City Council Panel Fails to Agree on Competing Business Tax Proposals

With Mayor Richard Riordan’s much-anticipated business tax reform proposal mired in City Hall politics, a key panel charged with recommending an overhaul of the city’s antiquated tax structure capped more than a year of deliberation Thursday by failing to send a unified plan to the full council.

Instead, the committee referred three competing proposals to the council for a vote next week.

Business tax reform, a major priority for the Riordan administration, suddenly has become a highly politicized issue, with some council members offering their own plans, others strongly criticizing the mayor’s proposals and still others ducking the issue altogether.

The council’s five-member tax reform committee, which has met half a dozen times since last month, clearly did not have the votes Thursday to recommend anything.

Councilmen Richard Alatorre and Mike Feuer agreed on one plan, but Councilwomen Jackie Goldberg and Rita Walters opposed it. Council President John Ferraro--who could have provided the tie-breaking vote--was absent, attending to other city business, his aides said.

As a result, the four lawmakers didn’t even bother with votes, merely passing the proposals on for debate and votes by the full council.

At least 18 months ago, council members on the Budget and Finance Committee, which Alatorre chairs, began discussing the issue and offering models for their consultants to study.

Nonetheless, three tax reform options will go to the council next week: one, a compromise hammered out by Riordan, Alatorre and Feuer, and two developed by Goldberg.

Goldberg, who has become an emphatic critic of the mayor’s tax plan, announced a new proposal Thursday that would lower all business taxes 4%, avoiding a ballot measure and buying the city time to develop what she says would be a more meaningful tax relief and simplification plan.

“I just think it’s inherently unfair for some businesses to get an increase while others get a decrease,” Goldberg said. “We have no quarrel with the notion that there is a need for tax reform and simplification. We just think that tax relief should be for everybody,”

With the tax reform committee’s action Thursday, Goldberg has succeeded in continuing to antagonize the mayor and his top staff. Earlier this week, she infuriated them by linking top contributors to Riordan’s campaign to create an elected charter reform commission with tax breaks she said they would receive under the mayor’s tax plan.

Riordan and his aides said the information was inaccurate, and they vehemently denied that the contributors would receive the large tax breaks she alleged.

Now Goldberg has miffed even some council colleagues by introducing not one but two tax reform plans. The mayor would have preferred that the council receive one plan--his--without the competition.

“If you are really interested in reforming an archaic tax system, you can’t cavalierly say, ‘Let’s try this, and if that doesn’t work, let’s try this other thing,’ ” said one City Hall source. “There needs to be some thoughtful analysis. . . . This is life in the big city.”

Under the compromise tax plan agreed upon by the mayor and the two councilmen and expected to win enough votes to get on the June ballot, two-thirds of the businesses in the city would receive a tax cut. The city’s cumbersome 64 tax rate categories would be cut to eight, with an average tax decrease of just over $69 per business. The plan would mean a $16.2-million loss to the city’s general fund budget.

Deputy Mayor Noelia Rodriguez said the mayor stands behind the compromise because he believes that it will keep and attract job-creating businesses.

Feuer, who worked at a frenzied pace to reach a compromise with the mayor after introducing his own proposal, said he believes the new plan will win a majority of council votes next week.

“It will provide broad-based tax relief, it will simplify our system and it will not unduly burden the general fund,” he said.

But Goldberg said that she is trying to help all taxpayers and that more study is needed to develop a more meaningful plan.