A committee of twelve National City business leaders voted unanimously on Tuesday to present a revised business tax proposal to the City Council. The new plan would generate $2.75 million in additional annual revenue, a sharp reduction from the $7.5 million increase initially sought by city officials. This alternative measure still requires approval from both the City Council and city voters before it can take effect.
The original proposal, which was rejected by a divided City Council in August, categorized local businesses into different groups and assigned varying tax rates to each. The committee's new approach abandons that complex structure in favor of a flat 0.07 percent annual business license tax applied to total sales for all businesses. To protect larger enterprises, the proposal caps the annual tax bill for any single business at $30,000, effectively exempting annual revenue above $42.9 million from the tax.
Committee members argue that while the new revenue is smaller, it balances the need to boost city coffers with the goal of keeping National City an attractive location for commerce. Jenifer Ball, vice president of Ball Auto Group and a committee member, stated that the city can elevate its revenue while becoming more competitive. She emphasized that while businesses are ready to assist, they do not believe it is their sole responsibility to close the city's entire budget deficit.
The dispute over the tax increase stems from a $13 million deficit in the city's budget. City staff originally proposed the higher tax hike to help balance the books, but a 3-2 majority on the City Council voted to task a business committee with crafting a more palatable alternative. The committee, which includes Chamber of Commerce President Karen McManus and Niederfrank's Ice Creams owner Patti Finnegan, met regularly with City Manager Doug Schulze and Economic Development Director Pedro Garcia starting in August.
During the process, city staff presented a compromise that would have raised $5.8 million annually. Business leaders found this amount too burdensome and ultimately voted for their own $2.75 million plan. Schulze and Garcia have indicated they will bring this new proposal to the City Council for a potential vote on November 17.
Reactions from City Council members have been mixed. Councilmember Marcus Bush, who is running for mayor and originally championed the idea of consulting with business leaders, called the new proposal a significant step forward. He noted that the original plan would likely have failed at the ballot box and damaged the relationship between the city and its business community.
In contrast, Councilmember Jose Rodriguez, also a mayoral candidate, expressed skepticism about the new numbers. He described the proposal as significantly less than what the city needs to offset its expenses. Rodriguez, who supported the original $7.5 million increase, has since formed a coalition of labor unions and community groups to place a different tax initiative on the ballot. That initiative aims to raise roughly $10.5 million by targeting large businesses such as Walmart and auto dealers.
Rodriguez is currently gathering signatures to place his initiative on the 2028 ballot. When asked if he would support the business leaders' new proposal and withdraw his petition, he said he would need to consult with his coalition partners. He expressed doubt that a group seeking $10 million would settle for $3 million. Business leaders, however, maintain that their proposal is fair and that the city should focus on operational efficiencies rather than solely relying on tax increases to fix its budget.
Joel Tubao, a property developer and committee member, stated that businesses would support their proposal at the ballot box. He warned that if the larger initiative proposed by Rodriguez's coalition passes, many local businesses might be forced to shut down. Business leaders also noted that even with the new tax, National City's business tax rate per resident remains the second highest in San Diego County, trailing only Del Mar.
