The fight over a Los Angeles school parcel tax exploded last week with allegations that the mayor’s office was bullying businesses to back off opposition to the tax. For the business community, the battle over Measure EE is about more than this particular tax for schools. It could a trendsetter over future fights on two major issues: business targeted for more tax revenue for schools and local government services; and secondarily, reforms over the public employee pension crisis.
The Los Angeles Times revealed the alleged threat issued by Los Angeles mayor Eric Garcetti’s senior advisor Rick Jacobs to Tracy Hernandez, head of the Los Angeles County Business Federation (BizFed).
According to Hernandez, Jacobs asked BizFed to pull off the opposition campaign for the school tax favored by Mayor Garcetti or BizFed members would have trouble doing business or getting cooperation from the city. Jacobs denied the charge but told the Times reporter he said to the BizFed leader that taking a position against the tax “won’t win BizFed friends in L.A.”
The line may be subtler than an outright threat but the message is clear.
Jacobs said BizFed said opposition to the tax would “hurt kids.” BizFed and other opponents say the tax is not so much about the kids as it is money for public employees benefit packages that are in debt.
Other Los Angeles business groups including the Los Angeles Chamber of Commerce and the Valley Industry and Commerce Association joined BizFed in opposing the tax. The parcel tax is calculated on a square-foot basis meaning business properties will carry a greater load in the total revenue raised.
Business sees Measure EE as the first step in having business pay more to satisfy tax-raising advocates. Lined up behind the parcel tax measure is the split roll proposal qualified for the November 2020 ballot that will raise ad valorum property taxes on commercial property with the money earmarked for schools and local governments.
Another objection by the business community to the LAUSD parcel tax measure is that it was placed on the ballot with no reforms to the district’s current funding system. BizFed charges that despite spending billions of dollars, the schools are delivering a subpar product. In other words, they are truly hurting the kids.
Meanwhile, money is needed to back-fill pension and health care promises made to teachers and their families. The teachers benefits programs are driving the school district toward bankruptcy, according to the Los Angeles County Board of Education.
The business community offered to work with the school district over funding issues but wanted reforms as part of the package.
The public employee pension crisis is eating into state and local budgets. Without reforms, the solution to deal with pension and health care promises is to raise taxes. That’s why this fight is so important for business and for all taxpayers. It will set a tone for future tangling over both pension reforms and who chiefly pays for government services.