Economy is hot topic

Mayor Elizabeth Pearson did some bragging Friday at the State of the City Luncheon about the city’s accomplishments in the past couple of years, tempered by the economy and gave hints of better days to come.

Pearson was the keynote speaker at the annual Chamber of Commerce luncheon, held May 14 at Montage Laguna. She spoke on the overall state of the city, but honed in on economic issues that impact the city’s business community, much of it echoed by representatives of elected officials at the state and county levels.

“Clearly the State of California is not the ideal place to do business — as evidenced by the recent sixth survey of Chief Executive Magazine, which ranked California as the 51st least desirable place to do business, behind all other 49 states and the District of Columbia,” Pearson said. “It’s not easy opening and operating a business in our state. But it’s going to start being a little easier in Laguna Beach.

“I’m here to tell you today that there’s a frame of mind at City Hall when it comes to helping our businesses---and potential businesses coming in — and it’s this: We want you here; we want you to thrive; we will do our part to be more friendly and approachable to help you be successful; our minds and doors are open to you.


“And I know all of you here today are with me on this.”

Keeping established businesses in town, filling empty storefronts and expanding the product and service mix in town so that more locals shop locally has been a priority for the past two years. .

The Long Term Business Task Force co-chaired by Pearson and Mayor Pro Tem Toni Iseman recently completed its mission and will be presenting a report to the full council and the public at the June 1 council meeting. The task force piggy-backed on the findings of the Business Assistance Committee organized almost two years ago by Pearson and Councilwoman Verna Rollinger, which made recommendations for immediate action.

Among the committee recommendations implemented:


 Increased sidewalk cleaning;

 Installation of credit card parking meters;

  Free Village Entrance parking year-round for business employees except during Festival Season; and

 A letter from the mayor asking retail property owners to consider reducing or not raising rents to help struggling business during the economic downturn — a notion promoted by Councilman Kelly Boyd.

However, the business community is not the only victim of the economy.

Property, sales taxes dive

City revenue derived from property tax receipts, which supplies about 56% of the city’s general fund, is down 18 percent from two years ago and hotel “bed tax” revenue, the next highest generator of city revenue, is 18% lower. Sales tax revenue is down 24% — led by a 37% drop in construction-related sales. General sales plummeted 32% and food sales, primarily grocery stores, dropped more than 16%.

A $2 million shortfall for fiscal year 2010-1011 will be covered by dipping into the Recession Smoothing Fund, established for just this purpose. Three jobs vacated by retirement will go unfilled and one job was cut to part-time with the employees’ concurrence.


Expenses will be further reduced by funding the Public Employees Retirement System retroactive payments from loans of unused city funds and the Municipal Employees Assn. relinquishment of a raise for the second year.

Pearson had a bit of good economic news to impart.

The city’s bond rating recently was upped by Standard and Poor’s to AAA.

“And we ‘sunsetted’ the one-half cent sales tax to complete the Bluebird landslide restoration, as we promised to do,” Pearson said.

Pearson said local indictors show promise of a reviving economy.

“Just over the last 30 to 45 days, we’ve been hearing some positive news,” Pearson said.

Homes are selling

Escrow openings have dramatically increased, indicating property is selling, although home prices are still lower than four or five years ago due to the glut of homes on the market.


City officials are also hearing that hotels had fewer vacancies this past month and a few retailers are reporting more sales.

“Hopefully the warmer weather will bring more hotel guests to town, which, as we all know, are our most beneficial tourists,” Pearson said. “Those folks spend money.”

In other State of the City reports, Police Chief Paul Workman said calls for service are up, but major crimes are down.

“I truly believe we have a great group of police professionals,” said Workman, a veteran of 35 years with the department. “They are talented and educated and last year’s cases prove that.”

Two jewelry store robberies and one murder were solved.

“Other cities have reduced services; knock on wood we are not forced to do that,” newly appointed Fire Chief Chris Head said.

In fact, the department is prepared to launch Ready Set Go, an educational program that sends firefighters into neighborhoods to help residents create a plan for evacuation if necessary rather than becoming a statistic.

Marine Safety Chief Kevin Snow reported that visitors to Laguna have increased, now up to about four million a year.

His department of 100 lifeguards, at its peak, is chalking up 3,500 rescues a year. Snow is looking forward to the construction of the new Lifeguard Headquarters on Main Beach to give his staff better monitoring of the beach and better facilities for training.

Public Works Director Steve May reported that tram ridership is up to 6,000 a day in the summer.

“That takes 2,500 vehicles off the road and that’s pretty cool,” May said.

Proposed capital projects include re-paving the North Laguna alleys, some of them untouched for 30 or 40 years.

‘Better than other cities’

“Laguna Beach is doing much better than most other cities,” Assistant City Manager John Pietig said. “As examples, we are not closing City Hall on certain weekdays, we are not furloughing or laying off employees and all departments are working to absorb cost increases to prevent an adverse impact on community services due to the economy.”

The economy was also addressed by Howard Sutter from Supervisor Patricia Bates office, Assemblyman Chuck Devore’s representative Scott Carpenter, State Senator Tom Harman’s District Representative Emanuel Patrascu, Lou Penrose from 48th District Rep. John Campbell’s local office and Gov. Schwarzenegger spokeswoman Lisa Kalustian.

“We need to make the state more business-friendly,” Kalustian.said.

The governor is focused on the economy, the job drain and a $20 billion deficit, according to Kalustian. He wants budget reform including a “rainy day fund,” a step taken by the Laguna Beach City Council in 2008, a portion of which will be used to balance the 2010-2011 budget, as Pearson mentioned.

Must attract businesses

The state needs to attract more businesses to stay or come to California to generate more revenue, Patrascu said.

“We are losing jobs because other states offer tax incentives,” Patrascu said.

Harman is working with the governor on pension reform to reduce expenditures, Patrascu said.

Overspending is also a national issue.

“The U.S. is not Greece, but Greece is a lesson for the U.S.,” Penrose said. “If you spend more than you take in, you won’t be able to borrow and things unravel. Our national debt is the worst except for Greece and Italy.”

Campbell wants a constitutional limit on spending, Penrose said.

Chamber President Chris Keller, owner of the Casa del Camino and the newly opened Big Fish and Ice Cold Beer restaurant, closed the program with a positive take on the economic future of the Laguna business community. .

“We will get through this,” Keller said. “We just have to think outside the box.”