Laguna Beach City Council members are gauging how residents will react to potential sales, hotel or real estate tax increases with a community survey to help boost city revenue.
It comes after officials in the coastal city decided that increasing city revenue was a top priority for 2024, despite Laguna beach already having some of the highest tax rates in both Orange County and Southern California.
In February, city council members unanimously voted to send out the community survey in April to see how residents feel about a tax increase as well as identify other services Laguna Beach could improve.
At the February 27th city council meeting, Councilmember Bob Whalen stressed the need to move quickly on this issue.
“We know we are dealing with a certain timeline if we want to proceed with anything for the November ballot,” he said.
When asked to comment on the possible increases, Mayor Sue Kempf responded that it was inappropriate for her to speak on the topic as mayor and directed questions to Assistant City Manager Gavin Curran.
“I am the current Mayor, therefore the spokesperson for the City. In this instance, however, it’s only appropriate for Gavin to comment,” Kempf stated.
The rest of the City Council, as well as the OC taxpayer association, did not respond to requests for comment.
Parker Whitham, a sales consultant and resident, is critical of having to pay more taxes but knows the impact it could have on city services.
“We are no fans of tax increases here in Laguna Beach, but 8 million dollars could go a long way towards helping to improve the city,” he said in an interview.
In the city’s budget released in 2022, Laguna Beach made a total of $115.3 million, while their expenses landed around $94.8 million.
But officials want to increase the revenue they generate.
One of the methods they’re considering is through increasing sales taxes – the tax on goods and services residents feel every time they buy something in the city.
Currently, the city receives 1% of the 7.75% sales tax. Increasing how much they receive by only 1 percent would generate an estimated $6.5 million, according to a staff report.
And they’re not the only officials looking at increasing sales taxes to bring more money in.
In 2022, the city of Westminster raised sales tax to 8.75% with Measure Y.
In the March primary election, Westminster’s Measure E asked residents to raise it once more to 9.25%. City voters adopted the sales tax increase.
Additionally, Laguna Beach officials are also considering applying a flat tax on all real estate. This change could mean a tax of $100 per parcel of land for an estimated annual revenue of $1.2 million.
Other areas of focus are the local business license tax and hotel taxes also known as transient occupancy tax.
The Transient Occupancy Tax (TOT) is a tax charged to guests in hotels, motels, and vacation rentals. The current Transient Occupancy Tax in Laguna Beach is the third highest rate in the county at 14%, behind only Anaheim and Garden Grove.
Officials also created a temporary Ad Hoc committee dedicated to designing the survey.
“[the] committee appointed by the City Council is currently collaborating with staff and the selected survey firm to develop the survey instrument,” according to assistant City Manager Gavin Curran.The survey is currently being circulated and is expected to return to council members by June.
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