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Council directs polling on modified business license tax after study shows options for modernization
Summary
After hearing a staff presentation and HDL study of alternatives to the city’s 50‑year-old business license tax, council directed staff to run statistically valid polling on a modified gross-receipts model (uniform rate with $100 flat threshold and a $100,000 cap, tested at an approximate $2.60 per $1,000 rate) and return with community polling results before any ballot decision.
Finance staff and consultant HDL presented a business license tax modernization study May 12 that examined four alternative tax models and compared Manhattan Beach to nearby cities. The study and a recent business forum showed broad interest in simplifying the city’s nine-tier license code, increasing equity among small and large businesses, and balancing revenue needs with political feasibility.
Emmy Rose Hannah, financial services manager, told council that most Manhattan Beach businesses (about 93% by licensing data) report gross receipts of $1 million or less and that the existing structure’s $12,156 cap produces a steep drop in taxable share for the largest firms. HDL’s Eric Meyers walked council through four options: removing caps while keeping existing categories; a single gross-receipts rate with a small flat fee; a single gross-receipts rate with a $100,000 cap; and a model with variable gross-receipts rates by category. Forum attendees preferred a tiered/variable structure but staff warned that voters may find multiple options confusing on a single ballot.
After extended council debate on fairness, simplicity and likely passage, councilors directed staff to conduct community polling on a simplified model derived from HDL’s proposals: a uniform gross-receipts framework with a $100 flat fee for the first $100,000 of gross receipts, a $100,000 cap, and a test rate in the polling near $2.60 per $1,000 of gross receipts. City staff said that at $2.60 the estimated revenue uplift would be roughly $800,000–$1.0 million compared with the current receipts (staff will test a small range during polling). The council additionally requested outreach materials and a draft of ballot language should polling indicate public support.
What’s next: Staff will issue a statistically valid poll, coordinate community outreach and return polling results and draft ballot language for council review before deciding whether to place a measure on the November 3 ballot. Council emphasized the need to present a single, clear proposal to voters.
