Valleywide : Tax Rebate Plan Draws Moderate Support

A plan to lure new business to Los Angeles with tax breaks got a warm reception from members of a City Council committee Thursday.

Despite the professed support, though, it quickly became clear that the proposal--an effort to tease jobs from the private sector by giving companies tax rebates for hiring--faces extensive tinkering.

The so-called “economic incentive” plan, initiated by City Councilwoman Laura Chick, would allow businesses to take tax rebates of at least $1,900 for each job they create by expanding or relocating to Los Angeles. The plan could cost the city $5 million a year.

Councilman Mike Hernandez, chairman of the Community and Economic Development Committee, praised the measure as “a new move in the city toward job creation.” But a little later, Hernandez suggested that the idea could go too far and become a handout. It should be flexible, he said, “without putting the fox in the chicken pen.”

Under Chick’s proposal, extra benefits would be conferred on companies that are considered desirable additions to the local economy--for example, those that pay employees $27,000 or more or that set up shop in poor neighborhoods.

Councilman Richard Alarcon, a member of the committee, said the program should go farther and exclude companies he believes are undesirable. For instance, those that pay very low wages shouldn’t be eligible for tax breaks, he said.

Gary Mendoza, Mayor Richard Riordan’s economic development deputy, and David Lynn of the Los Angeles Chamber of Commerce spoke in support of tax incentives. But the idea got a drubbing from professor Robert Benson of Loyola Law School.

Benson said the public would never know if tax dollars had been spent for nothing. After all, the jobs might have been created anyway. “There’s no demonstrable quid pro quo,” he said.

A second hearing on the tax incentive proposal will be scheduled in the next few weeks.