Author: Gary Toebben

The fundamental question facing Los Angeles City Hall today is whether L.A.’s residents should continue current funding for city employee pension and health care costs at the expense of basic city services. Last Friday, members of the City Council began to answer that question. While Friday’s motion was a beginning, the Council has much larger reforms to consider if they are to address the primary cause for the budget deficit, which is the cost of pensions and health care for retirees that is growing between $200 and $300 million per year. The Chamber was encouraged that the City Council discussed additional reforms at its meeting today. The reality is that every additional dollar the City lays out for pensions and retiree health care means a dollar less for libraries, parks, police, fire and other basic city services.

Robbing Peter to pay Paul has become budget politics-as-usual in
California. When state government faces major deficits, Sacramento
finds a way to siphon billions of dollars from local governments,
transit agencies and redevelopment funds in order to balance the state
budget. Prop. 22 would end the pirate raids and force Sacramento to
meet its own budget obligations rather than looting the locals.

Prop. 22 must seem like déjà vu to many Californians. In years past,
voters overwhelmingly approved initiatives that were meant to prevent
these raids. Unfortunately, those initiatives contained tiny loopholes
through which state lawmakers have managed to drive a Mack truck of
budget transfers.

Recent examples include Sacramento taking $85 million in funding
earmarked for L.A.’s Community Redevelopment Agency and more than $1
billion in transportation funding meant for MTA projects. Taking this
money away from local projects and using it to fill a perpetual state
budget deficit means a loss of jobs locally as infrastructure
improvements and commercial projects sit idle in the planning stages.

Many Californians agree that the decades-long "war on drugs" has been a
failure. We’ve spent billions of dollars to incarcerate thousands of
inmates for drug offenses. And public opinion about marijuana use is
shifting. Wouldn’t California be better served by regulating and taxing
marijuana? No, not if Proposition 19 is the answer because it creates many more serious problems than it portends to solve.

Prop 19. is titled the "Regulate, Control & Tax Cannabis Act of 2010,"
yet the initiative fails to do any of those three things. Prop. 19 does
not set forth a statewide regulatory framework for legalization.
Instead, it leaves it up to the local governments to set their own
standards. The result will be a patchwork of conflicting laws that will
create a whole new set of legal nightmares for law enforcement
officials and our courts.

Among the many other concerns about Prop. 19 are:

Beware of Proposition 27 – the most cynical, anti-voter initiative on
this November’s ballot. This power grab by the State’s politicians
would be a quantum leap backwards at a time when Californians are
hungry for true political reform. Don’t be fooled.

Gerrymandered legislative districts are one of the roots of political
dysfunctions in California, Washington, D.C. and in other states across
our nation. Following each decade’s census, states are charged with
redrawing their legislative boundaries to account for changing
demographics and population shifts. Problems arise when elected
officials are the ones in charge of drawing the new district
boundaries. They relish this opportunity to choose their voters rather
than the other way around.

In 2001 when the districts were redrawn by the California Legislature,
the result was oddly-shaped districts that protected incumbents and
killed any possibility for electoral competition or pragmatic
bipartisanship. Flash forward 10 years and we can see how that played
out in Sacramento.

Ambassador
Ron Kirk, U.S. Trade Representative, was in Los Angeles last week to
discuss the status and importance of the U.S. – Republic of Korea Trade
Promotion Agreement. Ambassador Kirk stressed the importance of this
Free Trade Agreement to achieving President Barack Obama’s goal of
doubling U.S. exports in five years.

President Obama has directed Ambassador Kirk and his negotiating team
to engage with South Korea to resolve outstanding issues by the next
G-20 meeting in November in Korea. Two of the key industry sectors
still being discussed are autos and beef.

Ambassador Kirk stressed that 95 percent of the customers for American
products and services live outside the United States. and that the
capacity for these customers to purchase U.S. products and services is
growing faster than consumer demand in the United States.

Last week President Barack Obama emphasized once again the importance
of doing everything possible to aid small businesses in jump-starting
the U.S. economy. We agree, and that is why we are speaking out about a
very disturbing part of the Health Care Reform Bill that has nothing to
do with health care and everything to do with small business. It is
Section 9006, which would place an unprecedented burden on small
business reporting and paper work requirements.

This provision would require any business that purchases more than $600
of goods or services from another business to submit a 1099 tax form to
the Internal Revenue Service. The mandate, which is to take effect in
2012, was included to help pay for the health care bill and was
estimated to raise $17 billion.

At a time when President Obama and everyone else agrees that our
economy needs small businesses to help our country grow out of this
recession, saddling them with expensive new paperwork requirements only
further hampers their ability to succeed and ultimately aid in our
economic recovery. H.R. 5141 and S. 3578, the "Small Business Paperwork
Mandate Elimination Act" would repeal this section of the "Patient
Protection and Affordable Care Act."

This time of year, education takes center stage as students of all ages
return to school. Yet this is not an ordinary fall.

Higher education in
California has reduced the number of classes being offered and the
number of students being admitted due to budget cuts; and K-12 public
education is facing more students in many classrooms due to the same
budget cuts. Here in Los Angeles and across the nation, teacher
evaluations have attracted the spotlight due to President Obama’s "Race
to the Top" and a series of articles by the Los Angeles Times.

Last Friday, the president of the University of California, the
chancellor of California State University and the chancellor of the
California Community College System were at the Chamber to discuss the
state of higher education in California on the 50th anniversary of our Master Plan for Higher Education.
All three leaders emphasized the changes that budget cuts have caused
at their institutions; and at the same time they voiced appreciation
for the confidence that the public has in California’s system of higher
education, and a continued commitment to maintaining quality and
meeting the needs of as many California students as possible.

When 30,000 people crowded downtown Los Angeles last week for the monthly Downtown Los Angeles Art Walk,
Angelenos from all walks of life confirmed that downtown Los Angeles’
renaissance is now.

This coming weekend, we have another opportunity to
welcome visitors downtown, this time from all over the nation. The
American Society of Association Executives (ASAE) will be in Los Angeles for its annual convention.
This highly sought-after group represents thousands of associations
that we would like to host in Los Angeles in future years.
Congratulations to LA INC., The Los Angeles Convention and Visitors
Bureau for bringing ASAE to Los Angeles.

Ever since STAPLES Center launched downtown’s revitalization in the
late 1990s, the area hasn’t looked back. Dozens of decaying historic
buildings have been transformed into beautiful art deco apartments, and
a host of new condo and apartment buildings have followed suit. The
restaurant scene has grown from a small number of eateries that
attracted the Monday-to-Friday business crowd to one of the nation’s
most important culinary destinations. Downtown is now an entertainment
destination seven days a week.

The
business community often complains about L.A. City Hall’s lack of
action to make Los Angeles more business friendly for job creators.
This week, I am pleased to extend congratulations    to City officials
for their recent actions on five of the L.A. Area Chamber’s top
business and budget priorities.

On the jobs front, Mayor Antonio Villaraigosa and the City Council
approved a three-year tax holiday for all new businesses that open in
Los Angeles over the next 36 months. This incentive is especially
important for startups and small businesses, and could create more than
55,000 new jobs, according to a recent report by the USC Marshall School of Business.

At the same meeting, the Council approved a taxpayer’s bill of rights,
and voted to move forward with an independent economic analysis of
comprehensive business tax reforms. The reforms to be studied include a
60 percent reduction in the City’s gross receipts tax for businesses in
the highest tax category.    The recommendations originated with the
volunteer Business Tax Advisory Committee appointed by Mayor
Villaraigosa and the City Council last year.