Taxes won’t be on ballot

Costa Mesa officials say services and infrastructure will suffer if the city doesn’t get more revenue, but a majority of the City Council said increasing taxes is not the answer.

The council voted not to put a measure on November’s ballot that would ask voters whether to increase the city’s transient occupancy and business license taxes. Debate centered on the transient occupancy tax, a 6% tax levied on anyone who stays at a hotel in the city. It’s also known as the “hotel tax.”

Costa Mesa’s transient occupancy tax, which hasn’t changed in more than 20 years, is the lowest in the county, according to the staff report. The city’s finance department estimates that each 1% increase in the tax would bring the city an extra $1 million in revenue.

Councilwoman Linda Dixon, who brought the measure forward, touted all of the achievements of the council in the past few years including more street improvements, sports fields and public safety spending in a speech that Mayor Eric Bever called “one of the best speeches ever given on this dais.”

Those types of projects would not be possible in the future if the city didn’t find some more revenue, she said.

Dixon said that such a modest increase in the tax would not drive business away from Costa Mesa as much as deteriorating facilities and a worse atmosphere caused by less infrastructure improvements would. Councilwoman Katrina Foley was Dixon’s only ally on the council, echoing many of her sentiments.

“If not [this tax increase], then what? The fact of the matter is that we can’t keep up the necessities with our current revenue stream. We’re not talking frivolities; we’re talking necessities,” Foley said.

Mayor Pro Tem Allan Mansoor, Councilwoman Wendy Leece and Bever all opposed the new tax. Bever said the tax would be a significant deterrent to businesses who utilize local hotels and new revenue could be raised in different ways.

“During the week, with seminars and symposiums, the difference in the [transient occupancy tax] can sometimes be in the tens of thousands of dollars, and that’s an incentive in the corporate world,” Bever said.

He thinks the city would be better served by increasing its property tax revenues by giving the Westside a face lift.

City Manager Allan Roeder said the city had done its best to manage its money conservatively, and that if something didn’t happen soon Costa Mesans would feel an impact. The city’s estimated 2008-09 revenue is just more than $1 million, so a 2% increase in the transient occupancy tax would add almost 2% to the city’s yearly income.

All five members of the council voted to “receive and file” the staff’s information, which, simply put, meant leaving the tax item off the ballot.

Foley said she supported the tax, but it wasn’t the appropriate time to bring the issue to the public. More business cooperation should be sought before putting the measure in the residents’ hands, she said.

ALAN BLANK may be reached at (714) 966-4623 or at alan.blank@latimes.com.