Mayor Elizabeth Pearson did some bragging May 14 at the State of the City Luncheon about the city's accomplishments in the past couple of years, tempered by the economy and gave hints of better days to come.

Pearson was the keynote speaker at the annual Chamber of Commerce luncheon at Montage Laguna. She spoke on the overall state of the city, but honed in on economic issues that impact the city's business community, much of it echoed by representatives of elected officials at the state and county levels.

"Clearly the state of California is not the ideal place to do business — as evidenced by the recent sixth survey of Chief Executive magazine, which ranked California as the 51st least desirable place to do business, behind all other 49 states and the District of Columbia," Pearson said. "It's not easy opening and operating a business in our state. But it's going to start being a little easier in Laguna Beach.

"I'm here to tell you today that there's a frame of mind at City Hall when it comes to helping our businesses — and potential businesses coming in — and it's this: We want you here; we want you to thrive; we will do our part to be more friendly and approachable to help you be successful; our minds and doors are open to you.

"And I know all of you here today are with me on this."

Keeping established businesses in town, filling empty storefronts and expanding the product and service mix so that more locals shop locally has been a priority for the past two years.

The Long Term Business Task Force co-chaired by Pearson and Mayor Pro Tem Toni Iseman recently completed its mission and will present a report to the full council and the public at the June 1 council meeting. The task force piggy-backed on the findings of the Business Assistance Committee organized almost two years ago by Pearson and Councilwoman Verna Rollinger, which made recommendations for immediate action.

Among the committee recommendations implemented:

Increased sidewalk cleaning;

Installation of credit card parking meters;

Free Village Entrance parking year-round for business employees except during Festival Season; and

A letter from the mayor asking retail property owners to consider reducing or not raising rents to help struggling businesses during the economic downturn — a notion promoted by Councilman Kelly Boyd.

However, the business community is not the only victim of the economy.

Property, sales taxes dive

City revenue derived from property tax receipts, which supplies about 56% of the city's general fund, is down 18% from two years ago and hotel "bed tax" revenue, the next highest generator of city revenue, is 18% lower. Sales tax revenue is down 24% — led by a 37% drop in construction-related sales. General sales plummeted 32% and food sales, primarily grocery stores, dropped more than 16%.

A $2-million shortfall for fiscal year 2010-11 will be covered by dipping into the Recession Smoothing Fund, established for this purpose. Three jobs vacated by retirement will go unfilled and one job was reduced to part-time with the employees' concurrence.

Expenses will be further reduced by funding the Public Employees Retirement System retroactive payments from loans of unused city funds and the Municipal Employees Assn. relinquishment of a raise for the second year.

Pearson had a bit of good economic news to impart.

The city's bond rating recently was upped by Standard and Poor's to AAA.

"And we 'sunsetted' the one-half cent sales tax to complete the Bluebird landslide restoration, as we promised to do," Pearson said.