Pass: 1508 / 68.0% Yes votes ...... 711 / 32.0% No votes

See Also: Index of all Measures

Impartial Analysis from City Attorney Mark Hensley

Measure N proposes amending the City's existing business license tax regulations by (1) providing for an annual increase; (2) reducing a sales/use tax credit available to businesses; and (3) making text changes to clarify existing tax rates.

Measure N would provide for an annual business license tax increase based upon averaging the last ten years of the consumer price index for the Los Angeles/Riverside/ Orange County area as calculated by the United States Department of Labor, Bureau of Labor Statistics. This ten-year average percentage would be added to the City's current tax rates. Measure N identifies the annual increase as the "average consumer price index" or "ACPI."

According to public documents, the ACPI is needed because business license taxes have not increased since
1993. Consequently, the revenue derived from business license taxes continues to decline both as a percentage of the City's budget and in real dollars adjusted for inflation.

Based upon City estimates, using the ACPI would increase City business license tax revenue by approximately 2.5% annually. This translates to approximately $250,000 to $300,000 per year.

Measure N would result in the City increasing its business license taxes commencing on January 1, 2011 for the 2011 calendar year and each January 1st thereafter.

Existing regulations allow businesses to offset business license taxes by utilizing a credit based upon the amount of sales/use tax revenue the City receives generated by that business. Currently, a business can use up to 50% of the sales/use tax the City receives from the business as a credit against the amount of the business license tax it owes the City. For example, if a business generates $50,000 of sales/use tax for the City, it is entitled to apply 50% or $25,000 as a credit toward its business license taxes. Accordingly, if the business's business license tax liability totaled $25,000 or less, the business's actual business license tax owed to the City would be zero.

Measure N would reduce the business license tax credit for businesses generating sales/use taxes from 50% to 40%.

Measure N would also make text changes to the City's business license tax regulations to implement the business license tax rate calculations. There is no actual change to the tax rate; the dollar amounts refl ects the current amount the City charges based upon existing regulations.

Measure N would be a "general tax." Therefore, all tax revenue would be available for use by the City to pay for general City operations and services. The City would not be legally bound in any way to use the tax monies for any special purpose or for any particular facilities or programs.

Since this ballot measure proposes a "general tax" rather than a "special purpose tax," it requires approval by a simple majority of the City's voters.

A "yes" vote on Measure N favors the Measure.

A "no" vote on Measure N opposes the Measure.

City of El Segundo