Author: Gary Toebben

On
Tuesday, Aug. 3, the Los Angeles City Council will discuss two items
that cut to the heart of the City’s ongoing budget crisis – ballooning
public pension obligations and the chronic inability of the City of Los
Angeles to collect outstanding debt.

Action or inaction on these two
issues will let voters know whether Councilmembers are committed to
major changes that will put the City on the right track toward solving
what has become an annual and perpetual budget crisis.

The Council will
discuss next steps on public pension reform. Pension contributions by
the City of Los Angeles to the three city employee pension funds are
growing by more than $300 million per year, with no end in sight. By
2014, the contributions will amount to more than 25 percent of the
general fund.

At
a time when local government must reinvent its approach to job
creation, the City of Los Angeles made two major strides last week. The
L.A. City Council unanimously approved the L.A. Area Chamber’s proposed Office of Economic Analysis and also endorsed the L.A. County Strategic Plan for Economic Development. Both are important opportunities to make good policies that incentivize business growth in our City.

The Office of
Economic Analysis will finally give City officials the information they
need to evaluate whether a proposed policy will drive businesses away
or encourage them to invest even more in Los Angeles. Under the new
program, the City will contract with respected, independent economists
to study how proposed legislation would affect the business climate,
job creation and overall economy.

Championed by City
Council President Eric Garcetti and Councilmember Greig Smith, the City
approved $250,000 in initial funding and will begin compiling a bullpen
of respected economists to contract with on an as-needed basis. The
Chamber’s ultimate goal is to make this office a permanent part of our
city government to provide this type of evaluation on a wide-range of
city policies and programs. In the meantime, the Chamber will be
working with City Council members to make sure that policies deserving
of this review are studied.

Summer reruns used
to be limited to network television. Now, they’ve taken over California
politics. The Legislature’s decision to leave Sacramento without a
budget deal and Gov. Arnold Schwarzenegger’s minimum wage declaration
for state employees are both reruns of political battles past. If there
was ever a time for thinking – and acting – differently, it’s now.

With approval ratings at their lowest point in years, many of us hoped
that this year would be different. Certainly, politics as usual is no
longer working. The State still suffers from a chronic budget deficit
and when you add the state pension crisis to the conversation, you have
a scenario that is threatening California’s future even after the
economy improves.

The tax reform commission’s recommendations to reduce
revenue volatility have been shelved without any real evaluation. And
the vast majority of Republican and Democratic lawmakers remain stuck
in their partisan corners, with each side exasperated with the other.

The
City of Los Angeles’ gross receipts tax is a major obstacle to
attracting and retaining job creators in the City.

That’s why the
proposal by Mayor Antonio Villaraigosa and motion by the City Council
to provide a three-year tax holiday for new businesses is an important
step in the right direction. It also dramatically reinforces the need
for comprehensive tax reform to encourage all of our existing
businesses to retain and grow new jobs in Los Angeles.

Los Angeles has
the distinction of having the highest gross receipts tax rate of all 88
cities in L.A. County and one of the highest of any major city in the
United States. In our information-driven economy where customers are as
likely to be overseas or across the country as they are to be next
door, many businesses are very flexible about where they locate their
offices.

Three
months ago, the City of Los Angeles teetered on the edge of insolvency.
City leaders appeared unable to eliminate the $500 million budget
deficit and lead Los Angeles out of its budget morass. Since then,
Mayor Antonio Villaraigosa and the City Council made the tough
decisions that will prevent another near-term fiscal crisis.

However, City Council members have come under increasing pressure to
back down from making many of the tough cuts. Now it’s time for the
business community to speak up in support of their efforts and help
keep Los Angeles on the right financial track.

The recent budget deal demonstrated that Mayor Villaraigosa and the
majority of the City Council are serious about facing down our deficit.
With the help of Chief Administrative Officer Miguel Santana and City
Controller Wendy Greuel, City officials cut $500 million in spending.
More than three-quarters of this amount represents long-term annual
savings.

California
lost one of its greatest leaders and role models last Friday with the
passing of legendary UCLA basketball Coach John Wooden. I am dedicating
today’s The Business Perspective to Coach Wooden because his
leadership principles – on which he based his life and coaching career
– are what business, government, labor and environmental groups need to
learn if we are to re-energize the California Dream and win as a team
for our State.

In the midst of a week of news stories about continued unemployment, a
crashing stock market, terrorism and conflict around the globe, and the
largest oil disaster in the history of the planet, a giant of a man
died quietly surrounded by family after being visited by so many
friends and those he mentored at the Ronald Reagan UCLA Medical Center,
a short walk from where he made sports history. 

Coach Wooden was an icon in college sports, but he could very well have
been a great businessman, college president, mayor or legislative
leader because he understood that all great organizations are the
result of exceptional team efforts by those who share a common goal.

There
is rarely good news out of Sacramento. The perpetual budget crisis,
political stalemates and continuing cuts to vital programs can make
even the most optimistic of us wonder whether things will ever change.
So why, you might ask, is the Los Angeles Area Chamber of Commerce
investing the time, money and energy to take 100 business and community
leaders to Sacramento next week to meet with legislators and members of
Gov. Arnold Schwarzenegger’s administration?

We are going to remind Sacramento that all the solutions they seek
hinge on building our economy and creating more jobs by making
California more business-friendly. It is people with jobs and growing
businesses that generate the tax revenue that legislators in Sacramento
need to balance the budget.

For most in the private sector, we’ve been operating our businesses and
homes differently for more than two years. The global recession forced
us to reevaluate our business models and the decisions we make around
the kitchen table at home. We immediately reduced expenses and found
more efficient ways to meet the needs of our businesses and our
families. We did not have the option of operating in the red. The focus
turned to implementing long-term plans that brought us back to basics
with a strategy on how to survive – and thrive – once the recovery
begins.

I’m excited about three good reports about job creation in Los Angeles.
Last week, a major international business chose L.A. City and County
to be its North American headquarters.  

Secondly, our signature
entertainment industry posted very positive numbers compared to last
year.  

And finally, L.A. County and the University of Southern
California appear to be close to establishing a biotech park around the
USC Health Sciences campus in Boyle Heights.  All three stories
represent major economic breakthroughs for our region.  

Yesterday, the Los Angeles Area Chamber of Commerce, in concert with the Los Angeles County Federation of Labor/AFL-CIO turned in more than one million signatures for a term limit reform ballot measure. In order to qualify for the November 2010 ballot, 694,354 valid signatures are required. This initiative, if certified by county registrars this June and approved by voters this coming November, would fundamentally change the tone and temperament in Sacramento.

The term limit reform initiative we filed is simple and straightforward. Beginning in 2012, it reduces the time a politician can spend in the State Legislature from 14 to 12 years. Time can be served entirely in the Assembly, the Senate or a combination of the two. After 12-years of public service, a lawmaker is termed out of state Legislative office permanently. No exceptions! Equally important, this term limit change does not benefit any current or former lawmakers or anyone on the ballot this fall.

Voters passed the current 14-year term limit law in 1990 and it fundamentally changed Sacramento. The unintended consequence has been an electoral merry-go-round in which legislators are focused on winning the next office instead of developing the expertise and independence needed to tackle the State’s complex issues. An objective look at the political climate and lack of results in Sacramento shows that the current system is broken and not working.