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Council directs staff to place Model 4 business-license tax measure on November ballot
Summary
After a multi-hour staff briefing, polling presentation and extensive public comment, the City Council voted 5–0 to direct staff to bring an ordinance and ballot resolutions for a variable-rate business-license tax (Model 4) back on August 4 for final adoption to place on the Nov. 3, 2026 ballot. The measure would simplify categories, apply a $100 flat fee on the first $100,000 of gross receipts, use a lower rate for general retail and higher rates for other categories, and cap payments.
After extended staff presentations, polling data and a lengthy public comment period, the Manhattan Beach City Council voted unanimously to advance a variable-rate business-license tax update — called Model 4 — to the voters.
Finance staff summarized the modernization project’s goals (simplify, clarify, modernize, and improve equity) and legal options; polling consultant Dr. Tim McLarty presented survey results that showed initial ballot-test support at 59% and a final ballot-test figure of 64% for the Model-3 framing used in the poll. Dr. McLarty told the council, "At the final ballot test, we have 64% of respondents say that they would support this proposal," and he cautioned that continued communication would be needed to defend the measure against opposition arguments.
Following public testimony from downtown business owners and contractors expressing concerns about proposed impacts, council members debated alternative rate structures and cap levels. Mayor Pro Tem Tarney moved to advance Model 4 "as presented," summarized by staff as: a $100 flat tax covering the first $100,000 in gross receipts; a lower gross-receipts rate for the general retail category ($2 per $1,000); higher rates for other simplified categories (calculated at about $2.80 per $1,000 for contractors, professionals and certain property-rental categories); and a proposed cap on any single business’s annual payment of $100,000. The motion passed 5–0. The council directed staff to prepare a redline ordinance and the ballot resolutions for the August 4 meeting and asked that revenue results be tracked and reported back in subsequent budget reporting. Council also asked staff to prepare educational materials for businesses and residents.
The action does not itself change the tax; it directs staff to prepare ordinance language and ballot materials for council consideration on August 4, 2026 so voters can decide in the Nov. 3, 2026 election. Council members emphasized that the measure is fundamentally intended to simplify the code and make taxation more proportional, not to create an unexpected revenue grab, and staff noted they will present a red-line ordinance and the required 75-word ballot statement for the council’s August meeting.
