CITY OF SANTA MONICA
NOVEMBER 2024 BALLOT MEASURES
BALLOT MEASURES
Business License Modernization
Increase Parking Facility Tax
City Council
Member Compensation
Staff has incorporated prior Council direction for the Business License Tax Modernization and seeks the following:
• Adopt a resolution to place the measure on the November 2024 ballot
• Identify Council Members who wish to prepare arguments for or against the measure
Business License Modernization Measure
Business License Modernization Overview
Purpose:
Modernize the applicable business license code sections Goals:
Proposal Description # Of Businesses
Impacted
Revenue Impact
Range in Millions
Increase the Small Business Tax Exemption threshold from $40,000 to $100,000
7,000-8,000 $(0.7) - $(0.8)
revenue decrease
Reduce Penalty Schedule maximum from 100% to 50% 200-300 $(0.2) revenue decrease
Remove the back tax calculation related to the application year on the firstrenewal submission
300-400 $(0.3) - $(0.4)
revenue decrease
Residential Rental 3 Units or Less Rate Reduction from
$3.00/$1,000 to $1.25/$1,000
400-500 $(0.02)
revenue decrease
Rate Reduction from $1.25/$1,000 to $1.15/$1,000 for
Retailers/Restaurants generating under $5 Million in gross receipts annually
1,800-1,900 $(0.1) -$(0.12)
revenue decrease
Auto Dealers will pay business license tax on their total gross receipts at a rate of $1.25/$1,000 for sales and a rate of $3.00/$1,000 for the auto repair operations with no maximum tax 13-16 $0.9 - $1.3
revenue increase
Increase tax rate on Corporate/Administrative Headquarters from $1.25/$1,000 to $2.50/$1,000
110-120 $2.1 - $3.1
revenue increase
A processing fee initially set at 100% of the BL Unit's costs The fee would be approximately $40
22,000-23,000 $0.8 - $0.85
revenue increase
ESTIMATED REVENUE IMPACT RANGE $2.25 - $3.93
revenue increase
April 9th Modernization Proposal
6 Council Direction from April 9th
Consider a phased approach to the business license tax rate increases Staff recommends phasing in tax rate increases over three years • Ease impacts on affected businesses
• Incrementally increasing business license tax revenue while remaining fiscally prudent
Proposal Description Year 1 Year 2 Year 3
Auto Dealer Cap Removal
and Service Repair Rate
Remove Cap -
tax allreceipts at
$1.25
Same as Year 1 Retail at $1.25
add service rate
at $3.00
Increase tax rate on
Corporate/ Administrative
Headquarters
Increase rate from
$1.25 to $2.00
Increase rate
from $2.00
to $2.25
Increase rate
from $2.25
to $2.50
Consider Return to Work Business License Tax Incentives Current Business Development an Economic Opportunities • Buy Local Santa Monica
• Assistance with California Competes grants and tax credits • Small business grants, fee waivers and range of rebate Staff Recommendation: Return to work incentives should be considered separate from the Business License Tax program • May introduce an inequity in the proposed tax structure • No current mechanism to track daily employee attendance • Additional administrative burden for City staff and businesses Additional Council Direction from April 9th
BUSINESS LICENSE
MODERNIZATION
VOTER SURVEY
Goodwin Simon Strategic Research
May 2024
BUSINESS LICENSE MODERNIZATION BALLOT
LANGUAGE TESTED IN SURVEY
Goodwin Simon Strategic Research
To fund essential city services such as 911 emergency response, public safety, and addressing homelessness, shall the measure modernizing the City of Santa Monica’s 1990 business license tax ordinance to improve tax equity, exempting small businesses from the tax, decreasing tax rates for most retailers and restaurants, raising the corporate headquarters rate to 0.25%, removing auto dealer tax exemptions, and restoring a business license processing fee, generating approximately $3,000,000 annually, until ended by voters, be adopted?
COMMUNITY SURVEY OF SANTA MONICA VOTERS
Goodwin Simon Strategic Research
All
Home
Owners Renters
Bus
Owners
Not Bus
Owners
Def/prob yes 58% 56% 63% 55% 59%
Def/prob no 25% 27% 19% 31% 23%
Not sure 17% 17% 18% 14% 18%
Net yes 33% 29% 44% 24% 36%
Solid majority favor Business License Tax Modernization measure After respondents were exposed to a brief
description of the measure’s purposes and
impacts, support widens to 75%
“Santa Monica’s business license tax has
not been revised since 1990. Passing this
measure would update the tax and make
it more equitable. For example, it would
exempt small businesses and cut rates for
medium-sized businesses including
restaurants and many retail stores. It
would also close loopholes that have
allowed some large corporations to avoid
paying an appropriate share of the tax. In
addition, it would modernize the tax code
to account for businesses that did not exist
in 1990, such as online businesses.”
