Five years after the creation of the Business Tax Advisory Committee, the city finally seemed ready to accept meaningful change in 2004. On Wednesday, November 17, the Los Angeles City Council unanimously passed a reform package that many say is a big step in luring new business to the city and convincing existing businesses to stay. In the end, the reform package will allow for $92 million in tax relief, eliminating taxes for 60 percent of current ratepayers. It reduced the number of taxpayer categories from 75 to seven, and offered specific relief for the entertainment industry, and gives a 15 percent across the board tax cut to all businesses. It seems that 2004 was the year for serious business tax reform in a large part because of direct pressure from the business community, which pushed the city council into action. The reform package’s political proponents, the bill’s co-authors and other city council members who championed the cause in various committees, credit a team effort by the city’s business and political leaders in getting the bill passed. Councilwoman Wendy Greuel, who co-wrote reform legislation with Councilman Eric Garcetti, said that she saw the business community act as a grassroots advocate more than she had seen on ayny other issue. She said that business leaders were ready and willing to champion the reform cause to their peers, and that her office received over 1,000 emails supporting her on the reform issue, an unheard of volume. Mel Kohn, co-chair of BTAC, echoed Greuel’s statement, saying it was the first time he could remember that the business community and its political leaders had worked so closely on something that would benefit the city. At its annual meeting, VICA presented Greuel and Councilmember Tony Cardenas with plaques with only half of a face plate for their work. The other halves, chairman Martin Cooper said, would be granted once the business of tax reform is completed. David Phelps, director of governmental affairs for VICA said that the group hopes that next year, the city will reassess the package’s impact and discuss the possibility of additional cuts. Whatever the real economic impact of business tax reform, the city stands to gain public relations points from its passage. Phelps said that at the least, neighboring states will have a harder time convincing businesses to move out of Los Angeles. Jack Kyser, chief economist for the Los Angeles Economic Development Corporation, said that the most lasting legacy of the reform may be the willingness of the business community to effect change in the city. “Nothing’s going to happen, nothing’s going to change unless business does get involved,” said Kyser. “With VICA leading the charge (in business tax reform) it’s actually a good model for us to use.” Kyser said he’s waiting to see what issue the business community next tackles, speculating it could be anything from public safety, education or housing. Kaiser said that business groups may end up taking a role in the city’s transportation challenges. Kyser said it’s unlikely for local groups to wield much power at the state level, however. For one, The California Chamber of Commerce and other groups do most of the business lobbying in Sacramento. Secondly, even if local groups wanted to establish themselves in Sacramento, they’d find the state legislature a much more difficult nut to crack. “It’s a different playing field,” Kyser said. “You’ve got a legislature that is seemingly out of touch with what’s going on in the rest of the world.” Kyser said that in Los Angeles, council members are “here on the ground, their constituents can get to them, they see what’s going on in real time.” Ultimately, Kyser said, the business community has realized that “we have some say in where the city is going.” Cooper said the organization found that its methods of prodding politicians into acting, such as supporting an Oct. 31 deadline for reform and taking out ads in local newspapers, were remarkably effective. Cooper said that VICA will continue to employ similar tactics in the coming year. Cooper also said that the Valley’s business community is confident that the business tax can be further reformed, and that now, they have experience working as a united front. “It think that what we discovered is that by forming a coalition to work on tax reform and getting more than 30 guilds, business associations and labor unions we found out that we could be more successful than had we worked individually,” Cooper said.
Business Pushes City Tax Reform