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LA Tax Proposals and Prop 30

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

The Los Angeles City Council voted to move ahead on four potential tax measures for the March citywide ballot – but the timing of the move could complicate those pushing tax increases on the state ballot.

Even though the city election is months away, some voters just might connect the dots and decide they are dealing with too many tax increases. Local tax measures often fare better at the polls than state measures.

Proposition 30 is made up of an income tax on the high-end taxpayers, but there is also a sales tax component. Prop 30 would increase the sales tax by one-quarter cent for four years.

Also appearing on the November ballot in Los Angeles is Measure J, an authorization to continue for 30 more years a county sales tax for transportation improvements, pushed hard by Mayor Antonio Villaraigosa and transportation interests.

Los Angeles City Council president Herb Wesson wants the city residents to adopt a half-cent sales tax in March to battle big deficits, partially caused by pension and health care obligations. An initiative on pension reform may also appear on the March ballot.

If Wesson is successful steering the sales tax through the council and the voters approve all the tax measures in November and March, Los Angeles residents will be facing a 9.5% sales tax. Business interests caught off-guard by the plan are already complaining, concerned that the LA sales tax would force buyers to neighboring cities with lower sales taxes.

Los Angeles could well hold the key to Proposition 30. The city contains the state’s largest voter pool. The Prop 30 campaign has thrown extra resources into the media campaign in LA, and the governor visits frequently to get the word out.

Now he has to be concerned that the tax monster is lurking to scare voters.

Earlier this year, Governor Brown went out of his way to convince the Los Angeles Unified School District to keep a local school tax off this year’s ballot, afraid that it would draw away from his tax increase proposal. A similar, although admittedly smaller effect could touch the November tax plans.

Other tax proposals the council moved on were an increase in the parking tax from 10% to 15%; a tax on home sales; and a parcel tax on property dedicated to parks. The sales tax would bring in the most revenue at a projected $220-million. City voters will unlikely face all four measures.

However, by talking about so many tax proposals right before an election there is a chance the measures on the November ballot could feel a backlash.

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