The night before the Los Angeles City Council passed a measure that would reduce business taxes, the Redondo Beach City Council voted to consider increasing that city’s business license tax.

Facing a budget deficit of at least $2 million, Redondo Beach like many cities throughout the region has been eyeing business tax revenues as a way to make up the difference.

“When the state began taking money from our coffers, we began looking at our entire tax and fee structure,” said Councilman John Parsons. “That’s when it came to our attention that this business license tax hasn’t been raised in 13 years.”

Parsons was one of three councilmembers voting to consider raising business license taxes; two opposed the motion.

Two proposals are due to come back before the council this week: one would raise taxes 20 percent a year for two years; the other would raise them 10 percent a year for five years. Both also call for subsequent increases tied to the rise in the local Consumer Price Index.

Redondo Beach Mayor Greg Hill, a Republican who just lost a race for state Assembly, has said he might veto the measure. It takes four council votes to override a mayoral veto.

The council has until Dec. 7 to place any tax increase measure on the March ballot. Under state Proposition 218, a tax increase with proceeds going to a general fund must garner majority support of voters.

Also on that March ballot is a measure to increase the city’s hotel bed tax from the current 10 percent to as much as 12 percent. That measure has conceptual support from the local Chamber of Commerce and is widely expected to pass.

Adding another political dimension: Hill is termed out as mayor next year and the candidates vying to replace him will also be on the March ballot.

Currently, Redondo Beach has one of the lowest business tax rates in the South Bay, according to a staff report. Most of the city’s 12,000 business establishments are charged a $99 flat fee, plus $18 per employee. Only about 2.5 percent of all city general fund revenues come from this business tax.

“Redondo Beach is a relatively low-cost city for business taxes, so they do have some room to play with,” said Larry Kosmont, a Los Angeles-based economic development consultant who publishes an annual “cost of doing business” survey. “In the short run, it’s a great place to find revenues, because businesses don’t vote. In the long-run, if rates go up too much, it could backfire.”

That was the chief concern among councilmembers when they first debated the issue. The staff proposal initially called for a 50 percent increase in the flat rate (to $150) and a doubling of the per-employee charge (to $35), effective with the start of the next fiscal year on July 1. It also would have established new taxes for businesses of more than 10,000 square feet.

That proposal met with resistance from the Redondo Beach Chamber of Commerce.

“We understand what they are trying to do and we are sympathetic to the need for more revenues,” said Chamber president Marna Smeltzer. “But our members agreed that this proposal to make up 13 years in one increase was simply too aggressive.”

Councilmembers have backed away from the initial proposal and put forward the two phased-in approaches.

Smeltzer last week said the chamber is in the midst of polling its members on the two proposals that phase in the tax hikes. So far, opinion was evenly divided on whether to support the 10 percent increase-per-year plan, while opinion was running about 2-1 against the 20 percent-per-year option.