Hahn Backs Hollywood Tax Plan

Eight months after City Council members proposed a set of tax breaks to keep entertainment companies in Los Angeles, Mayor James K. Hahn announced his support for the plan Monday.

Hahn held a news conference in the parking lot of a Hollywood electronics firm that serves the entertainment industry to announce that he would support a proposal to eliminate business taxes on companies and individuals in the entertainment business who gross less than $300,000 a year.

The mayor also supported another part of the plan that would lower taxes on producers who spend less than $12 million on a project.

“We recognize there is competition out there,” the mayor said, flanked by entertainment industry officials and council members.

“We believe it’s time for L.A. to fight back,” the mayor said.

Hahn’s endorsement of the new exemptions comes after council members Wendy Greuel, Eric Garcetti and Martin Ludlow proposed the plan in February and more than six months after a business tax advisory committee convened by the city made a similar proposal.

“Good work does take time,” Hahn said Monday. “And we’ve got a lot of people working on this.”

The plan, which must be approved by the City Council, was greeted warmly by representatives of production companies.

“It really means a lot to us,” said Steve Caplan, senior vice president of the Assn. of Independent Commercial Producers, whose members produce most of the major television ads nationwide.

But many business leaders and others are still waiting for more comprehensive reform.

The city of Los Angeles consistently has the worst business climate in Los Angeles County and is among the one or two worst statewide, in part because of its complex and expensive business taxes, said Larry Kosmont, an economic development expert whose company performs an annual survey of the business climate in U.S. cities.

“It’s been very disappointing to see how long it’s taken Los Angeles to do anything on this issue,” Kosmont said.

In his 2001 inauguration address, Hahn promised that he would be “implementing business tax reform and making city government more business-friendly.”

The mayor has championed some small reforms.

Shortly after his inauguration, he pushed to extend a tax moratorium on new business.

But recently, the push for reform has largely come from elsewhere.

When businesses advocated a simpler system that would allow a business to avoid paying multiple tax rates, the City Council took the lead in 2003 and passed the measure.

This summer, Hahn announced his support for a plan to exempt small businesses from paying any business tax, after Greuel and Garcetti asked city officials to analyze the idea.

Last week, the city’s Office of Finance concluded that better enforcement and other measures could generate millions of dollars in savings after Greuel and Garcetti challenged its report last month that the city could not afford sweeping tax reform. The proposed tax breaks for the entertainment industry would cost the city an estimated $2.5 million annually.

To compensate, Hahn and council members plan to tap a special trust fund set up to pay for tax reform.

Six months ago, Hahn proposed using part of this fund to help balance the city budget before the city attorney’s office ruled that such a transfer was illegal.