Goodwin Simon Strategic Research
Q2-Q3
Q2
(ballot
language)
Q3
(after
explanation) Change
Def/prob yes 58% 75% 17%
Def/prob No 24% 17% -7%
Net yes 34% 58% 25%
All not sure 18% 9% -9%
TOP GOALS FOR VOTERS
VERY IMPORTANT
GOAL
Slowing rise in cost of housing in SM 68%
Slowing rise in cost of shopping and eating in SM 66%
Making sure corporate HQs pay fair tax rate 62%
Making the tax fairer and more equitable 60%
Reducing tax burden on small business 59%
Closing loopholes that benefit certain businesses 57%
Encouraging job growth 55%
Making it easier to comply with business tax 55%
Attracting new business 52%
Improving opportunities for women and POC 46%
Modernizing code for new types of businesses 42%
Adding $3m in revenue for city services 41%
Making the tax more progressive 38%
Making tax rate in line with LA 36%
The top goals for voters:
1. Reduce impact of inflation
2. Make the tax ”fairer”
3. Ensure that large businesses
pay more, and small businesses
pay less
4. Increase equity and opportunity
for business owners
DRAFT BUSINESS LICENSE MODERNIZATION
BALLOT LANGUAGE
“To fund essential city services such as 911
emergency response, public safety, and
addressing homelessness, shall the measure
modernizing the City of Santa Monica’s 1990
business license tax ordinance to improve
tax equity and fairness, exempting small
businesses from the tax, decreasing tax
rates for most retailers and restaurants,
raising the corporate headquarters rate to
0.25%, removing auto dealer tax
exemptions, and restoring a business license
processing fee, generating approximately
$3,000,000 annually, until ended by voters,
be adopted?”
• Adopt a Resolution to place a measure on the November 5, 2024, General Municipal Election Ballot which modernizes the applicable sections of Article 6 Business Professions and Trades per prior Council direction;
• Identify Council Members, if any, who wish to prepare arguments for or against the Business License Modernization measure
Discussion and Council Actions
Council direction on placing the Parking Facility Tax increase on the November 2024 Ballot. If yes, actions required:
• Adopt a Resolution to place the measure on the November 2024 ballot
• Identify Council Members, if any, who wish to prepare arguments for or against the measure
Parking Facility Tax Measure
HISTORY OF PARKING FACILITY TAX
City's 10% Parking Facility Tax established in 1993
Applies to all City-owned and private parking lots
and structures in Santa Monica
Except :
• Parking meters
• Preferential parking permits
• Residential parking in rental agreements
• Parking for lodging when occupant’s stay
exceeds 30 consecutive days
NEIGHBORING PARKING TAX RATE COMPARISON
City Name % Tax Title of Tax
Santa Monica 10% Parking Facility Tax
Los Angeles 10% Parking Occupancy Tax
Malibu 10% Parking Occupancy Tax
Burbank 12% Transient Parking Tax
Inglewood 10% Parking Tax
San Francisco 25% Parking Tax
PRIVATE LOTS / STRUCTURES
An 8% increase is estimated to increase General
Fund revenue approximately $6.7 million
Private lots / structures self report and each
entity has very different parking fee structures
Difficult to assess the impact to consumers
Largest revenue generators are medical
facilities, hotels, and office centers
City-owned facilities exempted from increase
PARKING FACILITY TAX
VOTER SURVEY
Goodwin Simon Strategic Research
May 2024
Results of March and May community surveys of
Santa Monica voters
Tested in March 2024 Survey:
“To reduce traffic congestion in Santa Monica and lower the risk of fatal accidents involving drivers and pedestrians; create safe routes to school to protect children; and provide approximately $8.5 million for street and sidewalk improvements, safe alternatives to driving, crossing guards, public safety, libraries, and other essential city services, shall the City of Santa Monica increase the Parking Facility Tax at parking lots by 10% for users including visitors and tourists, with independent audits and all funds used locally?”
