Last week, the first meeting was held of the L.A. City Council’s new Ad Hoc On Comprehensive Job Creation Plan Committee. I attended and offered our Chamber’s strong support for their efforts. It is extremely critical to the future of our City that the City Council act to jumpstart the creation of jobs.
Committee Chair Paul Krekorian said “This is going to be a committee that takes action and makes recommendations to the Council. This is the biggest priority we have as a city. It will impact our ability to maintain a high quality of life for our residents.”
Dr. Christine Cooper from the L.A. Economic Development Corporation presented an overview of the opportunities and challenges that we face. She noted that L.A. unemployment has consistently been higher than at the county, state and national levels.
She wasn’t exaggerating. Since 1990, jobs in the U.S. have increased by 29 percent and by 28 percent in California. In Los Angeles, by contrast, the number of payroll jobs has increased only by 2 percent during the same period, according to the UCLA Anderson Forecast.
So the Ad Hoc Committee has a challenging assignment. We hope they will move quickly. Already, they have passed a motion directing various City agencies to report back with recommendations on a comprehensive job creation plan.
I’m sure there will be ample opportunity for input from the public as well. Let me offer a few suggestions. First, the City cannot create a jobs strategy without addressing the biggest drag on jobs creation in the City – the job-killing Los Angeles Gross Receipts tax. This is the highest business tax in the county by a factor of 9.5 times the average of the other 87 Los Angeles County cities.
The City has made small efforts to trim back the tax, but much more is needed. Over the next three years, the tax will be reduced by 5 percent a year. Assuming the City Council approves continuing reductions at that rate, it would take 20 years to do away with that tax – not enough to jumpstart jobs creation.
It is a challenge for the City Council to eliminate this tax, because it generates some 10 percent of City receipts. Facing an ongoing structural deficit, it takes a leap of faith to do away with it altogether and the City Council has been reluctant to do so. But maybe there are other alternatives that could be considered – such as reducing it initially to the countywide average for all cities so that we are not placed at a competitive disadvantage? Perhaps, the City could study alternative taxes that wouldn’t have the same negative impact on jobs creation? If the City wishes to be a competitive player in jobs creation, then it has to be a competitive player when it comes to the cost of doing business – and taxes are a big consideration for many firms.
The City should also look at where jobs are being created and see how they could facilitate that growth. Currently, Hollywood and Playa Vista are the biggest job creation engines within the City. With more than one-million sq.ft. of office construction underway, Hollywood has the potential to create thousands of new jobs. Already, Viacom, Netflix, Neuehouse, SIM Digital and others have announced they are coming to Hollywood. Other projects are in the pipeline and could be expedited if the City put the Hollywood Community Plan on the fast track to being reconsidered and implemented.
There are many other things that could be done, such as structuring an incentive package to encourage hotels to be built in all areas of the city – not just downtown by the Convention Center (which is the practical result of a plan that was presented earlier this year). The City could streamline the process that business owners and start-ups have to go through to get permits to expand or to open a business.
If you have ideas on what the City could do, send them my way and we will pass them on to the City. Better yet, plan to attend the ad hoc committee’s hearings! We will post them on our website as soon as we are aware that they have been scheduled. This may be a unique opportunity to move our city forward. Let’s all work to help the City craft a package that will really make a difference.
Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 23 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.