The Aug. 2 edition of the Indy contained a report about the Laguna Beach city council’s failure to address business tax license increases and a gross receipts tax on bars and restaurants to offset the considerable, non-reimbursed costs incurred by the city (Ultimately, the taxpayers) to cover unreimbursed day-tripper tourist costs.
John Thomas’s guest opinion in the Aug. 2 Indy presented a strong case in favor of increased business, and bar and restaurant taxes. If you look at the 2023 city budget, note that the city uses $27,000,000 to balance the budget. Most of this covers the $20 million of unrecoverable costs required to support day trippers.
Because of the magnitude of non-reimbursed expenses, the city needs to consider a gross receipts tax. Two councilmembers favored the consideration of the tax, and an ad hoc committee was formed to explore possibilities for revenue. A new state law specifically allows bars and restaurants to show and add taxes to a customer’s bill. This would be a pass-through. The establishments would simply be collecting the tax for the city.
I know there is opposition as bar and restaurant owners complained this tax would affect their business. However, another way to view this is that Laguna voters are subsidizing restaurants and bars that attract day-trippers with their property tax money, which the city could use instead for aging infrastructure and other purposes.
Over time, unrecovered day-tripper costs have greatly affected Laguna’s unfunded pension liability and household debt. In 2019, Laguna had the highest unfunded pension liability of any Orange County city (52%) and the highest pension debt per household ($11,513). The city is continuing to add personnel to accommodate day trippers. City employment is now 350, and they all get pensions.
Council continues to “kick the can down the road” by not addressing how the city will be made whole for excessive day-tripper expenses.
A gross receipts tax on bars and restaurants is a good start and will generate substantial revenue. Other sacred cows should be explored, such as entrance fees for the Pageant, Art-A-Fair and Sawdust Festival. In addition, the scope of the TOT can be greatly expanded without changing the current rate of 14%.
In a July 11 town hall, residents questioned why Visit Laguna was needed, as Visit Laguna’s function is to entice more day-trippers to come to Laguna.
The residents felt that the city needed to get rid of Visit Laguna. See Michele Monda’s excellent guest opinion in the Aug. 2 Indy.
The city is providing $1.8 million to Visit Laguna, which encourages day-trippers through social media and its website. Instead, the city could use the $1.8 million that goes to Visit Laguna to balance the budget and for enforcement against day trippers.
George Orff, Laguna Beach
$20 Million in ‘unrecoverable’ costs from tourists? Sir, the oceand beach aren’t OWNED by the people of Laguna. And tourists have every right to come to play, as you have every right to leave if you don’t like it. Those of us who have businesses that profit from tourists are sick and tired of the whining. You really have a perfect place and are still miserable? Why? Because YOU can’t drive around on a summer weekend without traffic. All the best to you sir.