Budget Madness: The Unilateral Phase Out of the Gross Receipts Business Tax

But maybe the City does not care as another $30 million hit to the budget is chump change when compared to the real budget deficit of $650 million when you eliminate the funny money games the City is playing with the investment rate and mortality assumptions underlying the City’s two massively underfunded pension plans.

While the City give lots of lip service to creating good paying jobs, its record is a disaster.

Over the last thirty years, we have lost over 165,000 jobs even though our population has increased by 1,000,000 residents. To compound this problem, many good manufacturing jobs have been replaced by less well paying service sector jobs as the aerospace, entertainment, and other value added industries have departed for friendlier climates.

Maintaining and creating jobs in California is tough enough given the State’s business unfriendly reputation for high taxes, burdensome work place and environmental regulations, a hostile judicial system, and a stifling, multilayered bureaucracy. But our City has only added to the problem as it is considered the “least business friendly city” in the region.

One of the primary investment criteria for any business is to make sure it has a financially stable partner with a record of consistent and rational behavior. But that is not is not case with our financially stressed City, its unbalanced budgets, unfunded pension plans, and failing infrastructure.

Rather than the unilateral phase out the Gross Receipts Business Tax, LA should focus on getting its financial act together by eliminating its budget deficit and creating a predictable environment that is conducive to long term investment, where job creating businesses and investors are not considered just another deep pocket to plunder.

The City must “Live Within Its Means” if it wants to attract job creating businesses and investors. This requires a charter amendment (after all, who trusts the fiscally irresponsible rascals on our City Council) which mandates that our City develop and adhere to a Five Year Financial Plan, pass two year balanced budgets based on Generally Accepted Accounting Principles, and over the next ten to fifteen years, fix our streets (and the rest of our failing infrastructure) and fully fund our pension plans that are $11.5 billion underwater.

While the City claims that it is “open for business,” its actions speak otherwise as many of its recent policies send a “closed for business” message to job creating businesses and investors.

For example, the union sponsored Exclusive Trash Franchise program that was approved by the City will end up costing businesses owners about $150 million more a year once it goes into effect in several years.

The $15 an hour Hotel Minimum Wage Policy that targets the tourism industry is not winning many friends unless they are blessed with massive tax breaks that deprive the budget of much needed revenue.

The “company employee” provisions that were part of the Clean Truck Program at the Port of Los Angeles have alienated the trucking and shipping industries, contributing to lower volumes of imports and the loss of market share that will only accelerate with the widening of the Panama Canal and the expansion of other West Coast ports in Canada and Mexico.

These examples, along with the needless bashing of big banks and Wal-Mart by local union leaders, the City’s unfathomable contracting provisions and less than transparent politics, and its upside down finances are why job creating businesses, value added manufacturers, and investors will continue to avoid our City, its politicians, and their cronies that occupy City Hall.

Now is the time for our new Mayor to stop “kicking the can down the road” to fiscal insolvency and to establish rational and transparent financial plan and policies for our City that will attract businesses and investors who will create well-paying jobs that will benefit our City and its long suffering citizens.

We cannot endure another lost decade.

(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