SURCHARGE: Council Drops Plan : Council Abandons Surcharge Plan After Businesses Protest

Responding to cries of “taxation without representation” from businesses that do not belong to the Chamber of Commerce, the City Council this week unanimously abandoned a plan that would have required all business license holders in the city to subsidize chamber activities.

“If we implement the 6% ordinance tonight, we’ll all go home without our heads,” said Councilman Archie Snow after two hours of testimony and debate about a proposed surcharge on business-license fees. The 6% surcharge would have provided the chamber with $57,600 next year.

The council voted instead to give the chamber an extra $7,000 from the city’s general fund to help the financially troubled organization. Under a five-year contract negotiated with the chamber last spring, the city agreed to give the chamber $35,300 from the general fund in 1985-86. The extra funds are to make up an estimated $16,000 shortfall in the 1985-86 fiscal year.

Businesses Unaware of Plan

Last week, Snow and three other council members voted to levy the 6% surcharge--which would have replaced the subsidies in the five-year contract--over the objections of Councilwoman Marcia Martin and Mayor Barbara Doerr. Martin and Doerr complained that most businesses in the city were unaware of the plan.

The surcharge would have increased fees on bills mailed this month for an estimated 10,000 business-license holders in the city, fewer than 600 of whom actually belong to the chamber.

Under the current five-year contract, the chamber is to become economically self sufficient in 1991 through gradual reductions in city subsidies and increases in membership contributions. The 6% surcharge was designed to immediately shift the burden of paying for the chamber from city taxpayers to local businesses.

“We can wait. We are in no hurry,” said Ernie O’Dell, executive director of the chamber, in response to the council’s change of heart.

Merchants Wrote Letters

“We tried to come up with a novel and nice way to support the chamber with only the businesses paying for it,” added Mary Davis, outgoing chamber president. “If that was wrong, then so be it.”

Several dozen local merchants, professionals and apartment owners--all of whom are required by law to hold business licenses--phoned City Hall or wrote letters after hearing about the surcharge. Both Mayor Doerr and the chamber mailed post cards to business-license holders last week advising them of the ordinance, which needed final approval Monday to take effect.

Chamber executives blamed Doerr’s post card campaign for the demise of the surcharge, charging that the mailings erroneously stated that the chamber had requested the 6% increase. O’Dell said the surcharge proposal came in response to a proposal already before the City Council to increase the fees by 4% to make up for inflation.

“We found out that we were going to be hit with a 4% increase and we set out to fight that,” O’Dell said. “In that fight, we found out that it might be a good opportunity--if you are going to have the increase anyway, give it to the Chamber of Commerce.”

Barbs Exchanged

O’Dell and Doerr exchanged a few barbs at the council meeting, as has been a practice between the chamber and the mayor on many business-related issues.

“I feel a little wronged that we who have worked so hard for the business community are now being shot at by those who are opposed to the business community,” O’Dell said. “I won’t name names, Mayor Doerr.”

“You are very good at twisting some of the facts,” Doerr countered. “I don’t think the record will reflect that you were ever at a City Council meeting fighting the 4% increase.”

Patsy and Earl Fry, owners of a small apartment building in the city, wrote a lengthy letter to Mayor Doerr, saying negative publicity about the surcharge could harm the chamber and inspire recall movements against City Council members who favored it.

“It is not so much the amount--which is small--but it is a violation of rights,” Patsy Fry told the council Monday night. “We really do believe in the chamber, but mainly through . . . private support.”

Objected to Method

Several speakers also objected to chamber plans to reimburse its members next year for the increased license fee, saying the rebate would create two classes of license holders. Others said they did not want to be members of the chamber, describing the involuntary payment as “taxation without representation.”

City Manager Tim Casey said most of the people who phoned City Hall did not object to city subsidies for the chamber, but rather to the proposed method of tying the subsidy to a specific fee.

“What the Chamber of Commerce is asking for is welfare,” said Martin Tabnik, a data processing consultant, one of 10 people who spoke against the proposal. “Do you want to become the draft board for the Chamber of Commerce?”

City Treasure Alice DeLong, who also opposed the surcharge, said about 4,500 of the city’s business-license holders are apartment owners--the vast majority of whom have no interest in the business community.

Apartment owners pay less for a license than do commercial businesses, with the owner of a building with three or fewer units paying $25 annually. The fee increases $5.25 a year for each additional unit.

Fees May Drop

The fees for apartment owners with one and two units may drop next week, however, based on an ordinance introduced by the council in the early morning Tuesday. At the suggestion of Councilwoman Kay Horrell, fees for one-unit rentals would fall to $14.50 and fees for two units to $19.75.

In contrast, businesses and restaurants pay $73.50 per year, plus an additional $13 for each employee up to 1,100 employees, DeLong said. Doctors and other professionals pay $96.50 plus the same employee fee, as do firms outside Redondo that make deliveries in the city, she said.