Critics Elicit More Clarity on Use of Tourist Tax

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To quell criticism over a vaguely worded measure to increase hotel guest taxes on the November ballot, the City Council decided to tighten up their stance.

In a resolution supporting Measure LL to increase hotel guest taxes from 10 to 12 percent, council members unanimously agreed last week to prioritize their list on how to spend the predicted $2 million annual bonanza to the city’s general fund. To keep their options open, however, they did not drop the fourth item on their priority list, a generalized description to spend the money on “other services and improvements.”

“It would be presumptuous for the five of us to say forever,” council member Bob Whalen said, “10 years, 15 years out, ‘This is how the money’s gotta be spent.’ But I think it’s appropriate for us to express now how we intend to spend it.”

The council also added a citizens’ audit oversight committee.

The first spending priority codified in the resolution is to protect the ocean and local beaches from pollution. The second is to provide increased fire, police and emergency-response services. The third is to underground utilities and remove poles, a project estimated at $180 million.

The measure is a general tax measure, which requires a simple majority vote for approval. The council opted not to make the measure too specific because that would require obtaining approval by two-thirds of voters, a strategy much more difficult to achieve, say lawmakers, unless a heavily favored purpose for the money already exists in the minds of the electorate.

Council member Toni Iseman compared the general approach to a specific bond measure in 1989 for $20 million to purchase part of Laguna Canyon and preserve it as open space. Laguna Beach voters overwhelmingly approved the tax increase by nearly 80 percent amid a highly charged movement to keep large-scale urban development out of the local canyon.

“A two-thirds vote is almost an impossibility,” said Iseman. “We definitely have found a way to reach out to the visitors in the community to help offset some of the costs.”

Paul Freeman, who ran the Save the Canyon campaign, said ballot measures with a specific purpose requiring a two-thirds vote can succeed. “There’s a general template of success for tax measures,” Freeman said. “Get as close to ‘what you see is what you get,’ things that people can eyeball. In this case, that’s not really the case.” Strong sentiment rates as a driving force, he said.

If increasing public services due to greater numbers of tourists is the driving sentiment, Measure LL won’t pass, he predicted. Instead, focus needs to shift to measures that enable residents to enjoy their town more by directing tax increases to day-tripping beachgoers, not hotel guests. Day-trippers drive the cars that are creating traffic congestion, don’t spend much money in town and put pressure on local services, he said.

Marine Safety Chief Kevin Snow estimates local beaches are accommodating nearly 6 million visitors each year. That creates “tremendous pressure” on city services from outside visitors, said Iseman.

City groups such as Village Laguna and the Taxpayers’ Assn. consistently objected to unspecified spending options listed in the ballot’s descriptions of Measure LL.

Flamingo Road provided the staging area in 2013 for Edison to replace utility poles. Photos by Mitch Ridder
Flamingo Road provided the staging area in 2013 for Edison to replace utility poles. Photos by Mitch Ridder

“It would take hundreds of millions of dollars to underground most of the utility poles in Laguna and the canyon,” said Johanna Felder, chair of Village Laguna, a 50-year-old organization formed to preserve the village character of Laguna Beach. Felder asked that the money “won’t be used to float a $1 million bond that would put the city in debt.”

But the council voted to keep their options open in case other funding or yet-unknown needs pop up.

An unknown, for example, is the impact of global warming and resulting rising sea levels, said resident Tom Halliday, who said he has extensive experience in budgeting and has owned several companies. Keeping a general option open allows for needed flexibility, he said.

Measure LL came to fruition after the results of surveying 6,000 Laguna Beach registered voters in June. The survey asked residents if they wanted utilities undergrounded to mitigate fire risk and power outages. The questions, said some, were skewed.

Pulling the fire danger card in the survey, City Council candidate Judi Mancuso said at a recent council meeting, “misled the public.” She added that she “was not convinced” where money from the proposed measure would ultimately be spent. She also recommended a five-year tenure for the citizens’ oversight committee rather than three, which was acknowledged and accepted by the council.

Mancuso’s comments, however, were taken as grandstanding by council members Rob Zur Schmiede and Kelly Boyd, who are not up for re-election. Whalen and Mayor Steve Dicterow are seeking re-election.

Whalen later said the survey, conducted by professional pollsters Fairbank, Maslin, Maullin, Metz and Associates of Los Angeles, revealed support for the measure. “We got the validation we wanted,” he said. The measure addresses residents’ growing concerns about visitors overrunning the city, he said. “This is one way we’re going to manage that better,” he said, saying that people putting more pressure on city services need to pitch in to pay for them.

The resolution solidifies the council’s support of the hotel guest tax increase, but council members cannot campaign for its passage, according to state law. “…public agencies may use public resources to analytically evaluate the merits of a proposed ballot measure and inform the public about its findings,” according to analysis by the League of California Cities. “What public agencies may not do is mount a campaign on the measure.”

Countywide, voters will decide on 34 local measures, according to the County Registrar of Voters website. About a third of the measures are seeking voter approval for bonds to improve school districts. Residents in Placentia, Costa Mesa and Fullerton are voting on whether to establish district elections.

Costa Mesa voters confront the most complex local ballot, which includes three medical marijuana measures and four land-use measures.

Newport Beach and Anaheim are both asking voters whether to require a two-thirds majority vote to propose taxes by their respective city councils. And voters in La Palma will be asked to pass a one-cent sales tax. Like Laguna Beach, San Clemente is also seeking voter approval to raise hotel guest taxes.


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