L.A. Sales Tax Increase Given Preliminary Approval for March Ballot

The Los Angeles City Council tentatively voted today to place a half-cent sales tax increase before voters on the March citywide election ballot, a proposal that supporters say would help stave off layoffs of police officers and firefighters.

The council declined to place three other proposed tax increases on parking, property, and real estate sales before voters. All four proposals are intended to help close the city's structural budget deficit, which is projected to be $216 million in July and more than $300 million by 2014.

The vote on the sales tax increase championed by Council President Herb Wesson was 10-4. Because the vote wasn't unanimous, the council will consider it again in one week, with at least 10 votes necessary for passage.

If the proposal makes it onto the March 5 ballot, 50 percent-plus-one-vote would be needed for passage.

The tax is expected to generate between $208 million and $215 million, according to an economic analysis commissioned by the City Administrative Officer. The tax would also likely trigger a drop in consumer spending of as much as 1.3 percent.

Council members Eric Garcetti and Jan Perry, who are both running for mayor, decided against supporting the tax increase, saying it would turn off the business community and stymie the city's economy.

"New taxes can chase away jobs at a time when I think we're trying to make this a more business-friendly city, and I want to continue to focus on growing our way out of this crisis," Garcetti said.

Councilmen Mitch Englander and Dennis Zine also opposed the tax. The city has not done everything possible to demonstrate to voters officials deserve more of their tax dollars, Englander said. He recommended that the city shed responsibilities like the zoo and convention center before asking voters for more revenue.

Former Mayor Richard Riordan, who is pushing a pension reform measure to cut city spending, said the tax increase would not go to improving basic city services. Instead, Riordan believes the sales tax revenue would be used to pay for the rising cost of employee pensions.

Riordan spokesman John Schwada said "it's no longer possible to hide what's really going on. These are pension taxes."

But Wesson defended the proposal, saying city leaders have cut the size of the city's general fund workforce by 5,000 positions and gotten most city workers to contribute 11 percent of their salaries toward their retirement health care.

"I think we have done many tough things to show that we're serious about putting this city on the right economic path,'' Wesson told his council colleagues. "But I don't think we can solely cut our way out of this problem.''

Councilman Paul Krekorian, who chairs the council's Budget and Finance Committee, acknowledged the tax proposal's potential negative effects on small businesses and jobs.

"But I'll tell you reductions in services affect small businesses, as well," Krekorian said. "When the city doesn't function, when you can't drive on the streets, when you can't walk on the sidewalk, when we're laying our employees off and putting them on the welfare rolls, that affects jobs, and that affects our economy."

Councilman Paul Koretz said the tax increase would not be "heavily felt" by residents.

"If you buy something for $100, it costs you 50 cents. Do you really notice it or think about it? Not really," he said.

Mayor Antonio Villaraigosa said in a letter to council members that he would only support the proposed tax hike if the council takes action on a variety of additional cost-cutting measures, which include handing management of the zoo and convention center over to private operators and proceeding with 112 layoffs and elimination of dozens of other unfilled positions. Villaraigosa also asked for a commitment to continue hiring police officers as positions become open.

If the council advances the proposal on Nov. 20, Villaraigosa would have 10 days to approve putting the sales tax increase on the ballot. He could also decline to approve it, sending it forward, or veto the measure.

"We're going to act on some of those things, but it won't be in 10 days," Wesson said.

This story is by Richie Duchon, City News Service.