Last week, L.A. City Council reached a deal to extend the timetable for boosting wages for hotel and private-sector airport workers under the Olympic tourism wage ordinance, in exchange for business groups dropping their measure to repeal the city’s gross receipts tax.

The council approved a revised plan in an initial 11-4 vote, delaying the target wage level of $30 an hour by 18 months to Jan. 1, 2030. Because the decision wasn’t unanimous, the council will have to vote again this week on the ordinance.

Travel industry and business groups had qualified a ballot measure for November to repeal the city’s gross receipts tax. In exchange for the wage delay, these groups agreed to drop that measure.

“This agreement ensures workers are paid fairly and that businesses that create jobs can continue serving L.A. and hiring Angelenos,” said L.A. Mayor Karen Bass said following the council’s initial vote.

Bass had previously met with the business and labor groups to begin brokering the deal which the city council is now voting on.

The gross receipts tax is expected to bring in roughly $890 million to city coffers for the 2026-27 fiscal year that starts July 1. Out of a general fund budget of $8.2 billion, it is the third largest revenue source behind property taxes and department receipts.

Original wage plan

The tourism wage ordinance was originally passed in May of last year after a years-long campaign by the Unite HERE Local 11 union of hotel and restaurant workers. That ordinance increased the minimum wage paid to hotel and private sector airport workers to $30 an hour by 2028.

The American Hotel and Lodging Association, Chicago-based United Airlines and Atlanta-based Delta Air Lines immediately attempted to place a referendum on the ballot so that they could campaign to overturn that ordinance. 

However, amid controversy over signature-gathering practices, that effort failed to garner enough valid signatures, and the first wage hike took effect.

The lodging association and airlines then pivoted to the repeal the gross receipts tax, joining the Valley Industry and Commerce Association and other business groups that had long been pushing for the elimination of the tax. In March, the business interests were successful in garnering enough signatures to place the measure on the November ballot.

Faced with the prospect of an $890 million hole being blown in their budget, city officials then turned to negotiations to convince the business groups to withdraw their repeal measure. The outlines of a deal were first reported two weeks ago.

‘Important step forward’

The council’s initial vote was welcomed by the Central City Association, one of the principal negotiators in the deal.

“Today is an important step forward for Los Angeles’ tourism and hospitality industries, and for the workers and businesses that create them,” the downtown business group said in a statement. “We reached an agreement that raises wages, expands healthcare benefits – but also recognizes the economic realities these industries are facing.”

The statement went on to say that the initial ordinance the council approved last year lacked business input.

“We should not repeat that approach,” the statement said.

But Unite HERE Local 11 blasted the deal.

“The hotel and airline industry’s successful shakedown sends a dangerous message: Any time workers win meaningful improvements, powerful corporations can threaten the city’s finances and strong-arm elected officials into taking back wages and healthcare that workers fought to win,” the union’s statement said.