Would increasing sales taxes by a half-cent citywide help Los Angeles'… (Matthew Staver / Bloomberg )
After several months of chatter about possible real estate and parcel taxes to lift Los Angeles out of its budget crisis, the City Council is expected Tuesday to instead send voters a proposal to increase sales taxes by a half-cent on the dollar citywide. The likely action comes just a few days after Californians took the very rare step of approving temporary sales and income tax increases in the form of Proposition 30 to help the state meet its current budget obligations without deeper school, service and safety net cuts. Council President Herb Wesson Jr., Police Chief Charlie Beck and City Administrative Officer Miguel Santana spoke last week with The Times editorial board and presented their case that the new city sales tax is likewise vital to protect public safety and city services.
Like most California cities, Los Angeles is facing serious budget problems because of both the deep recession and poor financial decision-making. Angelenos and their elected representatives must avoid a perpetual downward spiral: budget problems that lead to a diminished police presence and reduced services, and a resulting loss of confidence and public safety, leading in turn to loss of business, lower tax revenue and further cuts. If a sales tax could prevent such a disaster — even one that pushes the city's tax rate from 8.75% to 9.25% — it should by all means be considered.
But taxes, too, can spur downward spirals, and before expecting voters here to adopt this one, the council has some explaining to do. For example, it's hard to shake the suspicion that the real purpose of this tax would be to fund the next round of raises for city workers; or that even if that's not the purpose, it would be the result.
Los Angeles' public servants for the most part work hard and are good at their jobs, and they deserve to be fairly compensated. But their pay must be based on the resources the city already has at its disposal. New tax revenue — if voters ultimately approve it — must pay to keep threatened services intact or to restore services already cut. If that means preventing layoffs, that's one thing. But new tax revenue must not merely provide a new pool of funds to put on the bargaining table when city leaders begin negotiating the next contract with public labor unions a year from now.
Let's not forget that the negotiations that resulted in the current contracts took place just as warning signs of the economic meltdown were becoming apparent, yet still Mayor Antonio Villaraigosa and the council practically gave away the store, agreeing to 25% pay increases over five years for most city workers. Since then there have been concessions, give-backs and layoffs, but the city is still in much worse financial condition because of that deal.
The next contract will be negotiated next year and is due to take effect in June 2014. For elected officials who must cultivate their relationships with powerful city unions, a no-raise contract is practically unthinkable and unspeakable. But for council members, mayoral candidates and anyone else on the management side who expects voter support, it's time to make it clear that raises are not a foregone conclusion. And they'd better start coming clean about their plans for this new tax.
Keeping cops on the street, pools and libraries open, paramedics responding, graffiti painted over, inspections and permits on track, crimes prosecuted, bankruptcy avoided — fine. Convince voters that the tax is needed for those kinds of outcomes and they may well come through. Villaraigosa, Wesson, Beck, Santana and other city leaders should detail precisely what's on the block. They have about three months in which to make the case.
Gov. Jerry Brown, after all, put forward a full program of "trigger cuts" so voters considering Proposition 30 knew exactly what would be lost if they rejected the tax increases.
There were other aspects of Proposition 30 that made it more attractive — aspects missing from the city tax proposal. For example:
•The state sales tax increases expire in 2016 and the income tax increases expire after 2018. The city's proposed new sales tax would go on forever. Why? If the state measure should be considered a bridge to tide California over for a few years, and a permanent city tax by contrast is needed for deeper structural problems, city officials must be straightforward about the size and nature of those problems.
•The Proposition 30 tax increases didn't appear out of the blue; they actually restore money lost from recently expired or reduced taxes, including sales, income and vehicle taxes. When Los Angeles faced loss of a utility users tax, voters here kept it intact and extended it to cellphones in 2008 so there was no similar lapse. If other city revenue was lost, officials must detail for voters the type, the amount and the consequences.