Alleged Tax, Charter Reform Links Disputed

With two of Mayor Richard Riordan’s most important priorities facing serious trouble in the City Council, one of his most consistent critics, Councilwoman Jackie Goldberg, says she has found a troubling link between the charter reform and business tax proposals.

Goldberg, who like some of her colleagues is suspicious of the mayor’s interest in charter and tax reform, says that research conducted for her has found that major contributors to the mayor’s campaign to create an elected charter reform commission would receive tax cuts under Riordan’s business tax proposal.

Mayoral aides emphatically denied such a link and charged the councilwoman with trying to derail both reform efforts.

“You have to ask yourself: Was this a quid pro quo?” Goldberg said. “I don’t think anybody sat down with a list of charter contributors and said, ‘OK, let’s take care of them.’ I do not believe that. Nonetheless, it stinks. . . . You have to ask: Was there a return for these big donations and, if so, is it a tax break?”

Among other links, Goldberg alleges that:

* Bert Boeckmann, the owner of Galpin Motors and a Riordan appointee to the Police Commission who gave $50,000 to the charter effort, would receive a 17% business tax break under the tax reform plan.

* Saban Entertainment, which contributed $50,000 to the charter campaign, would get a 41% tax cut.

* Ticketmaster of Southern California, which gave $50,000 to the charter effort, would see a 25% tax reduction.

* BankAmerica Corp., which gave $25,000 to the charter campaign, would realize a 32% tax reduction.

But top aides to the mayor strongly disputed Goldberg’s research and her attempts to link charter and tax reform.

“It is absolutely off the mark to suggest that these two major reform initiatives--tax reform for businesses and charter reform for citizens--are in any way being driven with an eye toward benefiting a few rather than the masses,” said Deputy Mayor Noelia Rodriguez. “That is not the way this mayor operates.”

Further, she said, “to use that theory that [Goldberg] is advancing is simply in our view an attempt to derail both reform processes, which are at this point at a critical juncture.”

Other top mayoral aides, including Chief of Staff Kelly Martin and Deputy Mayor Rocky Delgadillo, who is overseeing tax reform, said Goldberg is attempting to draw connections that cannot be made.

They said that individual tax rates are confidential and that Goldberg is merely showing average industry tax codes that could include thousands of companies, and failing to accurately represent a specific enterprise.

Council members, including Goldberg, have become major thorns in the side of Riordan administration officials trying to push the charter and tax reform proposals through the council to meet deadlines for inclusion on the June ballot.

The mayor’s initial tax reform proposal faces serious challenges from Goldberg and Councilman Mike Feuer, who have come up with their own plans.

Goldberg’s proposal is quite different from the mayor’s, and Feuer’s is seen as occupying the middle ground between the two. Negotiations began in earnest late last week involving the mayor’s office, Councilman Richard Alatorre’s staff and Feuer’s representatives to develop a compromise proposal to be unveiled at a council Tax Reform Committee meeting scheduled for Thursday. Thecouncil was supposed to debate charter reform then, but that discussion has now been delayed.

Goldberg says she found the alleged links by trying to figure out how companies were placed into tax categories in the mayor’s proposal. She said that she never got a clear answer and that Riordan’s tax plan has dramatic inconsistencies, making it nearly impossible to explain to firms why they would be getting tax increases.

She objects, for example, to labeling construction and wholesale trades as growth industries--making some of these firms eligible for tax cuts--while firms in other fields, such as heavy construction and apparel, are hit with tax hikes.

As a result of her questions, she said she looked at the contributors to the mayor’s 1997 Proposition 8 campaign, which asked voters to create a charter reform commission and to elect the 15 members. The mayor raised about $1.9 million, most of it in donations of $10,000 or more. The bulk of those were from Riordan associates, but the mayor was the largest donor: He put up $575,000 to launch the signature gathering effort to put the charter issues on the ballot.

Goldberg said that the 10 lawyers and law firms that donated $2,500 to $32,500 to the charter effort would receive an 8% tax cut and that four investment companies that gave $25,000 to $50,000 would get a 9% reduction.

Feuer, who is working feverishly on his compromise, said he believes a new plan will emerge that will more objectively group similar businesses in tax categories.

Under Riordan’s $23-million plan, categories in the city’s 1930s-era business tax code would be whittled from 64 to eight, start-up firms would be exempt from city taxes in their first year and companies with less than $5,000 in revenue would have to pay only a $20 filing fee.

His plan calls for tax reductions for nine in 10 city businesses.

The council has until early March to vote to place the reform packages on the June ballot.