Businesses in Beverly Hills could face tax hikes totaling up to $7 million a year if voters in that city approve a business tax overhaul on the March 3 ballot.

Measure P, which the City Council placed on the ballot in the fall, would impose new taxes on private parking lots and garages. It would also increase taxes on oil companies drilling under the city, and sharply increase business license taxes paid by lawyers, doctors and other professionals.

The measure, which would take effect in 2010, would generate between $5 million and $7 million a year in additional revenues for Beverly Hills’ general fund, which like most cities has come under increasing pressure from the economic downturn.

Businesses are viewed as easier targets for tax or fee hikes than broader measures hitting residents such as utility rates or property tax assessments.

“Beverly Hills is no different than many cities in Southern California in that they treat businesses as second-class citizens,” said Larry Kosmont, a Los Angeles-based economic development consultant and co-author of the annual Cost of Doing Business Survey. “This perpetuates the perceptions at many city halls that it’s OK to tax businesses more rather than increase taxes on citizens.”

Beverly Hills is projecting a 7 percent to 9 percent revenue drop for the 2009-10 fiscal year. If passed, Measure P would add about 4 percent to the city’s $173 million general fund.

“Our expenses are rising faster than our revenues,” City Manager Rod Wood said. “Our citizens tell us repeatedly that they do not want to see cuts in services, so that means we either have to increase taxes or seek new development.”

The latter, Wood said, is highly controversial and has become a long, drawn-out process, as was the case with the recently completed Montage hotel project and a proposed redevelopment of the Beverly Hilton hotel site.

The 38-member board of the Beverly Hills Chamber of Commerce is set to consider taking a position on the tax issue Tuesday.

Taxing measures

Measure P would impose a 10 percent tax on the revenues of the 86 private parking facilities in the city, which would generate between $2 million and $4 million a year.

But private parking lot owners say the tax could backfire and drive away shoppers, leading to a net drop in city revenues. At the Two Rodeo Drive shopping center at Wilshire Boulevard and Rodeo Drive, General Manager Bill Wiley said the parking tax would be passed along to customers. The center’s 460- space garage has two hours free parking; then the higher costs would kick in.

“Given the current economic environment, this is precisely the wrong time to add taxes and reduce customer flows,” Wiley said.

The ballot measure also increases the tax on oil extracted from beneath the city. Currently, Beverly Hills charges a flat fee on each barrel of oil pumped from underneath the ground; Measure P would change this to 10 percent of the price of a barrel of oil. While there is only one operating oil well in city limits (on the grounds of Beverly Hills High School), several wells just outside the city including one by Breitburn Energy Partners LP at Pico Boulevard and Doheny Drive slant drill underneath the city, and they would be taxed.

City staff projects the oil tax would bring in just over $1 million a year, assuming oil prices are above $50 a barrel.

The other major component of the tax increases would be aimed at the city’s lucrative professional sector. Besides the usual law and accounting offices, Beverly Hills is home to hundreds of high-priced medical offices and dozens of cosmetic surgeons.

For more than 30 years, the Beverly Hills has taxed professional firms on a per-employee basis; Measure P would convert this to a percentage of gross receipts, just as in the city of Los Angeles. In most cases, professional firms would end up paying significantly higher taxes.

At least some professionals are opposed to this tax.

“The city realizes that the Beverly Hills address has cachet for doctors and lawyers so they believe they have these businesses over a barrel,” said attorney Kent Seton, who opposes Measure P. “But if this passes, then doctors and lawyers will have to reconsider whether that cachet is worth it, especially if the taxes are close to the levels that L.A. charges.”

Measure P also changes the way Beverly Hills would assess business taxes on corporate headquarters and administrative centers. Currently, the city charges a flat fee based on the number of employees in the city; under Measure P, this would change to a percentage of payroll for administrative facilities.