City Finances Should Shift Visitor Costs to Tourists

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The city will be holding a long-term financial plan presentation March 6.

That’s a good thing.

Presumably a long tern financial plan includes a discussion of future revenues to the city and future costs to the city, a discussion of the sources of funds and the uses of funds.

I am convinced that the revenue to the city government from visitors and the sector of local commercial businesses dependent upon visitors does not cover the costs incurred by the city that are attributable to the visitors and those businesses.

My estimate is that revenue from visitors and visitor dependent local businesses represents about 25 percent of city government revenue, while the costs attributable to those sources represent about 50 percent of city operating costs.

I believe that amounts to a mismatch of approximately $20 million per year with the residents subsidizing the visitors by that amount.

It doesn’t have to be this way – (see the quote below.)

This discussion of a long-term financial plan is an excellent opportunity for the City Council to address that imbalance of revenue from visitors versus costs attributable to visitors, and to consider remedies.

If the city could increase revenue from visitors to the point where it covers the incremental costs to the city attributable to the visitors, the city and its residents would benefit substantially and the increase in funds made available could be used to cover the costs of those fundamental items that to date have not been addressed due to lack of funds.

Specifically, I encourage the City Council to direct the staff and the city attorney to look into ways to correct this imbalance.

Quote From the Beverly Hills 2015-2016 Budget:  “Revenues generated from the business sector represent about 65 – 80% of total General Fund revenues. This allows the City to provide residents with the finest of residential living environments: clearly the City Council’s first objective.”


John Thomas, Laguna Beach

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