Monday, December 5 2022

May 24, 2022

The May 23, 2022 Culver City Council meeting did not make a decision on whether to place a measure to increase the business license tax in the November ballot; with Council member Alex Fisch absent due to illness, the two-to-two vote simply concluded this deal with no forward movement.

The business license tax, which has not been updated since 1965, nearly ran out just a few years ago when the council considered raising the rate at the end of 2019, as part of the update of the general plan. The consultancy that carried out the 2019 study compared Culver City to Los Angeles, Inglewood, Beverly Hills, Hawthorne and Santa Monica, and concluded that if the city changed the business license, it could generate up to $23 million additional revenue dollars.

With the advent of the pandemic in early 2020, this plan was shelved.

As currently constituted, the business license tax is $1 per $1,000 of gross revenue, or 0.01% of revenue. “The business license tax is based on gross receipts, and it is primarily a flat tax,” according to the city report.

Responses to a city-run poll showed 59% of voters favoring an increase in the business license tax with an exemption for businesses with gross receipts of less than $100,000. The city estimates that 4,000 local businesses fall into the “under $100,000” category.

The evolution of “business” in Culver City since the mid-20th century has been dramatic – from small, local brick-and-mortar operations to the largest online business platforms on the planet. According to City Manager John Nachbar, “Apple, Sony, and Amazon have separate agreements with the city that relate to the amount of business considered taxable locally, but the tax increase would also apply to them.”

With 24 people registered to comment, there was clearly great community interest in the tax measure. Almost everyone who spoke opposed the tax change, citing that small businesses are still recovering from the pandemic.

“If this tax was [put on the ballot and approved,] said Deputy City Manager Onyx Jones, “it wouldn’t come into effect until April 2023, so it wouldn’t be [create revenue] until 2024.”

Council member Goran Eriksson – who was present via a telephone connection – proposed that the matter be postponed until 2024. Vice Mayor Albert Vera, Jr. voted in favor, despite his statement that “I was born in 1965, we really need to think about updating it.” Mayor Daniel Lee and council member Yasmine Imani McMorrin voted against.

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