MAYOR—L.A. Mayoral Hopefuls Back Tax Reforms

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It appears the drive to reform the city of L.A.’s business tax code won’t fade once Mayor Richard Riordan leaves office in July. All six of the major candidates seeking to replace him say that implementing the reform proposals unveiled last week would be one of their top priorities upon assuming office.

The candidates, who were surveyed by the Business Journal, also agree on other steps to improve L.A.’s business climate, including expanding or sharpening the focus of Riordan’s Business Team and using incentives to bring jobs to the inner city.

Such consensus is remarkable considering the frequent bickering that has taken place over business and development issues between Riordan and the City Council over the past seven years.

The candidates stress the importance of simplifying and reducing business taxes, cutting red tape and focusing economic development efforts on creating high-paying jobs and revitalizing the inner city. On business tax reform, City Attorney and mayoral candidate James Hahn summarized the feelings of all the major candidates when he said: “We now have a set of recommendations and it’s time for the council to get off the dime and get this stuff passed.”

Hahn was referring to the proposal unveiled last week by the Business Tax Advisory Committee, a private-sector group whose members were appointed by Riordan and the City Council. The BTAC plan calls for more auditors and resources to identify and crack down on business tax scofflaws and an ombudsman to help businesses with any questions about their taxes. It also calls for further study of the best way to simplify the tax code while at the same time reducing rates for most businesses.

A previous reform effort by the Riordan administration got tied up in the City Council in early 1999; that plan was further delayed by the failure of state legislation that would have given the city access to state income tax data to facilitate tracking down scofflaws.

All six candidates said that they would do whatever it takes to work with the new City Council this time around to pass the remaining components of business tax reform.

“It should be easier because the Council is in on this effort right from the start, instead of having the plan presented to them from on high (by the Riordan administration),” Hahn said.

All the candidates realize that attracting and retaining companies provides a key source of revenues for the mayor to accomplish cherished goals, like improving the quality of life in neighborhoods and beefing up police and fire protection, said Larry Kosmont, president of Kosmont Partners, an advisory firm.

“The candidates sense that, while a lot of progress has been made, what L.A. wants now is an upgrade in the kinds of jobs it has,” Kosmont said. “They want to make sure that companies will want to start up here, grow here and remain here to assume the leadership ranks left vacant by the departure of our Fortune 500 stable of companies.”

Kosmont said the candidates’ differences on some key business issues are relatively minor. For example, Hahn, state Controller Kathleen Connell and businessman and mayoral adviser Steve Soboroff all said they want to expand Riordan’s business team. Former Assembly Speaker Antonio Villaraigosa; Rep. Xavier Becerra, D-Los Angeles; and city Councilman Joel Wachs also said they want to expand the business team but added that it should focus its efforts more on pursuing high-paying jobs and fostering growth industries.

Kosmont added that one factor spurring the candidates on is the growing realization that companies have left the city in recent years for surrounding cities with lower business taxes.

Meanwhile, all the major candidates agree that the business team should remain intact and even be expanded. But some of the candidates differ on what its focus should be.

Connell said the team needs to be more aggressive in using state tax credits and needs to focus on attracting biomedical and other high-tech businesses.

“I sit on many of the state commissions and boards that grant such tax credits to other cities and L.A. has not been among those seeking these credits,” she said.

Hahn said the business team’s focus needs to be on attracting small businesses to the city, while Wachs said a business team needs to be integrated into a larger economic development plan that prioritizes the industries that the city should target.

The candidates also said they want to see more investment in the inner city. Some, like Hahn and Villaraigosa, favor expanding Riordan’s Genesis L.A. program, which is trying to facilitate redevelopment activity on some two dozen inner-city sites.

Becerra said he would try to set up a trade and technology center in South L.A. and speed cleanups of abandoned and contaminated inner-city properties. And Connell said she would try to smooth the way for companies and developers to assemble land in the inner city.

Villaraigosa added that he would expand the role of the controversial Community Development Bank in inner-city areas, saying that despite its current troubles, the concept of a bank targeting inner-city and minority businesses is sound.

The candidates also stressed quality-of-life issues, saying such factors as public safety, adequate parks and recreation facilities provide the essential foundation that attract businesses and keep them here. Each emphasized different elements, from improving neighborhoods to overhauling schools.

For example, businessman Soboroff said that the neighborhood councils now taking shape must include a business voice, particularly in low-income neighborhoods that need new business investment.

“These councils need some business expertise. It can’t just be who screams the loudest,” he said.

Meanwhile, Becerra said more has to be done to improve L.A.-area public schools, so companies can hire adequately trained workers. One of his proposals is to convince companies to donate computers to schools, in exchange for tax credits.

Wachs has an entirely different focus: trimming down what he says is the city’s bloated bureaucracy and improving customer service within city departments.

“Businesses need to know that their tax dollars are being used in the most efficient manner possible,” Wachs said. “What’s more, the overall quality of service needs to improve, so that when businesses or residents have to approach the city, they are not scared off.”

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