GARDEN GROVE : Tax, Fee Increases Win Initial City OK

Faced with a $5.6-million budget deficit, the City Council this week tentatively agreed to raise business license fees and hotel and street lighting taxes--a move that might provide more than $3 million in revenue.

The council, which has historically resisted any kind of tax increase, must still come up with other ways to cut more than $2 million in services in order to balance the city’s $46-million budget, Deputy City Manager Michael D. Fenderson said.

“Right now, anything is possible,” Fenderson said. “We are looking at across-the-board cuts.”

Although no layoffs are expected, the council will consider cuts ranging from alternate work schedules for city employees to a hiring freeze. They will be presented with a list of recommended cuts early next month. At that time, they will take an official vote on the new taxes, Fenderson said.

The increase in business license fees, which would be the first such increase in the city since 1972, is expected to bring in an additional $1 million.

Although details of the increase are yet to be worked out, businesses will most likely be paying a fee based on their gross receipts instead of the current cost, which is a $30 flat fee plus an additional $10 per employee. The change would put the city in line with the county average of $96 per business.

“Businesses were getting a heck of a deal in Garden Grove,” Fenderson said. “We had the lowest cost in the county.”

The hotel bed tax, which is a tax for each hotel room in the city, would go from 8% to 10%, and street lighting taxes would be raised about $2 each month per property owner.