Say NO to the City’s $4.5 Billion Tax … There are Better Ways to Fix LA’s Streets

This comprehensive, professionally reviewed plan costs considerably more than the $3 billion, 10 year Save Our Streets LA program that was discussed by the City Council last year.

The City’s proposed $4.5 billion financing plan also allocates $640 million to repair the City’s worst sidewalks. However, compared to the estimated cost of $1.5 billion to repair the 40% of our sidewalks that are in a state of disrepair, this funding level is insufficient. Furthermore, since the operational aspects of the sidewalk repair plan differ significantly from those of the streets, the report recommended that a separate sidewalk repair program be established.

The City is proposing to fund this $4.5 billion street and sidewalk repair plan on a “pay as you go” basis by raising our sales tax by a half cent to 9½% for the next 15 years. According to the report, the increase in the sales tax is preferable to an increase in our property taxes since it spreads the burden over a wider base of users, including a record number of tourists. This tax scheme would also eliminate the need to pay interest since these capital expenditures would be paid for with cash.

However, can Angelenos afford another tax hike that will average $300 million a year for the next 15 years?

This would be in addition to other transportation taxes that are in the works that total more than $1.3 billion. This includes our share of a 90% increase in the federal excise tax on gasoline and additional transportation related taxes that are being considered by the State and the County.

In addition, over the next four years, our Department of Water and Power is expected to raise our water and power rates by 25%, or $1 billion.

An alternative plan that would avoid any tax increases would be to finance the street and sidewalk repair plan through the issuance of $4.5 billion of debt over the 15 year construction period, beginning in 2017. These bonds would be serviced by the City’s budget and specifically by the excess revenues generated from the DWP Ratepayers that exceed the City’s current projections.

For example, in 2019, excess revenues from the DWP Ratepayers of over $150 million will be twice the debt service on the bonds of $75 million.

Shortfalls in later years, if any, could be financed by the overall growth in City revenues, increases in the Parking Occupancy Tax or the Transit Occupancy Tax, or fees related to the Exclusive Trash Franchise program.

Leaving aside the increase in our sales tax to job killing 9½%, the Save Our Streets program is not ready for prime time.

The proposed plan does not address the maintenance and repair of streets that are in good condition.

Nor does it consider other “elements such as Great Streets, Complete Streets, Green Streets, alley improvements, traffic signal modifications, water quality elements, sidewalk improvements, utility relocations, or storm drain or sewer improvements,” all of which have politically powerful proponents who will be demanding that their vitally important pet projects be funded.

The Save Our Streets program is also lacking in truly independent oversight. According to the report, the City will establish an Administrative Oversight Board that consists of five City officials and a Citizens’ Oversight Advisory Committee consisting of nine political appointees, most of whom will not have the expertise, experience, and time to oversee the largest infrastructure project in the City’s history.

The City has also not addressed the management of this $4.5 billion, 20 year project, a critically important consideration given that the City does not have the in house expertise and experience necessary to make sure that the repair of our streets and sidewalks comes in on time and on budget.

While the plan to repair our streets and sidewalks have numerous benefits regardless of the financing plan, this plan needs more meat on the bones before it is ready for the ballot, especially since it will require approval of two-thirds of the voters in November.

And given that 55% voters rejected Proposition A, the permanent half cent increase in our sales tax, in March and that a recent ABC Eyewitness News poll indicated that 55% of the voters would not support the increase in the sales tax, it is time for the City to go back to the drawing boards to develop an alternative plan, preferably one with significant input from the Neighborhood Councils, homeowner associations, and other stakeholders throughout the City.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)
-cw