Mayor Barry Brucker Opposes Measure P — Who Is Supporting The Business Tax Increase?
Mayor Barry Brucker announced Wednesday that he will vote “no” on the business tax modification, Measure P, given the uncertain and rapidly changing fiscal circumstances facing Beverly Hills as a result of the state and federal economic climate.
“With the looming state budget deficit threatening services in cities throughout the state, this is not the time to make fundamental changes in local tax policies,” said Brucker in an exclusive interview with The Courier Wednesday.
“In addition, as I have been walking door-to-door speaking with residents about their concerns and issues; it appears that the general sense is that this is not the time to add more financial uncertain,” said Brucker. “Listening to the community is paramount to insure good governance and was a major factor in my decision to not support this measure at this time.”
Brucker was one of the five City councilmembers who unanimously voted on Dec. 2 to place the tax modification on the March ballot for residents to decide.
In November, he wrote a guest column in The Courier explaining the need for the tax.
“When the Council unanimously placed Measure P on the ballot, it seemed prudent to put this option before our voters,” said Brucker. “But as state and federal economies have deteriorated much more quickly than anyone anticipated, it has become clear that we should not be raising local taxes at this time.”
If residents approve Measure P by a two-third vote in March, it will modify taxes as follows:
• Professionals will be taxed on $5 per $1,000 per gross receipts.
• Business and licensed professionals will be taxed $1 per $1,000 per gross receipts.
• Corporate or other headquarters will be taxed on $1 per $1,000 of gross payroll.
• A 10 percent gross receipts tax will be implemented in commercial parking garages.
And, there will be an increase on the exportation and importation of the production of oil.
To date, the tax proposal has received little to no support. No City Council member has publicly endorsed the measure they placed on the ballot.
The government affairs committee of the Chamber of Commerce voted to oppose the tax modification last Thursday, as reported in the Jan. 23 edition of The Courier.
On Tuesday, the 38 members on the board of directors of the Chamber of Commerce also voted to oppose Measure P.
“Many local businesses have expressed serious concern to the Chamber about adding taxes during an economic recession,” said Board Chair Vicky Mense. “The board of directors agreed that Measure P was not widely vetted in the business community and would create economic hardship to local businesses and consumers.”
The tax, if approved, would generate $5 million to $ 7 million for City services including police and fire, as stated in a City mailer distributed throughout the City.
“Businesses in Beverly Hills contribute 75 – 80 percent of the City’s general fund revenue while utilizing only 20 percent of the City’s services,” said Chamber President and CEO Dan Walsh. “It is inappropriate to add additional strain to a segment of the community that already contributes generously to City’s funds, especially during a recession.”
Instead of approving Measure P, Brucker said the council needs to step back and evaluate the financial issues on the state and federal level that will affect Beverly Hills.
“Many cities in California are facing the need to dramatically slash public safety and other services because of the state’s dire economic situation. Some cities are even facing bankruptcy,” said Brucker.
“Beverly Hills has avoided such grim consequences because the Council has been flexible and fiscally prudent, carefully evaluating all sensible options. That gives us the ability to step back and assess the best ways for us to adapt to these state and federal problems — ways that help us maintain our quality of life in Beverly Hills.”
Proponents to Measure P include former mayor Mark Egerman, developers Arnold and Brian Rosenstein and City Treasurer Eliot Finkel.
“Measure P changes the business license fee charged to law firms in our City from a flat fee based on the number of individuals employed by the firm to a fee based on gross receipts,” said Egerman. “This change is fair because Measure P provides that business license fees for attorneys will be based on their gross receipts, which is the way business license fees on other types of businesses are currently determined.”
Finkel said, “I am not trying to say Measure P is the answer to all of our problems, I believe the City is facing serious economic times.
“To maintain the level of services as we balance a budget facing crossover we can: decrease services, increase taxes or increase revenue(development).
“The City’s budget was expected to be in balance in the beginning of the year. I have reason to believe it will be out of balance. The City’s general portfolio is earning 2 percent less than last year. We know the sales tax revenues will be decreasing. We have those issues to deal with. We also know the City is responsible for funding retirement for its employees. CALPERS was down 30 percent in the last half of 2008. The City will have to come up with funds to assure the retirement of employees of solvent.
“In order to fill gap we can raise taxes, or we can cut services- which they are working on, or we can dip into reserve funds. If we do, there are serious long-term consequences—we can lose the City’s AAA credit rating.
“The City has outstanding bonds of $300 million, it won’t have an immediate effect but it could get to $3 to $6 million additional cost range.
“Given these factors, I feel Measure P, primarily is a matter of equity in a sense that professionals will pay what I pay as a business man, and the parking will be comparable to what people in neighboring cities are paying.”