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L.A. City Council votes to put sales tax hike on March 5 ballot

November 13, 2012 | 12:23 pm

Los Angeles City Council President Herb Wesson in 2011.

Searching for a long-term solution to the city's chronic financial woes, the Los Angeles City Council agreed Tuesday to ask voters for a $200-million-a-year increase in sales tax collections.

The proposed half-cent per dollar boost in taxes on millions of everyday purchases, which would appear on the ballot in the March 5 mayoral election, has drawn sharp criticism from opponents. Four council members cast opposing votes: Mitchell Englander, Eric Garcetti, Jan Perry and Dennis Zine.

Because the vote was not unanimous, a second vote will be needed next week.

Advocates for working-class families argue that the rush to get the measure on the ballot left them out of talks that took place behind the scenes between city leaders and the real estate industry.

Sunyoung Yang, lead organizer with the Bus Riders Union, said her group had not yet taken a position on the sales tax but frequently opposes “regressive” measures that charge rich and poor equally. “If they really wanted to have a more democratic and fair process they would have consulted different community groups that have contact with their constituents on a daily basis,” she said.

The vote also drew criticism from former Mayor Richard Riordan, who accused city leaders of pushing the financial responsibility for costly pension expenditures onto taxpayers. Riordan is trying to get a measure on the May municipal election ballot that would move new employees away from a government pension and into a 401(k)-style plan.

“It's no longer possible to hide what's really going on,” said Riordan spokesman John Schwada. “These are pension taxes.”

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.”

Budget officials had spent six months laying the groundwork for a real estate transaction tax. But the real estate lobby steered them away from that proposal and toward a sales tax hike, saying the latter  would generate more than twice as much money while faring considerably better with voters.

Last Friday, a firm hired by the city found that a sales tax could lead to as much as a 1.3% drop in business spending. That firm said the biggest bite would be felt by sellers of buildings supplies, who would see a decrease as large as 3.9%.

Pressure to raise revenues has been growing because years of belt-tightening and cuts in basic services have failed to erase huge annual budget deficits.

Mayor Antonio Villaraigosa said that before he supports the proposed tax hike he wants to see the council reaffirm its support for Los Angeles Police Department hiring. The department has added roughly 800 officers since he became mayor. Villaraigosa also wants the city to move ahead with the elimination of nearly 160 civilian jobs at the LAPD, possibly through layoffs.

That view was not shared by Councilman Bill Rosendahl, who said he opposed both the cuts in civilian LAPD employees and a companion measure to lay off 50 city attorneys. Although he agreed that a sales tax would be regressive, he argued that alternative proposals would have failed at the polls.

“What [this] will do is give us $200 million that we desperately need,” he added.


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-- David Zahniser at Los Angeles City Hall

Photo: Los Angeles City Council President Herb Wesson in 2011. Credit: Genaro Molina / Los Angeles Times