Acting City Manager Tom Modica urged city council members to declare a fiscal emergency at Tuesday night’s meeting.
A recent review of the Long Beach Convention Center revealed it needs over $50 million in “critical needs” to support its current operations, he said. The valuation did not include funding for modernization and improvement, which the city says will be crucial in maintaining Long Beach’s tourism economy.
According to Modica, the general fund which is used to pay for improvements, will be running at a deficit as early as 2021.
Mayor Robert Garcia said he has been working with business leaders around the city, including the CEO of the convention center, Steve Goodling, to find an economically feasible solution to the impending budget shortfalls.
Garcia said that they’re trying to implement a 1% increase in the city’s transient occupancy tax, which is levied on hotel guests. The 1% increase would raise the effective tax rate to approximately 16% across the city and would cost potential guests an extra $1.80 to $2 per night.
Right now the TOT is set at 12% with 6% paid into the Special Advertising and Promotion Fund and 6% going into the General Fund. The proposed 1% increase would go directly to the General Fund and is expected to bring in an additional $2.8 million annually.
“What we’re talking about is an increase that is not paid for by Long Beach Residents,” Garcia said. “It’s not even paid for by the hotel itself. Additionally, even with this increase, it is still on average $100 cheaper than Los Angeles per night.”
Voters will be able to weigh in on the decision during the 2020 election.
A portion of the expected revenue will also be directed towards funding local arts programs in the city. It has already secured the endorsements of the Long Beach Playhouse, Long Beach Symphony, and the fledgling African American Cultural Center.
However, some residents had questions about how the money will be spent.
“If I’m not mistaken, the city manager suggested that [the money raised by the increase] is all going to the advertisement side,” resident Gary Shelton said.
There were also concerns about who exactly would be paying the new TOT.
“I’m not surprised to see that one of the partners of the [Breakers Hotel] is in favor of this since you recently gave them a waiver on the TOT for the next eight years,” resident Ann Kentrell said.
Kentrell was referring to a controversial decision made by the city in early October to assist a group of investors who are renovating the historic hotel by giving them an eight year long tax break estimated to be worth over $30 million.
“It will be an investment in and boom for the arts in our city. Arts are at the heart of our community,” councilmember Al Austin said.
The next city council meeting will be held Nov. 19 at 5 p.m. at Long Beach City Hall.