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National City staff outline business-license reform to help close $13M budget gap
Summary
City staff told the council a 47-year-old business-license (gross-receipts) structure needs updating to help close a roughly $13 million deficit and presented two rate options and a $150,000 cap; staff and a consultant said voter polling shows majority support, but many business owners urged more outreach and warned of harms.
City staff presented a proposal to reform National City's business-license tax on the grounds that the current structure, last updated decades ago, leaves a roughly $13 million shortfall in the fiscal plan.
"The adopted budget back in June was just under $90,000,000," said Doug Schultz, the city manager, who told the council that mandatory expenses and public safety commitments leave about $14.5 million in discretionary funds and a $13 million gap to fill. Schultz said staff had identified revenue and expenditure options and would bring more detail back for council consideration.
Staff outlined two principal options for a variable gross-receipts structure. Under Option 1 the general retail rate would be 0.001; Option 2 would cut that general retail rate to 0.0005 and add a proposed $150,000 annual cap on any single business's fee. According to staff materials, the variable model originally projected about $7.5 million in new revenue; Option 2 was estimated to reduce that to about $5.8 million.
Pedro Garcia, a city economic staff member who led the study presentation, summarized local context: "We have more than 4,000 businesses" and the city's location and binational market provide a large consumer base. The staff presentation included jurisdictional comparisons showing National City generated lower revenue per business than neighbors such as Chula Vista.
Consultant Richard Bernard presented a voter survey of 412 likely November 2026 voters conducted June 4–25. Bernard said an initial read of a neutral ballot title and summary produced 71% yes, 21% no and 8% undecided; after providing legally permissible education about uses and provisions support rose to 77% yes with 55% reporting they would 'definitely' vote yes. He cautioned the sample margin of error was plus or minus about 4.9 percentage points.
Council members asked clarifying questions about differences between the options and the mechanics of the proposed gross-receipts approach; staff said rent and property rental would be captured in the property-rental category and that the cap had been added based on recent outreach input.
The proposal is advisory at this stage; staff told the council they will return with a more-detailed package and the council faces an August 4 deadline to decide whether to place a measure on the November ballot. No final action on the ballot placement was taken at this meeting.
