A bill in the state Legislature would give counties and school districts the power to levy more taxes on residents and businesses. It’s already giving local restaurant owner David Houston indigestion.

Houston, who owns five Barney’s Beanery restaurants in Los Angeles County, fears he will be slammed by higher tax bills. He would also face the burdensome task of tracking different tax rates and proposed hikes in the county and at least seven school districts.

“If local governments were allowed to raise more taxes, they would do so with abandon,” Houston said. “And then it would turn into an accounting nightmare for us.”

Houston is one of hundreds of business owners in the county and throughout the state who are lining up to oppose the local government taxation bill put forward by state Sen. Darrell Steinberg, D-Sacramento.

The bill, SB 653, would give California’s 58 counties and more than 1,000 school districts the right to ask voters to approve a wide range of taxes on personal income, vehicles, retail sales and services, alcohol, cigarettes and oil drilling operations. The aim is to give local governments more authority to raise revenue to offset steep cuts in state funding.

Mark Hedlund, spokesman for Senate President Steinberg said last week that the bill would only move forward if an agreement can’t be reached in Sacramento to place a measure on the statewide ballot that would maintain current rates of sale and income taxes, and vehicle registration fees. Without additional revenue, basic local services and education would face substantial cutbacks in funding, according to Hedlund.

But local business owners say they would face severe impacts if the bill passes. Hardest hit would be companies that have multiple sites, forcing them to track tax proposals for each location, fight those proposals and, if voters approve the measures, pay new or higher taxes.

Houston’s chain has restaurants in five cities in the county – Burbank, Los Angeles, Pasadena, Santa Monica and West Hollywood. If the bill were to pass, he would have to track tax proposals in four separate school districts, three community college districts and the county. He would also have to consider spending money to fight the proposals as they go to the ballot and then be prepared to pay the taxes if they are approved.

“I understand that any tax proposals would have to be put before voters,” Houston said. “But the proponents of these taxes make them sound like they would be used for motherhood and apple pie. So the voice of businesses that feel they already pay enough in taxes is often drowned out in the process – unless those businesses are willing to spend tons of money to defeat the tax proposals.”

Government gone wild

Indeed, business groups throughout the state believe many new taxes would pass, resulting in much higher bills for businesses.

“It will allow local governments to run wild with new and higher taxes,” said Randy Gordon, chief executive of the Long Beach Area Chamber of Commerce.

Steinberg spokesman Hedlund said the bill wouldn’t automatically result in tax increases. Local taxes for schools or specific purposes would require a two-thirds vote, a difficult threshold to reach. But taxes to raise money for general local government spending would only require a majority vote.

Houston also voiced concern over the unlimited amount of excise taxes that the proposal would allow. An excise tax is levied on a specific product such as alcohol or cigarettes.

“There’s no end to the things you can think of that justify excise taxes,” Houston said. “Alcohol, junk food, products that could cause pollution, etc. … You give local governments free rein here and they will become very creative.”

Business leaders said that if the Steinberg bill passes, the constant threat of new tax measures on a whole range of products would be devastating.

“I was not sure what else Sacramento could do to make this state worse for business, but this takes the cake,” said David Fleming, founding chairman of the Los Angeles County Business Federation and of counsel to the downtown L.A. law firm Latham & Watkins LLP. “We are already the least business-friendly state in the nation.”

Small-business owners could be especially hard hit by the Steinberg proposal. Many small businesses pay state and federal taxes through their owners’ personal income taxes. They are already in the highest personal income tax brackets, so new income taxes at the local level would affect them disproportionately.

“SB 653 would be a disaster for small businesses throughout the state,” said John Kabateck, executive director of the California chapter of the National Federation of Independent Business.

Bad timing

More taxes couldn’t come at a worse time for Tom Benson, who owns Long Beach-based Bud’s Auto Interiors, which has five employees.

“We’re barely pulling out of the recession right now and it’s a very, very slow pullout,” he said. “I’ve had to cut back on my employees more than 50 percent just to survive and several of my competitors have gone out of business. Now they want to add another whole layer of taxation? There’s not much more I can cut. If I get hit with new taxes, I don’t know if I’ll be able to stay afloat.”

Benson said he’s also concerned that the prospect of new local taxes would deter many entrepreneurs from opening businesses in California.

“There are already way too many agencies taking way too much money from businesses all the time,” he said.

Steinberg spokesman Hedlund countered that new and existing businesses benefit from stable levels of government service. He also said the state is looking at various tax credits and exemptions in other areas to help small businesses, such as sales tax exemptions on the purchase of manufacturing equipment.

Another Long Beach business owner also had concerns about the bill’s timing, because new taxes would compound the problem of spiraling costs for fuel and other basic supplies. Hilda Sanchez, co-owner of Minuteman Press, said she’s already struggling to cut expenses elsewhere as these costs go up.

“We have so little control over these external costs and we can’t really raise our prices,” Sanchez said. “Now they spring this on us. I have just one word for this: Ugh.”