Pico Rivera's business tax license had not been updated since 1967 and the city was leaving about $5.8 million in annual revenues back in the 1960s, yet the city had changed dramatically - for the better. By updating the fee schedule to reflect the changing business and demographic dynamics, the city would be able to fund ongoing infrastructure, public safety and parks programs. A huge victory for Pico Rivera - thanks to a growing trust between the city and voters.
In 2022, with a progressive City Manager, innovative staff and supportive City Council, Pico Rivera started to re-imagine how the city of just over 60,000 predominantly working class residents could continue to invest in streets, improve public safety and ensure parks were clean and safe. Despite balanced budgets, the City was looking long term, looking to make innovative changes in how the city operated and reinvesting in the community. Pico Rivera voters had already approved a marginal sale tax increase via Measure P, in 2008, which left another sales tax increase off the table. City leaders realized they had a great opportunity to generate revenues without imposing a sales or parcel tax.
The business license fee was, for the most part, unchanged since the late 1960's when the City of Pico Rivera had a totally different local economy. Circus tents and bowling allies have been replaced with strong retail and manufacturing sectors, yet they paid very little into the city's infrastructure.
Creating Equity by Engaging the Community
While it is true that bowling alleys, circuses, stamp collections and other businesses were paying the same fees as larger businesses, the real challenge was ensuring new businesses were able to continue to thrive, while ensuring equity. The path to securing a win in November started with research that suggested voters were interested in long term infrastructure, public safety, clean water and crime prevention. The city realized they had a unique opportunity to ensure community needs were met while improving the business climate for small business.
By examining the existing license structure and testing potential modifications by creating impact models, Pico Rivera was able to determine that a mixed gross receipts and square foot model would spare a high impact on small and medium business while ensuring that larger businesses were paying their fair share. The City Council approved sending Measure AB to the November ballot after considerable staff work, debate, community engagement and discussion.
Developing a Narrative
Dragonfly Public Affairs was able to review staff reports, observe council meetings and engage in conversations to build a narrative around Measure AB. The key to ensuring community engagement and support was to distill complex information into materials that are relatable and understandable by residents that may have no preexisting concept of the city's business license climate. Dragonfly staff were able to reframe the material in a manner that voters and community members could understand without specifically advocating for a "Yes" vote, which is not allowed when cities communicate on a ballot measure.
On Election Day, Pico Rivera overwhelmingly supported Measure AB because the city had a vision and a process to ensure voters were educated long before ballots were mailed. While Dragonfly produced direct mail, PowerPoint presentations, social media and newspaper ads, the real effort was the city's understanding of creating an environment of trust, transparency and openness.
As other cities face long term revenue challenges, looking to voter approved sales tax measures can become increasingly risky given increasing price increases on consumer goods. Improving the business license fee benefits residents without a direct cost via sales tax or parcel tax. With increased transparency and equity in how the city determines the the appropriate business fees, the entire community benefits by directing revenue enhancements by improving streets, parks and public safety.
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