Some Business Groups On Board With Transit Tax

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Local business groups appear split on whether to support a permanent half-cent sales tax hike for transportation projects that the Los Angeles County Metropolitan Transportation Authority is looking to place on the November ballot.

The transit agency, known as Metro, was looking at a tax increase that would expire in 2057, as well as extending out to that date a current half-cent sales tax – known as Measure R – that had been set to expire in 2039.

But earlier this month, Metro Chief Executive Phillip Washington unveiled a plan to make both sales tax measures permanent. He said that would enable the agency to book future tax revenues as repayment streams and move up construction for several big-ticket projects, including a new highway and rail corridor in the Antelope Valley and a planned extension of the Gold Line light-rail line to Whittier.

If approved by voters in November, the sales tax rate for Los Angeles and most cities in the county would jump to 9.5 percent from the current 9 percent. In a few cities that have enacted their own sales tax measures, the rate could go as high as 10.5 percent.

Traditionally, business groups do not favor increasing sales taxes that many of their members must pay. But transportation-related tax measures have been one of the frequent exceptions, and this time is no different as three major business groups appear supportive.

“Transportation infrastructure will always need investment, so removing the sunset date creates a permanent solution for that investment in L.A. County,” said Jessica Duboff, vice president of public policy for the Los Angeles Area Chamber of Commerce. “While businesses don’t like paying higher taxes, when the funding goes to projects that make it easier to do business and improve the lives of our employees, we understand and support the investment.”

Similarly, the Valley Industry and Commerce Association supports the plan, saying it prioritizes several much needed transportation projects in the San Fernando Valley.

The Los Angeles County Business Federation, which represents 150 business groups, is also generally supportive of the tax hike plan.

But the Metro sales tax hike is not getting a good reception at the Long Beach Area Chamber of Commerce. Partly it’s a matter of bad timing: Long Beach voters this month approved a 1 percent hike in the sales tax starting next year to boost funding for basic city services. And other state and local tax increase measures appear headed for this November’s ballot.

“It’s been one thing after another in terms of increased taxes and direct expenses on our business community,” said Jeremy Harris, senior vice president with the Long Beach chamber, whose board will take up the measure later this summer.

Another reason for the chamber’s skepticism is the tax hike would exacerbate the sales tax differential between Long Beach and adjacent cities in Orange County.

“If this Metro tax hike were to pass, Long Beach would have a 10.5 percent sales tax next year, putting us very near the top for sales taxes in the county,” Harris said. “But our bordering cities in Orange County are paying 8 percent sales tax. That 2.5 percent differential is a lot.”

For example, he said, a Long Beach resident looking to purchase a $2,000 big-screen TV could save $50 in sales tax by driving 10 minutes down the 405 freeway into Westminster.

Fee Increase

State fee increases for retailers and wholesale distributors of tobacco products kicked in earlier this month, thanks to a law enacted by the Legislature and signed by Gov. Jerry Brown in May.

Most impacted are retailers with multiple store locations – for them, the fee jumps to $265 a location a year; previously, retailers had to pay a one-time fee per location of $100.

Wholesalers and distributors are seeing a much smaller relative increase to $1,200 a year per location from the previous level of $1,000 annually.

The additional money is going to support administration of a state program that issues licenses to tobacco retailers and wholesalers.

Minimum-Wage Hikes

Employers in the city of Los Angeles and unincorporated portions of Los Angeles County beware: The minimum wage for many businesses will rise to $10.50 an hour as of July 1.

In both jurisdictions, the hourly minimum wage for employers with 26 or more employees will rise to $10.50 an hour from the current state minimum of $10. Employers with 25 or fewer employees have an additional year to comply; in the city, many nonprofits will get a similar extension.

Also starting July 1, employers in the city of Los Angeles must provide six days of paid sick leave a year, double the current state law.

Staff reporter Howard Fine can be reached at [email protected] or (323) 549-5225, ext. 227.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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