Respect the Will of the Voters : Los Angeles should find a way to implement tax break for businesses in poor areas

One year after the Los Angeles riots, city voters passed Charter Amendment 1 to allow City Hall to grant special business tax reductions or exemptions in economically depressed areas. An implementing ordinance, which would reduce business license fees through the year 2004, now sits on the desk of Mayor Richard Riordan. It has merit.

At the urging of Councilman Mark Ridley-Thomas, the City Council last week voted unanimously to provide tax relief to blighted areas from Watts to Pacoima--not just the riot zones but poor areas throughout the city. The city administrative officer estimates the municipal tax break would benefit more than 8,000 businesses at a cost of $2.3 million.

Mayor Riordan is concerned that the incentive is too modest and wouldn’t do enough to attract new businesses, specifically manufacturing. But how about trying to attract private investment by leveraging some of the $150 million in federal funds promised by Washington as a consolation prize after the city failed to win an empowerment zone?

To increase the impact of the tax break, some have suggested that the mayor confine the relief to new businesses that would generate additional jobs in blighted neighborhoods. However, a question of fairness arises. Such a restriction would discriminate against existing businesses that have stayed and in many cases struggled to survive in the face of high crime, insurance redlining, limited access to capital and other hurdles.

The tax break should apply to all businesses in the designated areas. Although manufacturing companies may create more jobs than most other businesses, retail firms and service companies should not be undervalued. Grocery stores, clothing and shoe stores, dry cleaners, restaurants and other businesses enhance the quality of life in a neighborhood. Such establishments often are hard to find in poor areas. A municipal tax break could help.

Mayor Riordan has warned that he may veto the ordinance this week. But voters showed they wanted business tax relief in depressed areas by approving Charter Amendment 1. If the mayor finds the tax cut objectionable, he should spell out an alternative plan for revitalizing the poor neighborhoods of Los Angeles.