January 14, 2008
Taxifornia Has No Money
Los Angeles is $75 million in the red and the state is using the same colored crayon at $14 billion. And where's the Mayor? He's spending a lot of time with Hillary Clinton.
Naysayers may suspect Mayor Villaraigosa is bored with LA already and is ready to climb the political ladder ASAP, but columnist Rick Orlov at the Daily News says it more has to do with a future run at Governor and better federal relations:
There has been no indication that the mayor is looking for a job in a Clinton administration if she wins. It seems rather that he is looking to leverage the city position -- and Los Angeles' pursuit of federal funds -- with any Democrat who takes over the White House and Los Angeles' pursuit of federal funds.Federal funding is especially important this year because all levels of government are facing financial problems. [Daily News]
As we learned last week, Governor Schwarzenegger proposed sweeping cuts, which could devastate state parks, beaches, social programs and we're hearing first-hand that organizations who receive state funding are worried so much, they are starting to let people go.
As for Los Angeles, that negative $75 million on the books could grow if Proposition S, the phone tax, on the February 5th ballot doesn't pass. Currently, $270 million is raised from the phone tax. Voters will determine the future of that one, which could ultimately determine the future of jobs, more local parks and other city services.
Photo by manmadepants via Flickr



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You mention Prop S, and it seems like you might be supporting its passage, although this isn’t clear from your post. I want to add my thoughts on this issue.
First, this ballot proposal is deceptively billed as a tax reduction, but in reality would expand taxes on telecommunication services and open the door to taxing of our internet services. The special interests and politicians who are promoting Prop S claim that it’s about safety and protecting essential services, but nothing in Prop S requires City Hall to spend the money on hiring more police or fire fighters. Don’t let the politicians get away with this deception. It is critical that this proposition be defeated, so please vote NO.
Here’s the Facts
1. Prop S would RAISE your taxes, not lower them.
Prop S would ratify tax hikes City Hall made illegally in the past. City Hall adopted certain taxes on cell phones and land lines without voters' approval, which is illegal under our state constitution and which has been struck down by two court decisions. If Prop S passes, those taxes would stay in force, and would drop from 10% to 9% -- but if Prop S fails, those taxes would disappear altogether, so they would go from 10% to ZERO percent. When coming up with the plan to have voters validate their illegal tax hike through Prop S, Mayor Villaraigosa persuaded council members to seek a 9% tax - just so they could bill it as a tax cut. That's what's so sneaky about Prop S!
Prop S would also impose a BRAND NEW TAX on DSL, wireless, text-messaging, instant-messaging, VoIP and other "new" communications services. The new tax could cover everything from a land-line telephone call to a photograph sent from a cell-phone camera to a text message sent via BlackBerry. And, it’s possible that if Prop S is approved, in the future, the city could impose other taxes on your basic internet access without getting any voter approval.
2. Prop S is unfair.
Prop S would tax YOU at 9%, but telemarketers would pay only 5%. Plus, the L.A. Times and other newspapers and radio stations would pay NO tax on cellular, wireless and internet services. Furthermore, our phone taxes are currently DOUBLE or TRIPLE that of other goods and services. And these taxes are regressive, the burden falls especially hard on fixed-income users such as seniors, working families and small businesses.
3. Prop S is unnecessary.
Despite the scare tactics and the misleading ads on TV, you can be sure that essential services won’t be cut if Prop S fails. Mayor Villaraigosa has repeatedly said he would protect the Los Angeles Police Department from cuts and press on with the goal of adding 1,000 officers by 2010. Furthermore, the City of L.A. has higher taxes than any city in the county, and already takes in more revenues than ever in its history: $6.7 billion per year. Even if we repealed all cell phone and land line taxes, and hired 1,000 new police officers, the city's tax revenues would still be 21% higher than they were in 2004-05.
Meanwhile, City Hall wastes YOUR tax money on hundreds of millions of dollars per year on subsidies to downtown developers and on other wasteful spending. For example, there are only 15 City Council members, but 108 city owned and paid-for cars assigned to those council members' offices. That’s over 7 cars per council member.
In addition, $66 million in taxpayer subsidies will go to the out-of-state developers of the Grand Avenue luxury shopping and hotel project downtown and $270 million in tax breaks — the very amount city officials cite as the upcoming budget shortfall — is going to AEG, which developed the ritzy L.A. Live entertainment venue downtown. These are just a few examples of how LA government wastes your tax dollars. So why should you pay higher taxes while the special interests get perks and big tax breaks?
And to add insult to injury, the City is squandering $5.1 million to put Prop S on the ballot as a special election when they could have saved that money and just added Prop S to the next regular municipal election. But that’s not until April of 2009. Apparently, the City Council just can’t wait to get its hands on your hard earned dollars.
Other cities thrive with no phone taxes. Did you know that Beverly Hills, Thousand Oaks and San Diego have no phone tax? The same goes for Atlanta, Boston, and Philadelphia. As for cities that do impose phone taxes, New York’s tax is just 2.4%; Long Beach and Las Vegas charge 5%; and Burbank and Portland charge 7%. So why must we pay 9%?
Prop S is a big rip-off. Vote no, and PLEASE email everyone you know who lives in Los Angeles and tell them to do the same. The special interests behind Prop S have put up $2.3 million for a misleading advertising campaign. You may have seen some of these ads on TV. They’re organized and they have lots of money. We taxpayers, by contrast, have to let one another know. We need to get the word out or the deceptive title and wording of Prop S will probably lead many uninformed voters to vote yes and that means higher taxes for us all. There’s only a few days left before the election. Forward this information to your contacts before you do anything else. Please act NOW.