Garcetti Says Business is Booming in LA; But Beware of New Business Taxes

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

In his annual address to the San Fernando Valley’s United Chamber of Commerce event, Los Angeles Mayor Eric Garcetti proudly proclaimed Los Angeles a city of the future that promotes the business community. While he had a list of positives about the city’s economic vitality, including tax reductions for business, he didn’t mention that he also supports some tax increases on business properties, which could have a negative effect on the city’s economic standing. 

Garcetti thumped his chest over Schroders Global Cities 30 Index ranking Los Angeles as the number one strongest economic city in the world. The Schroders index, according to its website, “is compiled on a range of factors, including the projected growth of the economy, university rankings, disposable incomes over the next decade and demographic measures.”

The mayor also noted the city’s top ranking among all American cities in attracting tourists, shipping cargo, and being the center of infrastructure building. 

Despite the reputation of the Silicon Valley, Garcetti said Los Angeles is becoming the tech center in the state creating desirable tech jobs and offering rents to technology concerns 35% lower than the Silicon Valley. 

Mayor Garcetti promised the business audience that, “We want to spend your tax dollars in your businesses.” 

All this positive economic news moved ahead with the help of cutting red tape and reducing the city’s business tax to the tune of $160 million, Garcetti said. 

Yet, those business tax savings could be turned upside down if Garcetti continues to support measures to raise taxes on business property. 

While noting that he jumped into the Los Angeles teachers’ school strike at the beginning of the year, which ended with what he labeled a historic settlement, part of the solution the mayor supported in ending the strike was to back Measure EE to raise taxes for schools and pledging to support a split roll property tax increase with the proceeds dedicated to both schools and local governments. 

Both measures were designed to hit business pocketbooks. 

Measure EE proposed raising parcel property taxes on residential and business property. However, the way the measure was written, the major portion of the tax increase would land on commercial structures. Measure EE was defeated at a special election, but school officials are talking about brining back a like measure in a coming election. 

One property tax increase measure to raise taxes on commercial property has already qualified for the 2020 General Election and a second measure is being readied, presumably to substitute for the first if it qualifies for the ballot in time.

The business community has largely opposed both the parcel tax and split roll proposals. 

Garcetti acknowledged problems LA faced, particularly homelessness, saying he was prepared to work with the Trump Administration to confront the issue if the Federal government is sincere in its offer of help. 

He also promised that the San Fernando Valley would benefit from transportation funding approved by voters as well as pledging not to ignore the valley when plans for the 2028 Olympics are created. 

The issue of the downtown power structure ignoring needs of the San Fernando Valley led to a ballot revolt when the Valley attempted to secede from Los Angeles in 2001. While the proposal passed within the boundaries of the Valley, it was defeated citywide. 

(Disclosure: I worked on behalf of the San Fernando Valley secession movement.)

 

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