Laguna Beach to consider sales tax increase in strategic planning session

Laguna Beach is expected to entertain new avenues for revenue enhancement in 2026, including the potential for a sales tax increase.

City Manager Dave Kiff brought up the idea during a government affairs meeting at the Laguna Beach Chamber of Commerce on Thursday, while speaking as a guest.

“Sales tax is really flat year-to-year in Laguna,” Kiff said. “What we look at from the city government is the need to make sure that our expenditures are not exceeding our revenues. When you have a really reliable revenue source — sales tax — flattening, you have to adjust what you do as a city.

“We’ll be talking with the City Council later in January, at our strategic planning session, about trying to retool a little bit. We’ve got to get our own house in order better in order to stay fiscally sustainable.”

Laguna Beach’s sales tax rate stands at 7.75%. A sales tax increase would require a ballot measure, and it may not be a popular move with the business community.

Jim Hall, a hotelier affiliated with La Casa del Camino, cautioned against a sales tax increase, preferring to explore methods to bring more business to town.

“I think it limits the spending ability, and it could push folks to other cities that choose not to do that sales [tax] increase,” Hall said. “Dana Point, Irvine, Newport. If everybody raised it, I think we’re in the same boat, but if we kind of lead that charge and put the higher sales tax, it’s already kind of tough times out there for people spending, and I don’t want to give them another excuse not to come.”

Laguna Beach offers services that are not common in other cities, Kiff said, pointing to the city’s on-demand rideshare program, its lifeguarding agency, and wildfire mitigation efforts, to name a few.

Kiff said the city’s stategic planning session later this month will also include discussion of business license and transient occupancy taxes, more commonly known as bed taxes.

Kiff also used the platform before the chamber members to double down on his push for the community to consider becoming a charter city. The subject has come up before for Kiff, particularly related to parking enforcement. State law requires a city employee to place a citation on a windshield, he said.

“I’m convinced that Laguna Beach, the voters should consider, and hopefully vote for, becoming a charter city,” Kiff said. “... Some of the key areas where that’s important is in our ability to have different service delivery. In some cases, it’s privatizing it, contracting it out.”