Tested in May 2024 Survey:
To maintain essential city services, including enhancing public safety, addressing homelessness, creating safe routes to schools, reducing fatal pedestrian and bike accidents, improving city streets and sidewalks, and maintaining clean and safe parks; shall the measure increasing the City of Santa Monica’s Parking Facility Tax by 8%, exempting parking at City-owned parking lots and structures (including downtown and the beach) from the tax increase, generating approximately $6,700,000 annually until ended by voters, with independent audits, be adopted?
Goodwin Simon Strategic Research
March May
Yes 50% 45%
No 40% 48%
Net yes 10% -3%
The survey shows that voters are concerned about
the personal cost of the parking facility tax increase
Goodwin Simon Strategic Research
March Survey
Results All
Park in city
lots <6
times/mon
th
(60%)
Park in city
lots 6+
times/month
(27%)
Costs me a
lot/some
(30%)
Costs me not
that much
(21%)
Costs me
hardly
any/nothing
(40%)
Def/Prob Yes 50% 54% 40% 40% 53% 62%
All No 40% 38% 52% 52% 37% 34%
Net Def/Prob
Yes - All No 10% 16% -12% -12% 16% 28%
Support rose in both polls to 57% when voters saw or
heard in plain language that it would not affect the cost of parking in city lots:
Goodwin Simon Strategic Research
“Passing this measure would only increase the cost to park at privately-owned, paid parking lots in Santa Monica. It would not increase the cost of parking at city-operated parking structures and lots, such as the structures in the downtown area and the lots at the beach. Nor would it affect the cost of parking at free parking lots, for example at supermarkets or drug stores.” March 2024 May 2024
Ballot
language
After
explanation
Ballot
language
After
explanation
Yes 50% 57% 45% 57%
No 40% 36% 48% 37%
Net yes 10% 21% -3% 20%
DRAFT PARKING FACILITY TAX BALLOT LANGUAGE
“To maintain essential city services,
including enhancing public safety,
creating safe routes to school to
protect children, and lowering the risk
of fatal traffic accidents, shall the
measure increasing the City of Santa
Monica Parking Facility Tax by 8% for
users including visitors and tourists,
causing no additional cost in Cityowned lots and structures (including downtown and the beach) because of
a partial City exemption, generating
approximately $6,700,000 annually
until ended by voters, be adopted?”
• Adopt a Resolution to place a measure on the November 5, 2024, General Municipal Election Ballot to increase the City’s Parking Facility Tax rate by 8% and exempt City-owned lots and structures from the tax increase;
• Identify Council Members, if any, who wish to prepare arguments for or against the Parking Facility Tax measure; Discussion and Council Actions
MAYOR & COUNCIL COMPENSATION COMPARISON
CITY Approx.
Population
Mayor
Annual
Compensation
Mayor
Monthly
Compensation
Councilmember
Annual
Compensation
Councilmember
Monthly
Compensation
Berkeley 118,950 $133,100 $11,092 $83,853 $6,746
Inglewood* 102,991 $111,305 $9,275 $60,660 $5,055
Santa Barbara 86,499 $75,110 $6,259 $60,088 $5,007
Anaheim 347,111 $27,000 $2,250 $26,400 $2,200
Burbank 102,755 $25,800 $2,150 $25,800 $2,150
San Luis Obispo 48,341 $32,352 $2,696 $25,068 $2,089
Santa Monica 89,922 $26,844 $2,237 $23,184 $1,932
Pasadena 133,560 $32,934 $2,744 $21,958 $1,830
West Hollywood 34,349 $21,816 $1,818 $21,816 $1,818
Huntington Beach 192,129 $29,675 $2,473 $21,160 $1,763
Santa Cruz 61,501 $41,048 $3,421 $20,524 $1,710
Redondo Beach 67,749 $20,030 $1,669 $20,030 $1,669
Newport Beach 82,637 $25,368 $2,114 $19,201 $1,600
Beverly Hills 30,974 $9,430 $786 $9,430 $786
*Inglewood has a full-time Mayor and City Council.
Charter Cities are in bold.
Based on Area Median
Income (AMI)
Based on something
other than AMI, most
likely based on rates
set for General Law
limits and population.
• Review Council Compensation Comparison report and
direct City Manager to return to Council with additional information necessary for City Council to place a measure on the November 5, 2024, or future, General Municipal
Election Ballot to amend the Santa Monica City Charter
Section 602 to increase Council Member compensation.
Discussion and Council Action