Make Newport More Business Friendly

Do you remember The Newport Dividend? That was former Mayor Rush Hill’s idea to buy the election last November.

Rush’s great ideas were to give free building permits to all residential builders during 2014, establish a water taxi system, and convert the Coyote Canyon Landfill to a municipal golf course.

I am glad that it did not work out for Rush. Although these were supposedly Rush’s ideas, four of the council went along with them, only Daigle and Gardner dissented.

What was the logic behind the giveaways? According to Rush, as quoted in the Newport Beach Independent on March 14, 2014, “Basically, this is an attempt to look at our current financial situation and our future short-term needs and evaluating that, at this point in time, we feel that we are adequately funded and that we wanted to do something that would be appropriate to give back to the community.” Without the political doublespeak that translates into “We collected too many taxes and we feel guilty, so we are going to give some back, since this is an election year….”

In fact, Curry, Petros and Henn were all quoted as supporting the idea. Daigle and Gardner were against it because it they thought it was too narrow in the way that the taxes were being returned.

So Newport collected too much in taxes and the council gave some back through the free permit process. In fact the council gave $2.02 Million back during the free permit phase. Did it spur economic growth as was forecast? Hard to tell how many people decided to remodel because of the free permits that would not have remodeled otherwise.

Of the few permittees that I talked to, all of them were going to remodel anyway. One pushed his remodel work up a couple of months in order to cash in. Kind of reminds me of the “cash for clunkers” giveaway.

So the City Council collected too much in taxes and wanted to return some to the taxpayers, but as Daigle and Gardner pointed out the taxes were collected from a very broad base, but returned on a very narrow base, on a one year only basis.

We have another surplus this year—yes, even with the incredible overspending, we are a blessed city.

The surplus has been used, so far, to pay down unfunded pension liabilities ($6.6 million), additional reserves for our self-insurance fund ($2.5 million), employee deferred compensation fund ($1 million), and “to be determined” ($2 million).

If we keep our spending next year in line with this year, we will also have excess revenues that should be returned to the taxpayers. I propose a broader and permanent tax cut.

Instead of collecting taxes and then deciding where to give the extra money, how about not collecting the taxes in the first place? I propose reducing the business license tax from the $162 to $1,621 that taxes based on the number of employees, to a simple flat fee of $50 per year.

The current business license tax that is collected is $4.1 million per year. With a $50 flat fee, which would cover the cost of managing the database, the revenue would probably be in the $500,000 to $1 million range, which would result in a tax savings of $3 million to $3.5 million.

This would give us a long term refund to the taxpayers, and eliminate a tax that has been part of the city since 1906.

A tax that has been around this long will be hard to kill. Reagan said that “a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

I believe in the economic principal that when you tax something you get less of it. So why are we taxing businesses for having more employees? Big Corporations, of course, have no problem with this tax. It is the small businesses that pay a disproportionate share of the tax, so why not make our dividend permanent?

Let’s make our community more business friendly.

Councilman Scott Peotter