The Los Angeles City Council on Wednesday signaled its strong support for a half-cent sales tax increase to fund city services, but also moved forward with three additional proposals that could go before voters in March – taxes on parking, property and home sales.
The council, which directed the City Attorney’s Office to draft ballot language for the tax increases, has until Nov. 14 to decide which ones to advance to the March 5 municipal primary election ballot.
The sales tax increase is projected to raise $215 million annually for the city’s general fund, according to city officials. A $39 parcel tax would raise about $30 million annually that would be dedicated to funding the Department of Recreation and Parks, which has been decimated in recent years by decreasing subsidies from the city for utility costs.
A tax on home sales is projected to raise about $80 million annually, and a tax on private parking lot owners, which is expected to be passed on to drivers, would generate a little more than $40 million per year.
“At the appropriate time, I believe my request to you will be that we move forward with one tax, and that will be the sales tax,” City Council President Herb Wesson told the council.
The city’s top budget analyst, City Administrative Officer Miguel Santana, said the city has made dramatic strides since the start of the Great Recession to cut costs without asking voters to pay more in taxes, including shedding about 5,000 jobs, cutting services and recently moving to roll back civilian employee pensions for newly hired city workers.
But the city is still facing a budget deficit of $216 million for the next fiscal year that starts July 1.
“What’s at risk today is really the public safety programs that the city has. Without a new revenue source, it is impossible to maintain public safety in both police and fire at the same levels that we have today,” Santana said Wednesday.
A handful of other City Council members – Bernard Parks, Paul Koretz and Bill Rosendahl – telegraphed their preference to ask voters only for a sales tax. Parks referred to the menu of other taxes as an effort to “nickel and dime” residents.
“Our residents understand sales tax increases for reasons that are necessary,” Koretz said. “They don’t hit anyone so hard … that a business would leave or that an individual would struggle with a half-cent sales tax.”
Councilmen Mitch Englander, Richard Alarcon and Dennis Zine opposed moving forward to put the tax increases on the ballot. Englander said a sales tax increase would hurt small businesses and argued there are still more places to cut costs, including contracting out management of the Convention Center, zoo and senior centers.
“Until we get there, we’ve done all that, we’ve exhausted all of our resources, I think we’ve got to focus on that first,” Englander said.
A sales tax increase, Englander said, would cause people to go to other jurisdictions with lower sales taxes to purchase big ticket items. As part of advancing the sales tax proposal to the ballot, the city will commission an outside economist to estimate the net loss to sales within the city.
The Central City Association, one of the city’s most powerful business groups, expressed frustration that it had less than 24 hours notice about the sales tax plan, which Wesson unveiled Tuesday.
We have not yet had the opportunity to take a position on the half-cent sales tax, and we would have appreciated being part of the discussion,” said CCA Vice President of Legislative and Legal Affairs Anne Williams. “We support the city in trying to maximize revenues, but we just want to remind you that the process of how we get there is just as important.”
One of the city’s largest employee unions, Service Employees International Union Local 721, praised the council’s effort to look for new revenue rather than more cuts.
“It’s also high-time for City Hall to get serious about making rich folks, who have done very well, contribute more to make L.A. sustainable,” SEIU Local 721 spokesman Ian Thompson said. “Working families are doing their part. The wealthiest 1 percent should too.”