Council gives tentative approval to put sales tax hike on ballot*

cityhall2.jpgThe vote was 10 to 4 - no votes came from Mitch Englander, Dennis Zine, Jan Perry, and Eric Garcetti. The half-cent increase would boost the sales tax in L.A. from 8.75 percent to 9.25 percent. (Add in the quarter-cent sales tax increase from Proposition 30 and you're up to 9.50 percent.) If L.A. voters approve the measure in March, proceeds will go to the general fund, which faces a huge shortfall that's largely related to health and retirement costs. Much of the council debate centered on how the tax hike would prevent public safety-related cuts. The plan is not unreasonable - only .75 percent of the current 8.75 percent goes to the city, and the higher tax is certainly an efficient way of raising revenue. The problem, as Mayor Villaraigosa suggested, is that the council has avoided steps to deal with the systemic deficit problem. L.A.'s budget officer, Miguel Santana, says that even if the measure is approved the deficit will still run $100 million the following year. Also, unlike Proposition 30, there's no expiration date; the increase would presumably be permanent. At least voters will be able to take a longer look at the proposal, which could become a focal point of the mayoral campaign. From this morning's LAT editorial:

New tax revenue must not merely provide a new pool of funds to put on the bargaining table when city leaders begin negotiating the next contract with public labor unions a year from now. Let's not forget that the negotiations that resulted in the current contracts took place just as warning signs of the economic meltdown were becoming apparent, yet still Mayor Antonio Villaraigosa and the council practically gave away the store, agreeing to 25% pay increases over five years for most city workers. Since then there have been concessions, give-backs and layoffs, but the city is still in much worse financial condition because of that deal.

*From the LAT:

Council President Herb Wesson defended the council's handling of the issue, saying the city had already removed 5,000 positions from the payroll and secured concessions from its employees on retirement costs. "We have done many tough things to show we're serious about putting this city on the right economic path," he said. "But I don't think we can solely cut our way out of this problem." Added Councilman Paul Krekorian: "There is no place left other than public safety to make significant reductions" Perry, in voting no, said she feared the tax would "cause other businesses to reconsider coming here or cause them to leave."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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