Wednesday, October 31, 2012
L.A. Council Moves Forward On Four Proposed Tax Increases
BY KATE LINTHICUM, LOS ANGELES TIMES, NOVEMBER 1, 2012
The Los Angeles City Council moved forward with four proposed tax increases Wednesday, instructing city lawyers to draw up the language for ballot measures that would raise property, real estate, parking and sales taxes.
Council President Herb Wesson said he hopes that only one of those proposed increases ends up on the March ballot and said he will be pushing for the half-cent sales tax hike, which would generate an estimated $215 million to $220 million for the cash-strapped city.
Wesson, who said he asked the council to proceed with all of the ballot measures as a safeguard, said he will be closely watching the results of Tuesday's election, when voters in three dozen California cities will decide local sales tax increases on the ballot.
"I think it will be a big indicator as to how people feel throughout the state," Wesson said, noting that if the response to those proposals is tepid in other communities, he might support putting one of the other tax measures on the ballot.
Wesson surprised community leaders and some of his colleagues Tuesday when he announced that he wanted to increase the sales tax from 8.75% to 9.25%. The proposed change would bring L.A. in line with Santa Monica and Inglewood, but it would leave the city with a higher rate than some neighboring communities, including Burbank, Pasadena and Glendale.
The plan has alarmed some business leaders, who argue that it could drive shoppers away, and some community activists, who complain that lawmakers have fallen into a pattern of raising fees instead of making difficult decisions to rein in costs.
Several council members expressed support for raising the sales tax Wednesday, including Bernard C. Parks, who said the proposal was the fairest on the menu of increases the council is considering.
One proposal would generate $40 million a year by increasing the parking tax from 10% to 15%. Another would generate between $76 million and $103 million by raising the tax on real estate sales. Parking lot operators and real estate agents have fought those proposals, saying they shouldn't have to bear the burden of raising revenue for the city.
Parks complained about a third proposal to charge a $39 parcel tax to fund the Recreation and Parks Department, which has been decimated by cuts in recent years. He said residents in poorer, denser parts of the city would benefit less than those in other neighborhoods.
"The people with the least amount of park space and the most density will come out on the short end," said Parks, who represents part of South Los Angeles. A coalition of community leaders that supports the parcel tax has said they would support a plan that ensured that underserved neighborhoods got their fair share of new park land or services.
Councilman Paul Koretz said he supported putting one large tax increase on the ballot instead of several smaller ones, saying that he thinks voters will understand that lawmakers have done all they can to cut costs.
"We're doing everything that we possibly and legally can," Koretz said, "and yet we still have a hole not of our own making."
Since the economic recession hit in 2008, Mayor Antonio Villaraigosa and the council have trimmed the city payroll by about 4,000 people. Many employees who remained have faced mandatory furlough days, have seen their pay raises postponed and have agreed to pay more toward their retirement benefits.
Villaraigosa has said that he would not support a tax increase unless the council adopted additional cost-cutting measures, including privatizing the city zoo and Convention Center. Wesson said Wednesday that the council will continue to move forward on those initiatives, and he promised to lobby Villaraigosa to warm him to the idea of a sales tax increase.
"We'll sit in a room and maybe argue a little bit and see if we can't work this out," Wesson said.
An outside analyst is expected to deliver a report on Nov. 9 about the economic effects of a sales tax hike. The council is expected to decide soon after on which tax measures to include on the ballot in March, when voters will fill eight City Council seats and elect a new city attorney, controller and mayor.