Just four months after Californians voted in support of a statewide sales tax increase, the City of Los Angeles hopes to benefit from that afterglow by placing its own larger, permanent tax hike in front of voters on March 5. The Los Angeles City Council approved Proposition A back in late November, on the heels of California voters’ approval of a temporary one quarter-cent sales tax increase through Proposition 30. If the proposition passes, L.A.’s sales tax will be a combined rate of 9.5 percent. The Valley Industry & Commerce Association (VICA) Board of Directors voted to oppose the tax measure shortly after its introduction. The city hopes to use the increased tax revenue to close its $238 million structural deficit, but it cannot make taxation the default path to increasing revenue. The tax hike frustrates a business community that has offered up other ideas that city leaders continue to ignore: business tax reform; a comprehensive sign ordinance; a non-exclusive waste hauler franchise system; privatizing the zoo and convention center; streamlining the city’s building and permitting process; collecting unpaid taxes; and exchanging billboards for digitized signage. By placing Proposition A on the ballot as a permanent tax increase, proponents are failing to pressure the city to adopt alternative revenue sources through better budgeting that will create a healthier long-term solution. In recent history, the city’s taxes and fee increases have just hurt residents and business owners instead of actually improving the financial situation. In 2008, Mayor Antonio Villaraigosa and the City Council tripled the trash fee charged to homeowners and small apartment buildings, saying the proceeds would allow them to add 1,000 Los Angeles Police Department (LAPD) officers. That same year, Villaraigosa and then-LAPD Chief William Bratton pushed for passage of Proposition S, a telephone tax measure, claiming it would shield the department from deep cuts. Once again, the city is asking for more money under the guise of funding public safety. But the argument that police- and fire-related budget lines will be cut if the voters do not pass this tax increase rings hollow. This City Council will not cut public safety funding, which has always been a priority for all Angelenos – and it should be. Given the opportunity to cut the LAPD budget by eliminating 100 civilian positions, the City Council balked. But if forced, the City Council will make the hard choices they should have in the first place while keeping public safety intact. Instead, the city clearly intends to rely on tax and fee revenue to get the city back into the black, and as a result, smacking its businesses and residents with one of the highest sales taxes in the country. VICA is in favor of certain tax measures that are specific in their scope and arise as a last resort when all other avenues have been considered. VICA supported Proposition 30, which specifically outlined its appropriation of funds to school districts, county offices of education, charter schools and local community college districts. Proposition 30 also prevented $5.3 billion in specific cuts to K-12, community colleges and state universities that were going to be triggered through state legislation in 2013 without a solution. However, there is no similar accountability with Proposition A. The city has not enacted trigger cuts that would prove they were going to slash public safety contingent on Proposition A failing. And an economic analysis by Beacon Economics estimates that the tax increase would generate between $208 million and $215 million annually, which will be deposited directly within the general fund – meaning the money falls into the same black hole as the trash fee and Proposition S. The ballot proposition takes a gamble by creating a more hostile and expensive business environment without specific measures to ensure this tax hike is creating tangible improvements to the city’s public safety. This tax increase is not dedicated to public safety – which it should have been – and has no expiration date. This tax increase is bad for the city, bad for the economy and bad for business. On March 5, voters must vote no on Proposition A and tell the city to go back to the drawing board. Remind the current City Council and the newly elected councilmembers that there are alternative revenue streams that the city hasn’t tapped into yet. VICA believes the right solution is one that sensibly ushers in various new incomes instead of crafting one sweeping, damaging tax hike. The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.
