McKay, Ann Marie CC
Subject: Regarding the Proposed Ballot Measure for a Business License Fee - Many restaurants in LA are doing this with the influx...
From: John Thomas
Sent: Thursday, July 2, 2026 5:19 PM
To: City Council <[email protected]>; Orgill, Mark <[email protected]>; Jones, Hallie < [email protected]>; Whalen, Bob < [email protected]>; Kempf, Sue <[email protected]>; Rounaghi, Alex <[email protected]>; Kiff, Dave CM <[email protected]>
Subject: Regarding the Proposed Ballot Measure for a Business License Fee - Many restaurants in LA are doing this with the influx...
Regarding the Proposed Ballot Measure for a Business License Fee - According to a post on NextDoor today - "Many restaurants in LA are doing this with the influx...
Mark Rivera
M ••.
South Laguna Village • 22 min ago • ®
I read about this recently. Many restaurants in LA are doing this with the influx of foreigners attending the World Cup. This is because tipping, particularly in Europe is already included. Perhaps OC restaurants are doing the same...
Holly Rigby
5 days ago
New service fee.
Jimmy's Famous American Tavern - Dana
Point
25001 Dana Point Harbor Dre
Dana Point, CA 92629
Servers Hope M
Check #5 ~ Table 43
Guest Count i 2
ordered: 6/21/26 10:05 AM
thresh Catch
i Breakfast, Burno
Service Fee (2,50%)
Subtotall $49.20-
$0 81
Tax
$53-01
totall
2 McKay, Ann Marie CC
Subject: Technical Corrections Needed for Item 16 - Per John Thomas and James Danziger Attachments: Email from John Thomas and James Danziger regarding Item 16.pdf From: John Thomas
Sent: Sunday, July 5, 2026 5:00 PM
To: City Council <[email protected]>; Orgill, Mark <[email protected]>; Jones, Hallie <[email protected]>; Whalen, Bob < [email protected]>; Kempf, Sue <[email protected]>; Rounaghi, Alex <[email protected]> Cc: Kiff, Dave CM < [email protected]>; James Danziger Subject: Technical Corrections Needed for Item 16 - Per John Thomas and James Danziger The following email is from John Thomas and James Danziger We appreciate the city's willingness to test further the electoral viability of an adjustment to the business license tax or BLT - adjusting the 30-year-old BLT for bars and restaurants.
This measure is what we believe is the opportunity to collect the highest dollar amount of revenue from non- residents.
The survey seems to indicate that there is not currently a majority of voters who would support the BLT measure.
However, we will point out three things about the report that could change that conclusion.
Simply stated 1) survey data directly conflicts with staff's statement that BLT support did not improve with additional information 2) the survey sample is statistically inconsistent with the profile of Laguna Voters and 3) staff expresses an opinion stated as a fact.
First, there is an important technical inaccuracy in the staff report Attachment 1 that should be corrected.
The report says twice that "support for the BLT did not improve after voters received additional information." And page 102 of Attachment 5 has the same mistake.
That is simply not correct. Survey data shows that support did improve with additional information.
The Probolsky slides and Page 18 of Attachment 3 report that on 38.0%
33.3%
the initial vote 33.3% would vote "yes."
Then page 25 and the slides document that on the "informed" vote 38% would vote "yes". There was improvement. The Report of "no improvement" is simply not correct.
Merely hearing 7 facts resulted in a 5 point improvement or 20 people previously undecided changing their vote to "yes." initial Informed Contrary to the staff report statement of "no improvement", 5 Vote yes points is substantial improvement.
That is meaningful improvement - not "no improvement."
Secondly, there is a statistically important problem in the demographics of those surveyed.
In the earlier survey the sample was 30% non-college and 70% college. 1 In the more recent survey, it was fully 60% non-college respondents and only 40% college. That is twice as many non-college respondents compared to the earlier survey - or 120 more non-college potential voters in the sample of 400.
US Census data indicate that 70% of Laguna Beach have a bachelors degree of higher.
Earlier Survey More Recent Survey US Census
Education
Education Education
Non-college 59.7%
No college 29.8%
Bachelor Degree or
College 70.3% College 40.3% Higher 69/3%
The earlier survey sample was 70% college, a sign that the more recent sample is clearly not valid.
The dramatic oversample of non-college and undersample of college respondents is a very serious flaw. It is so major that it is surprising the survey was presented as an accurate one. One can only speculate how a valid sample of Laguna voters would have responded to these questions and Probolsky should be held accountable for this major error. Minimally, they should have acknowledged that this is a major threat to the validity of the entire survey.
If the sample in the earlier survey more accurately reflects the mix of Laguna Beach voters, and the initial 'Yes" vote in that more accurate sample was 41%, then it follows that if the same 7 facts had been provided in the earlier survey that the "informed" vote could easily have been 15% higher, or nearly the same as the "informed" yes vote for a sales tax. And the revenue potential from the BLT is greater for the city than from the sales tax and residents would be contributing only about half that increment from a BLT compared to a sales tax.
The third issue is more subtle -- an opinion creeped into the report and needs to be called out. Page 7 of Attachment 2 calls the business license tax a "more complicated measure to explain" and says a gross receipts tax is unfamiliar to most voters.
This comment is similar to what the Probolsky representatives said to the Council and is probably the basis of the staff opinion.
However, a sales tax is also a gross receipts tax, just like the measure proposed for the business license tax.
And a hotel tax is simply a gross receipts tax on hotel room sales.
How complicated is that to explain?
Staff seems to assume that one gross receipts tax is easier to understand than another one.
Moreover, the Probolsky representatives told us that they conducted surveys regarding a business license tax increase in three other cities and that, after an information campaign, the tax increase passed in all three cities.
The Staff report did recommend a robust public information campaign to educate voters if the Council decides to proceed with a future BLT measure. As noted above, an education campaign would have a substantial positive impact. And the survey shows that to be true - the increase from 33% to 38% was the result of just a few additional facts and less than preferred framing.
And even with this minimal information about increasing the BLT for bars and restaurants, only half of the respondents said they would vote no. The problem of inadequate collection of revenue from day trippers is very well understood by the voters. Why would the city not take staff's advice and pursue that "robust" education effort before concluding which preferred action Council should take two years from now? 2 Finally, this leads to the recommendation of a modification to staff recommendation #2 to instead recommend the city continue to educate and test all three possible ballot measures over the next two years rather than focus only the sales tax.
• We know that when tried before at only ½% the sales tax failed. • We know that the Hotel tax has the highest potential voter approval. • We know that the $4.8 million difference between the potential increased revenue from the hotel tax of $3 million and the potential increased revenue from the sales tax of $7.8 million is almost all to come from additional tax paid by residents.
• We know that the BLT could have the highest revenue potential of the three. • And the staff report states that staff recommends a robust public information effort to educate voters along with continued testing of the BLT (page 7) if the Council wishes to proceed with a BLT in the future.
So, why would you only focus on the sales tax?
John Thomas and James Danziger