Officials postpone business tax review

The Costa Mesa Finance Advisory Committee on Tuesday voted to postpone its examination of the city’s business license tax until more data are collected.

A majority of the 10 committee members said they wanted to see results from new city software that will help better facilitate the collection and renewal of the annual tax.

The success of that software, they said, will help them make better decisions before they issue recommendations to alter the tax.

Earlier this year, City Councilwoman Wendy Leece proposed that the committee look into potentially changing the tax, a tier system based on annual gross receipts that starts at $25 and maxes out at $200 per year for businesses with more than $500,000.

Leece said in June that while the low tax could remain the same because it’s a business incentive, it does seem to present a disparity between high-revenue stores like Nordstrom and small businesses.

The committee is scheduled to reexamine the tax in six months.

Committee member Robert Juneman’s proposal to wait passed with an 8-2 vote. Chairman Shawn Dewane and co-Chairman Terry Shaw dissented.

“We really need to work on being a business-friendly city,” Juneman said, acknowledging that he has a Costa Mesa business license. “This recession is really not over. We’re still in the woods.”

Dewane said the tax is politicized and would be a divisive issue that results in negative publicity.

“It may not, in my opinion, bring the city together,” he said. “It may serve as a wedge to divide the city.”

A tax increase could ultimately affect consumers, Dewane added.

“We the consumers are passing along a tax to ourselves ... I’m not sure that it actually services the purpose in which it’s intended,” he said.

Mayor Pro Tem Steve Mensinger, noting the changing economic cycles, said tax revenue can rise without increased taxes.

He pointed to the nearly 4% increase in Costa Mesa’s revenue that is primarily stemming from more robust property and sales tax revenues, as well as the transient occupancy tax that comes from overnight stays at hotels and motels.

Robin Leffler, president of Costa Mesans for Responsible Government, said the issue, like a city charter, is worth putting on a ballot for voters to decide, “whether you call it a tax or a fee or whatever.”

“If you can trust us for one thing, you can trust us with the other,” Leffler said.

The members were split evenly earlier in the meeting with a measure that Dewane proposed, which would have recommended that the business license tax structure be unchanged.

Dewane, Juneman, Mensinger, Jim Fisler, Howard Hull and voted in favor of retaining the system.

Shaw, John Hinson, Richard Riva, Dave Stiller and city CEO Tom Hatch dissented.