Wu: Politics is getting in the way of business
9:28 PM PDT, July 28, 2012
Ever since I wrote about Bob McCaffrey’s Stop the Dock Tax Political Action Committee, I have been pretty busy meeting with the different commercial docks owners (“Dock tax opponents form a strong PAC,” July 8).
While McCaffrey’s PAC deals primarily with the potential tax on residential docks, these commercial docks are under more imminent threat of getting taxed out of business, and only talked about taking the political route until now.
Enter the Coalition to Preserve Newport Harbor Political Action Committee, a PAC guided by a well-known and successful political consultant, representing the interests of the commercial marina owners.
For some reason these business owners don’t feel that a 20% tax on gross income is fair, with one owner saying, “I made 8% net profit, where in the world can I come up with 20% of gross [income] to pay a new tax?”
What is this new tax supposed to pay? Anything that relates to Newport Beach’s harbor, bay and beach gets paid out of the city’s tideland management budget, which gets its income from the different water-related fees.
The problem is that the city claims it has subsidized this budget by $15 million a year to cover its expenses.
The city has already increased the mooring fees by 300% and is now looking at the commercial marina owners and then possibly the residential dock owners to bridge the difference.
The Stop the Dock Tax PAC and the Coalition to Preserve Newport Harbor PAC claim that the tideland management budget isn’t true. Both want forensic accounting done to get an accurate picture of what the expenses truly are.
Once the budget is true, the PACs say they would be willing to be properly taxed to meet those expenditures. Sounds simple, right?
But it’s not when you consider that the Police and Fire departments receive money from both the tidelands management and general budgets. Whenever either department responds to a call at the beach, the money comes from the tidelands management budget.
But the funds aren’t determined by call but are instead based on an estimate of the percentage of calls that are beach- or harbor-related. How accurate can that be?
The $200,000-a-year, full-time lifeguards are also charged to the tidelands budget, which means the dock owners are expected to pay for their wages and $100,000-a-year pensions when the entire city benefits from the millions of beach visitors.
In all my meetings with the dock owners, as well as with other business owners discussing other issues, a common theme kept popping up.
They all work hard to support their families, meet payroll, keep their doors open, and never thought they would have to play politics just to stay in business.
Consider Mario Marovic, owner of Malarky’s.
After buying the Irish pub, he spent hundreds of thousands of dollars to improve the interior. He spent tens of thousands of dollars to pave over the fenced-in dirt lot next to his restaurant to offer more parking and create beautiful landscaping, improving the area.
Never did he think that he’d be told that he should have politically leveraged the building of that parking lot so that he could increase his dining room by 500 square feet. Business, not politics, dictated that his restaurant needed more parking. But it was politics that interfered with his business, and instead of the city helping his business, it is deterring it.
Perhaps Mario would have benefited further in his MBA studies at USC if they also threw some politics classes in there as well.
I heard the exact same thing from Larson’s Shipyard’s Ted Robinson, Duffy Duffield of Duffy Electric Boat Co. and Jack Mau of China Palace (now CP).
They spent years grinding away to ensure their businesses stay open, only to be hampered at some point by Newport Beach politics, with government telling them how to operate their businesses, when to operate their businesses, and at times demanding partial ownership of their businesses through excessive taxation.
But finally, desperate times organized some of these business owners into creating multiple PACs with the sole purposes of threatening these politicians with the only thing they truly covet: their political lives.
JACK WU is an accountant who lives in Newport Beach and practices in Costa Mesa. He is a longtime Republican Party loyalist and a volunteer campaign treasurer for Rep. Dana Rohrabacher (R-Costa Mesa). His column runs Sundays on the Daily Pilot Forum page. He can be reached at [email protected].