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LA Is Open for Business Alright — New Business Tax Holiday Extended to 2015 despite $30 Million Loss in Last 3 Years

Led by the man who would be mayor, Eric Garcetti, the City Council on Tuesday declared on a 10-2 vote that “LA is open for business” — a double-edged phrase by which they mean they are going to give you the business as usual and are ready to do business with anybody who pays them.

Noted for his pious declaration that the Council Chamber is “a temple of democracy” and always believing the “perfect should not be the enemy of the good” no matter how imperfect the good is, Garcetti added a new phrase to his lexicon when he acknowledged that “there’s something inside the city that is sick.”

The admission came as he argued for extension for more three years of the “business tax holiday” that cost the general fund $30 million although there is not a shred of evidence that a single one of the 11,000 new business in the city would have gone elsewhere without the lucrative tax break, according to the City Administrative Office’s financial impact study (CAO-taxholiday).

In fact, the CAO found that 80 percent of the new businesses were service businesses that don’t generate significant sales or other tax revenues. Unmentioned was that some of the largest beneficiaries of the tax holiday also got tax subsidies, rebates or grants as well as not having to pay the gross receipts tax like their existing competitors.

Garcetti’s admission of what a sick town LA is came in the context of mentioning how the city — unlike the county has gained jobs and people — has lost 165,000 jobs while adding 820,000 people in the last 30 years.

Since Garcetti served on the Council nearly half of those 30 years, mostly as its President, — 12 of which Garcetti served on the Council, mostly as its President. it is hard to see how he will explain his own role in the decline and fall of LA.

The same can be said of Controller Wendy Greuel, a former Council member who like Garcetti wants to be mayor, who took the occasion of Tuesday’s vote to issue a press release (greuel-taxholiday) boasting that the three-year tax holiday without evidence of its value is really her idea and part of her grand scheme to create job, jobs, jobs.

As the architect of the City’s  successful  business  tax reform,  the new business exemption was a key component of my plan to incentivize new businesses to relocate to Los  Angeles,  knowing  that they  would  not have  to pay business  tax  upon  relocation  to Los Angeles …  the City must do everything that it can to demonstrate that it is open for business.

Despite making some progress, the City continues to struggle to demonstrate  that it is open for business, and the extension of this program sends a clear signal that the welcome mat is there for new businesses to relocate to Los Angeles.

In challenging this nonsense, Paul Krekorian chose not to use his intelligence and verbal skills to defend the indefensible — instead he used his talents to laser focus on all that’s wrong with a sweeping tax holiday.

It isn’t targeted to businesses that would go elsewhere or on job creation and tax revenue generation and it doesn’t do anything when so many towns around LA offer no business tax “forever,” not just three years.

Worst of all, he noted, jobs coming from firms like Gensler, the giant architectural firm that got a million dollar poverty grant and the tax holiday as part of the sweetheart deal to move from Santa Monica to downtown to work on AEG’s events center, brought its employees with it.

The only support he got came from Councilwoman Jan Perry who used the occasion to draw a sharp distinction between herself and her mayoral opponents Garcetti and Greuel by joining in calling for targeted tax breaks as part of a comprehensive program to link jobs to training, transit and housing.

None of this fazed Garcetti who pulled out every trick in the debater’s book to ignore the facts, mixed in targeted tax breaks like lowering the rate for Internet companies like Shopzilla as if they were part of the tax holiday and stooping so low as the tax holiday was a  ”loss leader” to demonstrate “LA is open for business.”

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4 Responses to LA Is Open for Business Alright — New Business Tax Holiday Extended to 2015 despite $30 Million Loss in Last 3 Years

  1. ex valley says:

    Some interesting passages from this report:

    This Office is unable to determine whether there has been or will be any net gain to the City as a result of the extended NBE, due to the complexity of the economic analysis required to quantify offsetting revenue increases. Previous analysis of various proposals to eliminate the business tax reported that reduced business taxes would increase economic output and employment; however, whether the increased activity would generate enough non-business tax revenue was uncertain (C.F. No.09-1914-S8).

    As the City’s projected revenue growth is outpaced by the projected increases in expenditures for the next four years, the City must be judicious in implementing business tax relief. Measures should be targeted to those firms that produce the most economic gain or revenue growth.

    so why is this NBE good? Just because it’s only for 3 more years.

  2. So if Prince Eric is so pro business, why is he endorsing the Exclusive Trash Franchise that is going to cost local businesses $150 million more?

  3. Wayne from the most corrupt city in history (Chicago is #2 again) whose post awaits moderation says:

    Here’s somemore great ideas for Councilclown Garslutti:
    3/ How about allowing COMPETITION AGAIN for trash contracts for businesses?
    These three TAXES are what the 99% of L.A.’s Businesses fork over that allows Garslutti to give his fat cat buddies these freebees. That’s why businesses are out of luck in this Most Corrupt of all Cities in America.
    ELIMINATE the THREE EVIL BUSINESS KILLERS ABOVE and there would be a remarkable creation of jobs FROM THE PRIVATE SECTOR right here. But that would be FAIR and INGENIOUS, two things AEG and the 70 other major campaign donors WONT EVER ALLOW.

  4. Here come the Feds says:

    With HUNC’s calling for a Federal Grand jury investigation of Garcetti’s role in downsizing Hollywood’s 2 acre Fire Station 82 by 75% and his role in the falsification of the LAFD response times, Garcetti needs all the business friends he can buy.

    Yep, Garcetti had a great plan. Cut the funding for the fire department and paramedics and give the “savings” to the real estate developers who will fund his mayoral campaign.

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