SOLANA BEACH — Solana Beach residents rejected a business tax that could have added approximately $500,000 annually to city coffers.
With slightly more than 57 percent of voters opposing Proposition L in the June 8 election, city officials will have to look elsewhere to address a half-million-dollar deficit in the upcoming fiscal year budget.
Council members began looking at the tax early last year as one of five options to help increase revenue and balance the budget.
A sales tax and fire benefit fee increase, the addition of a utility tax and a decrease in the minimum night stay for short-term vacation rentals were all rejected for various reasons.
The business tax was initially met with opposition but city officials and representatives from the business community worked together for months to create a model both sides eventually agreed on.
“I’m disappointed because we all worked so hard with the business community and we had strong business support,” said Deputy Mayor Lesa Heebner. “Ultimately it was up to the voters to decide. Fortunately we are an efficient well-run city with healthy reserves, and we will move forward from here.”
The tax would have been based on gross receipts and ranged from $50 to $1,675 annually. Proposition L also would have required property owners with more than five residential rental units to pay $25 per unit. Home-based businesses would have been charged $75.
Council members would have had the option to waive or suspend the tax at any time.
Solana Beach will remain one of only two North County cities — the other being Encinitas — that do not charge a business tax. City Manager David Ott said companies haven’t been flocking to Solana Beach because it didn’t charge the business tax, nor were other cities losing businesses because of it.
Solana Beach cut its budget by more than $1 million during the past two years to help deal with declining economic conditions. Ott said the cuts have not affected services so far.