CITY OF LAGUNA BEACH · STAFF REPORT
General Revenue Measure:
Ballot Strategy & Deferral to November 2028
City Council Meeting · July 7, 2026 (UPDATED)
Prepared by Dave Kiff, City Manager
Coordinated with Megan Garibaldi, City Attorney & Revenue Ad Hoc Committee
STAFF RECOMMENDATION
What the City Council Is Being Asked to Do
1. Defer & Focus on a Single Measure
At the Revenue Ad Hoc Committee's request, defer a general tax measure from the November 2026 ballot.
Concentrate on internal efficiencies, outreach, education, and polling on one measure — a one-cent (1%) transactions and use (sales) tax — for the November 3, 2028 General Municipal Election.
2. CEQA Determination
Find that the recommended action is not a project subject to CEQA under Guidelines Section 15378, and alternatively, is exempt under Guidelines Section 15061(b)(3).
Recommendation City of Laguna Beach — Staff Report
BACKGROUND
Why Is the City Looking for a New Revenue Source?
Rising Cost Pressures
• Public safety staffing costs – staying competitive
• The costs of responding to huge numbers of visitors
• Our remaining unfunded pension liability
• Insurance and claims
• Adding to our Fuel Modification Zones and fire safety efforts
• Maintenance & replacement of aging infrastructure
Already Cutting Costs
To balance the FY 2026-27 budget, the City eliminated 7 fulltime positions and reduced contracts and capital outlay.
Major Long-Term Obligations
Facilities Master Plan
Aging fire stations, library, beach accessways
Hospital Closure by 2030
Might need a new medical transport model…
Acquiring Open Space and Parkland
Seeing opportunities to preserve areas around us,
including in South Laguna
Utility Undergrounding – the 10-20% assist
Undergrounding utilities in town and along evac routes
Background City of Laguna Beach — Staff Report
Assist w/compliance with State law, aging-in-place
Senior and Workforce Housing
BACKGROUND
Process Timeline: February–June 2026
Feb 24, 2026
Council confirms 2026
Strategic Priorities,
including Fiscal
Sustainability
Feb–May 2026
Community outreach: 4
Town Hall meetings +
online survey
May 19–27, 2026
Probolsky Research voter
poll: 400 likely voters (±5%)
June 9, 2026
Study session — Council
directs TOT & business
license tax measures
June 19–24, 2026
Second Probolsky voter poll
focused on business license
tax
Process Timeline City of Laguna Beach — Staff Report
DISCUSSION
Three Revenue Concepts Considered
Transient Occupancy Tax
$3.0M
estimated annual revenue
12% → 14%
Strong voter support (75% yes) but insufficient
scale for infrastructure needs.
Business License Tax
$8.6M
estimated annual revenue
3% on gross receipts
Tested under 40% support in two different polls,
informed opposition at 50% (June 2026). Note:
documents transposed education level –was
similar education level in each poll (40% college,
60% non-college).
Sales Tax (1%)
$7.8M
estimated annual revenue
1% transactions & use tax
Strongest combination of revenue capacity and
likely voter approval.
COMMITTEE RECOMMENDATION
Revenue Concepts City of Laguna Beach — Staff Report
$3,000,000 $7,800,000 $8,600,000
DISCUSSION
Transient Occupancy Tax (TOT)
A tax paid by hotel and short-term lodging guests — not a tax on residents' homes or property. The proposed measure raises the rate and modernizes how the tax is collected.
Rate Increase 12% → 14%
Effective July 1, 2027
Modernized “rent” Definition
TOT collected on full guest charge, incl. booking fees & commissions Stronger OTC Enforcement
Expedia, Booking.com, Airbnb, Vrbo and other platforms
75% said yes after hearing
more information (up
from 74%)
68% more likely to support
knowing it's paid only by
guests, not residents
ESTIMATED NEW REVENUE
$3.0M
per year
Combined lodging rate: 16%
(14% TOT + existing 2% TMD assessment)
Requires approval by a simple majority of
voters.
Transient Occupancy Tax City of Laguna Beach — Staff Report
DISCUSSION
Business License Tax — Bars & Restaurants
The current business license tax for bars and restaurants is capped at $1,650 a year — a cap that has not kept pace with the cost these visitor-serving businesses place on City services.
TODAY
$1,650 cap
Flat annual cap, regardless of size
→
PROPOSED
3%
of gross receipts — cap removed (new
Group 4 category)
No changes are proposed to the business license tax for any other category. Effective January 1, 2027.
ESTIMATED NEW REVENUE
$8.6M
per year
The largest revenue potential of the three
measures — but, as the next slide shows, it also
faces the most voter resistance.
