Mayor Proposes Tax Hike for Culver City Businesses
February 27, 2020
Buoyed by sales tax initiatives on both the March and November ballots, Culver City Mayor Meghan Sahli-Wells has proposed a major increase in the business tax.
The city, which has a history of using tax incentives to attract and keep larger businesses, has created a committee looking for ways to increase revenues. Proposals being floated could possibly triple the business tax in the next couple of years.
Sahli-Wells tweeted out: "There are a lot of major companies that are locating in Culver City. Especially as we welcome some of the wealthiest corporations on the planet, it would be appropriate to ensure that all businesses are paying their fair share."
Currently, the city charges businesses a tax based on gross receipts regardless of whether the business makes a profit. Currently the wholesale/retail sales businesses and most services are taxed at a rate of $1 per $1,000 of gross receipts. Consulting and most professional services are taxed at a rate of $3 per $1,000 of gross receipts.
According to city data, revenues from the business license tax have increased over the past 10 years, from $10.7 million in fiscal 2009-2010 to $13.1 million collected in 2018-2019 and are on course to hit $15 million this year -- resulting in a 50% increase in the tax revenues over the past 10 years.
Since businesses pay a part of their gross revenue, city officials have not elaborated on how this proposed tax hike would be accomplished and what it would achieve.
However, any increase in the business tax would have to be approved by a majority of the council and by residents in a ballot measure, city officials added.
Colin Diaz, president of the Culver City Chamber of Commerce, said his members, which include Amazon and Apple, are preparing an alternative proposal. He commented that the chamber is aware the city needs the money but he added that "71% of the general fund is derived from the business community. If taxes are to be increased, what are they going to be used for?"
Diaz was critical of recent council decisions, citing millions of dollars in unnecessary spending.
Longtime resident Paul Ehrlich put it succinctly recently in his written remarks, "they are going to spend $500,000 to replace a perfectly good City Hall courtyard with another perfectly good City Hall courtyard."
He also cited the $1.5 million the city was contracting with Metro to provide bicycle stations throughout the city. Culver City had the option to partner with private companies on a bike share program but chose to invest in Metro's failed program
To read more on the failure of the Metro bike programs, go to https://medium.com/@geniusaging/public-transportation-fail-in-los-angeles-metro-bike-share-more-44d1f4df8c9c.
Known as the "Heart of Screenland," Culver City has become a hub of streaming services since Amazon began occupying the Culver Studios three year ago. Major construction on the lot are underway and Amazon plans to lease 530,000 square feet of the campus. The company has also leased the entire 75,000 square feet at the Culver Steps across the street.
HBO's West Coast office will move into its new Culver City headquarters occupying 240,000 square feet.
Sony Pictures Entertainment which sits on the former MGM lot is the city's largest employer with about 3,500 workers.
The three major companies coming to town will employ over 5,000 people. TikTok estimates about 1,000 people. Amazon's about 2,400 employees, HBO is expected to have 750 employees, and Apple will employ about 1,595 people, according to Culver City estimates.
The large companies have remained quiet on the tax issues and it remains to be seen if unreasonable increases will force these companies to rethink locating to Culver City.