Although excessive public-employee salaries are getting a lot of attention these days, many ostensibly private officials – including an L.A. tourism bureau boss who makes almost $500,000 a year – are paid mostly or entirely from public money. Public-private compensation packages can be even higher than the pay of public employees that has been the focus of taxpayer outrage.
Consider one example: LA Inc. is a non-profit that functions as the city of L.A.’s convention and visitors bureau. The company is organized as a 501(c)(6). In its tax filing, LA Inc. describes its main function as “Advance the prosperity of L.A.’s visitor economy and the livelihoods that depend on it.”
LA Inc.’s budget in 2009 was $19.4 million. About $15.6 million of that came directly from the public: $10.4 million of it came from a portion of the city’s 14 percent hotel room tax and $5.2 million from Los Angeles World Airports. An additional $1.3 million came from membership fees and $2.4 million from business activity, including advertising in LA Inc.’s visitors guide. But the largest portion – more than 80 percent – comes from public funds. If you want to know what happens to all those taxes and fees that run up your airport and hotel bills, this is one example.
LA Inc.’s budget will soon be going up even more thanks to a recently approved additional 1.5 percent hotel tax. Mark Liberman, LA Inc.’s president and chief executive, said the new dedicated tax could double the organization’s budget.
Where does all that money go? More than 40 percent of it goes to pay staffers. Salaries, pensions, benefits and other compensation make up $8.6 million of the organization’s spending. All of LA Inc.’s executives make well over $100,000 a year in total compensation.
Lack of attention
CEO Liberman pulls down $488,000 a year. This is well above the pay scale for many public officials who have been lambasted for their featherbedding. Recently, an Orange County grand jury study of compensation brought considerable condemnation and unwanted attention to some of that county’s most highly paid city managers. Yet the highest paid of these, Laguna Hills City Manager Bruce Channing, is “only” pulling down $378,000, which is still $110,000 a year less than Liberman.
The difference is that there has not been nearly as much attention paid to the lavish compensation of officials in public-private partnerships like LA Inc. Nor is this information as easy to organize in the kind of databases that are being put together for teachers, city managers and other public employees around the country. But taxpayers are still funding these outrageous pay packages.
What are they getting for this investment of public money? LA Inc. spends about $7 million a year on “advertising and promotion.” The justification for this spending is that tourism is a major portion of Los Angeles County’s economy.
Now, Liberman might be very good at his job. But it is absurd, especially in a recession that has seen L.A.’s gross municipal product drop 3.4 percent (according to the Bureau of Economic Analysis), to spend public money to advertise Los Angeles as a tourist destination.
Los Angeles is already the center of the American entertainment industry, which provides more free advertising for the area than any quasigovernmental entity could ever hope to match. It’s pretty widely understood, in the United States and abroad, that Malibu has beautiful beaches and Rodeo Drive offers a unique upscale shopping experience. I do not remember a time when I did not know the word “Hollywood.” What could LA Inc. possibly be offering in the way of tourism-boosting that would justify its cost?
Here’s an idea to bring tourists back to the City of Angels. How about not imposing massive hotel taxes and airport fees in the first place? If you want more people to come here, you can start by making the trip less expensive.
Tim Cavanaugh is a columnist at Reason magazine and Reason.com.