Business License Tax City of Laguna Beach — Staff Report
DISCUSSION
Business License Tax: Voter Resistance
Yes vs. No — May & June 2026 Polls
41 33
38 48 47 50
0 10
20 30
40 50
60 May (initial) June (initial) June (informed)
Yes No
Support improved by five points, while opposition improved by three, after voters heard additional information. Note: This was incorrectly characterized as no movement on the support side in the staff report – support moved 5% upwards as shown.
Message Testing — % Moved Toward Each Side
71%
→ NO
Could close restaurants / raise vacancies
55%
→ YES
“Every dollar stays in Laguna Beach”
51%
→ NO
“Makes the city less competitive”
49%
→ YES
Funds could reduce wildfire risk
Opposition messaging tested at least as strong as support. Staff recommends a robust public information effort and continued testing if the measure proceeds.
Business License Tax City of Laguna Beach — Staff Report $3,000,000 $7,800,000 $8,600,000
DISCUSSION
Sales Tax (Transactions & Use Tax)
Presented at the request of the Revenue Ad Hoc Committee — reconsidering the Council's June 9 direction to instead advance the sales tax as a single measure for 2028.
1%
transactions & use tax rate
$7.8M
estimated new revenue annually
50%+
simple majority voter approval
required
The tax would be deposited into the General Fund, remain in effect until ended by voters, and be subject to annual independent audits and public disclosure of expenditures.
Sales Tax Measure City of Laguna Beach — Staff Report
THE PLAN
Deferral With a Plan for November 2028
Concentrating on a single measure lets staff:
1 Walk the Talk
Continue to work to make
the City more effective and
efficient – squeezing what
we can out of expenses
2 Develop and
Communicate the Need
via a Spending Plan
Explain clearly what the
community needs, what a
measure does and its
impact.
3 Continue Testing
4 Refine Language
Ongoing message testing
and polling ahead of the
2028 study session and
filing deadline.
Staff would complete this work by the end of 2027 and present results — with a recommendation — at the Council's 2028 study session, well ahead of the 2028 filing deadlines.
Deferral With a Plan City of Laguna Beach — Staff Report Adjust question wording
and, if warranted, measure
structure to address points
of confusion.
DRAFT SPENDING PLAN
$8.0 Million Per Year — Where the Money Should Go
A conservative planning estimate: the business license tax is projected at ~$8.6M/yr and the sales tax at ~$7.8M/yr; $8.0M is used so the plan holds regardless of which measure advances.
40%
20%
15%
10%
8%
7%
Fire & Wildfire Safety Police & Emergency Svcs
Beaches, Parks & Visitors Library & Community
Housing Reserves & Savings
Where the Money Goes Share Each Year 5-Year Total
Fire Stations & Wildfire Safety 40% $3,200,000 $16,820,000 Police & Emergency Services 20% $1,600,000 $8,410,000
Beaches, Parks & Visitor Programs 15% $1,200,000 $6,308,000 Library & Community Facilities 10% $800,000 $4,206,000
Housing for Seniors & Workforce 8% $640,000 $3,363,000
Reserves & Savings 7% $560,000 $2,943,000
Draft Spending Plan City of Laguna Beach — Staff Report
DRAFT SPENDING PLAN
Funding Side by Side: Plan A vs. Plan B
Priority Plan A — Sales Tax $8.0M/yr Plan B — Hotel Tax $3.0M/yr Fire Stations & Wildfire Safety $3,200,000 $1,050,000
Police & Emergency Services $1,600,000 $600,000
Beaches, Parks & Visitor Programs $1,200,000 $900,000
Library & Community Facilities $800,000 —
Housing for Seniors & Workforce $640,000 —
Reserves & Savings $560,000 $450,000
Total Each Year $8,000,000 $3,000,000
A dash indicates a priority not included in that plan. Both plans are general taxes deposited into the General Fund; figures assume a 2.5% annual increase.
Funding Side by Side City of Laguna Beach — Staff Report
ACCOUNTABILITY
Proposed Citizens Oversight Committee
A recurring theme in outreach: residents want assurance new revenue is spent as promised.
Before the Election
Convene a citizens review committee to help confirm infrastructure and operational needs, review a proposed spending plan, and give independent input on the case for whichever measure the Council places before voters.
After the Election
An advisory oversight committee reviews revenue and expenditures at least annually, confirms consistency with the spending plan presented to voters, and reports findings publicly — complementing the annual independent audit.
Oversight Committee City of Laguna Beach — Staff Report
NEXT STEPS
Recommended Council Action
• Defer a general tax measure from November 2026
• Continue to get our own house in order – walk the talk • Make the case - direct staff to focus outreach, education & polling on the 1% sales tax for November 2028
• Adopt the CEQA finding as recommended
Next Steps City of Laguna Beach — Staff Report