city.
The farming out of work to consultants is not something that most city staff can do. They are not structural engineers or builders. This is work that has to be done by consultants. However, The city should farm out for services such as parking enforcement. These employees are the most laziest folks on the face of the earth and do very little while getting paid good salaries and pension for life. A commercial company would do a much better job and bring in $20,000 more to the city a month.
I also agree with you on the coastal commission. The city needs to stop wimping out to the coastal commission and making excuses why they can’t do anything. If Huntington Beach can charge $35 or more a day for beach parking, so can Laguna.
Enforcing other violations such as speeding and loud exhausts would be great. Instead we get press releases from the police chief bragging how over 3 days his parking team managed to give six tickets to people with loud exhausts. They should be giving out six tickets an hour every weekend.
But while certain members of City Council enjoy their time attending parties and having cocktails with department heads, I doubt anything will ever be changed.
As i understand it:
A comparison of the amount of spending by visitors at Laguna Beach restaurants as reported in the 2016 report prepared by Destination Analysts for Visit Laguna Beach compared to total Laguna Beach restaurant revenue in the same time period according to the Laguna Beach City budget, it indicates that 81.44% of Laguna Beach Restaurant revenue is attributable to visitors.
In more detail:
1. A 2016 report prepared by Destination Analysts for Visit Laguna Beach estimates that direct spending in Laguna Beach restaurants from visitors in 2016 was $208,634,000
2. Total Laguna Beach Sales Tax revenue based on the City Budget for Fiscal Years 2015-2016 and 2016-2017 average: $5,450,500
3. The budget document also states that restaurants generated 47% of all Laguna Beach sales tax revenue during that time period.
4. The math is: 47% X $5,450,500 = $2,561,735 citywide restaurant sales tax for that time period
5. City sales tax of $2,561,735 is 1% of $256,173,500 of citywide restaurant sales.
6. The restaurant revenue of $208,634,000 reported in the Destination Analysts report as visitor spending at restaurants divided by total Laguna Beach Sales Tax from restaurants of $256,173,500 = 81.44%.
7. Therefore – Laguna Beach Restaurant Gross revenue is attributable 81.44% to visitors and the remaining 18.56% to residents
A study done in 2016 for Visit Laguna estimated that in that year, restaurant revenue due to visitors was about $208,000,000.
That was about 80% of total bar and restaurant revenue citywide for that year according to city budget data. And that study also estimated that 68.9% of visitors dined in a restaurant or went to a bar.
Another City study led to a similar conclusion about the 80/20 split. So, even though day-trippers may not spend much individually, that study suggested that the 68.9% collectively represented 80% of total bar and restaurant business.
Five percent of $208,634,000 would have generated $10,431,700 about half of what taxpayers are currently having to shell out for visitor services.
Also note that this would not cost restaurants or bars a single penny – this revenue would be paid by customers. And when they’re paying $20 for a cocktail, it seems pretty slim that they’re going to cease coming to Laguna for an extra 1%-5% on that tab.
Restaurant failures can be attributed to many things – location, overpricing, too much competition from established competition, mismanagement, high rents, etc. As shown above, cumulatively, the successful restaurants are doing a bang-up business. And 80% of that business is coming from out-of-towners.
Contrary to your comments, a very small tax on food and beverage tabs is not an “attack on restaurants” – it’s a clawback of visitor expenses paid by customers, with the proceeds being sent directly to the City at no expense to the restaurants.
Thanks for citing some stats. That is helpful.
Here’s the problem with those stats. They are no different than the surveys that the city claimed they put out about the promenade, which seemed to provide them with the responses they wanted versus the responses that could have been provided if they sent out the survey properly.
How specifically did they gather these statistics? I don’t know any restaurants that were asked to take part in a survey.
Most important, the day trippers that trash the beaches and require lifeguards to save them are not the same day trippers that come out and support the restaurants. Those folks that support the restaurants are regional and live in the surrounding towns of Laguna Beach. They are not draining resources from the city.
So if you are going to pass a tax on restaurants thinking that you are trying to claw back revenue from day trippers, your penalizing the wrong day trippers as well as restaurants that already raised their menu prices because of inflation and cannot justify doing it again. So yes, this tax will hurt restaurants.
Do you really believe the report from visit Laguna? If so, why this time?
Finally, do you have a p&l sheet from a few local restaurants that you can show? Why are you believing that there are restaurants in Laguna that are making millions? There are some very great restaurants that were in business for more than 30 years also did a bang up job, but can’t afford to do business in Laguna Beach anymore. The cost of rent for some of these locations is more than 25,000 a month as is currently listed for Madison square garden. On top of that, it is not sustainable to pay employees more than $16 an hour and have a dozen employees working and evening. That eats away all the profits. Plus payroll taxes on top of that. It is naive to think that restaurants in Laguna are making millions.
Show us your stats from a bona fide reliable source.
Jerome, I always enjoy your letters but in all due respect going into 2017 was a great time, stock was up, U.S. debt was lower and people could easily afford to eat out, it was a happier time. That is no longer the case, I also would not rely on Visit Laguna reports. 2024 has unfortunately brought us heavy reality, new mandates, more rules and laws from the state which I don’t understand people not questioning and less $$ in our pockets. I think the writing is on the wall, Let’s trim off the books things that we simply do not need, like Visit Laguna, I truly don’t like seeing our business’s paying even more tax or anyone for that matter, it’s like feeding a insatiable appetite that keeps on begging for more! We need Accountability and a good accountant.