Putting Prices on the Future

0

Here’s a look at how Vernon businesses may fare if the city were disincorporated and became part of Los Angeles County, or if it were consolidated with the city of Los Angeles or Commerce. Data was drawn from the 2010 Cost of Doing Business Survey by the Kosmont-Rose Institute and independent research.

INVOLUNTARY DISINCORPORATION

No city has been forced to disband in California history, so it’s unclear exactly how it would work. An involuntarily disincorporation would require state legislation.

Prosecutors in the Los Angeles County District Attorney’s Office reportedly have drafted legislation targeting Vernon that would disincorporate it. If disincorporation eventually is approved, Vernon would become part of the County.

PRO’S: In Vernon, all companies must get a business license and pay a fee. In unincorporated Los Angeles County, however, not all businesses need a license, including apparel manufacturers.

CON’S: The county Board of Supervisors could take control of Vernon’s public utility, the Light & Power Department, according to California’s government code. That could result in an electricity rate hike of 40 percent to 65 percent for Vernon’s businesses. Also, businesses would be subject to a utility user tax of 4.5 percent on communications, and electric and gas charges. Vernon does not charge those taxes.

CONSOLIDATION WITH LOS ANGELES

It’s unclear exactly how the city of Los Angeles could annex Vernon or merge with it without the approval of the state’s Local Agency Formation Commission and the separate approval of a majority of voters in each city.

PRO’S: Los Angeles has business improvement districts, state enterprise zones, federal empowerment zones and redevelopment areas that can help businesses. Vernon has none of those.

CON’S: Los Angeles is expensive for businesses. Vernon Light & Power Department’s rates are 20 percent to 28 percent lower than the Los Angeles Department of Water & Power’s rates, according to the Vernon Chamber of Commerce.

L.A.’s taxes are much higher, too. Under L.A.’s gross receipts tax, Vernon’s top industries, manufacturing and wholesaling, would pay $1.09 per $1,000 in gross receipts. That would be close to $11,000 for a business that grossed $10 million. Vernon businesses are now taxed per employee, with the maximum capped at about $5,000.

Vernon charges no utility user taxes or miscellaneous fees. Los Angeles does have big utility user tax and other charges.

MERGER WITH COMMERCE

Again, it’s unclear how Commerce could annex Vernon or merge with the city without the approval of the Local Agency Formation Commission and the separate approval of a majority of voters in each city.

PRO’S: Commerce business taxes are based on the number of employees and the size of the business facility. However, the maximum fee is only $3,499. Commerce has redevelopment project areas, no utility user taxes and no miscellaneous fees.

CON’S: It’s unclear who would control Vernon’s publicly owned utility and what would happen to customers’ rates. Southern California Edison supplies electricity to Commerce, and Vernon’s rates are about 30 percent to 40 percent lower, according to the Vernon Chamber of Commerce.

No posts to display