How to stop L.A.’s corporate flight

Today’s topic: The premise of Measure E is that Los Angeles is losing jobs and investment to other cities. How big a problem is that, and what’s the root cause? City Councilman Greig Smith and mayoral candidate Walter Moore debate Measure E.

Stopping the job bleeding
Point: Greig Smith

The problem cannot be underestimated: The population of Los Angeles has grown by 1 million over the last 30 years, but we have lost 50,000 net jobs. That was before the national economic crisis, which has sent L.A.’s unemployment above rate 10%. We cannot afford to lose more jobs, and as a city, we must be doing all we can to preserve jobs and help create new ones.

Measure E would amend the City Charter to enable Los Angeles to more effectively compete with cities in the region and abroad, allowing us to help our local businesses thrive and create the jobs and economic growth that our communities need. Unlike neighboring cities with which we compete, L.A.’s charter does not give the city direct authority to offer incentive packages to employers to encourage them to relocate to L.A. or stay and expand. That was how we lost out to Burbank on having a Yahoo subsidiary relocate to Los Angeles. There are countless other examples.

The ballot arguments against Measure E claim that offering incentives to businesses is spending of public money that could be spent on other services. Yet projects that the city has supported with incentives, such as L.A. Live and Staples Center, have created large numbers of jobs and brought in millions of dollars of economic growth that contribute to the city’s funds and, therefore, its ability to provide essential services, including police and firefighting. That is why the ballot argument in support of Measure E is signed by Los Angeles Mayor Antonio Villaraigosa, LAPD Chief William Bratton, Fire Chief Douglas Barry and the heads of the Los Angeles Area Chamber of Commerce, the Valley Industry and Commerce Assn. and the unions representing thousands of L.A. police officers and firefighters.

Critics also claim that we are giving taxpayer money to politically connected millionaires. That is a lie. In fact, Measure E has protections in place, as stated in the impartial summary on the ballot: “These incentives must result in clearly identifiable public benefits, such as job creation, new facilities that deliver public services (such as a park), or generation of new revenues. Any benefits provided must follow applicable law and must be approved by the mayor and council before they are provided. This amendment also requires a finding that the public benefits provided by these incentives could not be created through any other means.”

Lastly, I acknowledge the need for transparency and accountability in city government. No one is asking for a blank check. The criteria for the incentives Measure E would authorize would be discussed in public meetings of the City Council’s Jobs, Business Growth and Tax Reform Committee, which I chair.

In this economic downturn, Los Angeles cannot afford to be left behind in the competition for new and expanding businesses that choose to locate elsewhere or might otherwise leave the city. Measure E will help Los Angeles compete.

City Councilman Greig Smith represents Los Angeles’ 12th district.

We shouldn’t have to bribe companies to do business in L.A.
Counterpoint: Walter Moore

Greig:

One definition of insanity is to do the same thing over and over and expect different results.

You and your colleagues at City Hall have been giving hundreds of millions of our tax dollars, year after year, to politically connected companies through the Community Redevelopment Agency. The results? As you yourself admit, employers have been fleeing our city in droves. This is nature’s gentle way of saying, “It’s not working. Enough with the subsidies.” The invisible hand of the free market keeps slapping you in the face, yet you won’t wake up.

Wake up, buddy. L.A. has every natural commercial advantage going for it: perfect climate; a built-in market of 4 million consumers; a major seaport; electricity, more or less; and access to rail and highways galore. The only thing driving businesses away is city policy.

Do you not “get” that the city’s business income tax -- which is a tax on gross rather than net income -- drives away employers? Have you never taken Econ 101 or actually run a business? The subsidies you want to dole out to the chosen few don’t come from the city controller. They come from the many employers, already here, struggling to make payroll.

I want you to go up to 100 business owners in L.A. and ask them which they would prefer: repealing the city’s business income tax or continuing to require them to pay it so you and your colleagues can give their tax money to other companies.

You are robbing Peter to pay Paul, and Peter is fed up. It’s not fair, and it does not increase employment overall. It simply redistributes wealth from those without lobbyists to those with lobbyists.

As for the “protections” built into the law, you’ve got to be kidding! There are no objective criteria whatsoever. Nor can you point to any track record of success for the city’s boondoggles. On the contrary, audits by the city controller and independent economists -- links to which are available at VoteNoLA.com -- show City Hall’s abysmal history of failed dabbling by wannabe investment bankers squandering taxpayers’ hard-earned money.

We’re not rural Mississippi; we don’t have to bribe companies to locate here. Rather, we have to treat all employers fairly and equally. They’re not going to fall for the slogan, “We cheat the other guy and pass the savings along to you.”

Walter Moore, a business trial lawyer, is a candidate for mayor of Los Angeles.