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.”