GARDEN GROVE : City to Consider Business Tax Waiver

Officials are considering a proposal to waive the city’s business tax for new companies for a year and begin an aggressive marketing campaign to attract businesses that will increase the tax base in the financially strapped city.

Councilman Mark Leyes, who last week advocated suspending the business operations tax, has also urged colleagues to exploit other conditions in the city that favor business growth.

They include inexpensive lease rates and available space in the city’s industrial park, comparatively low water bills and the lack of a utility tax, Leyes said.

The absence of a utility tax should be especially attractive to companies that use a great deal of energy, he said. Virtually all cities surrounding Garden Grove impose a tax on telephone, gas and electricity bills, he said.

Leyes said he plans to ask his colleagues to waive the business tax at the council meeting on June 1.

“The single thing that’s going to help the city and all local governments the most is an economic recovery,” he said. “Garden Grove has little control over some of the important economic factors. But this initiative will help us to do our share to promote economic development.”

The maximum fee for a business license is $3,000 a year.

Bill Grant, who is scheduled to become president of the Garden Grove Chamber of Commerce on July 1, said the proposal to waive the business tax has merit. He said the waiver might help the city attract a company that is just getting started and is undecided on where it wants to locate.

The city faces a $7-million budget deficit in the coming fiscal year and officials are considering program reductions and pay cuts.

Mayor Frank Kessler said the proposals are worth considering because the city is having increasing difficulty in balancing its budget due to a slim tax base and the state keeping revenue that previously was given to local government.

Kessler noted that nearly 60 city positions, which were mostly unfilled, have been eliminated from the current budget. He expects 20 additional positions to be made vacant next year.

The city has about 600 employees, he said.