28 Jun 2011
- Written by Tim Cavanaugh
LA Inc. [link] is a non-profit that functions as Los Angeles’ convention and visitors bureau. LA Inc. is organized as a 501(c)(6). In its tax filing, LA Inc. describes its main function: “Advance the prosperity of LA's visitor economy and the livelihoods that depend on it.”
LA Inc.’s budget in 2009 was $19.4 million. About $15.6 million of that money came directly from the public: $10.4 million from a portion of the city’s 14 percent hotel room tax and $5.2 million from Los Angeles World Airports. Another $1.3 million came from membership fees and $2.4 million from business activity, including advertising in LA Inc.’s visitors guide. But by far the largest portion comes from public funds. If you want to know what happens to all those taxes and fees that run up your airport and hotel bills, this is one example.
LA Inc.’s budget will soon be going up thanks to a recently approved additional 1.5 percent hotel tax. [link] Mark Liberman, LA Inc.’s president and CEO, says the new dedicated tax could double the organization’s budget.
Where does all that money go? More than 40 percent of it goes to pay staffers. Salaries, pensions, benefits and other compensation make up $8.6 million of the organization’s spending. All of LA Inc.’s executives make well over $100,000 a year in total compensation.
CEO Liberman pulls down $488,000 a year. This is well above the pay scale for many public officials who have been lambasted for their featherbedding. Earlier this week, an Orange County Grand Jury study [[ ]] of compensation brought boos for some of that county’s most highly paid city managers. Yet the highest-paid of these, Laguna Hills City Manager Bruce Channing, is only pulling down $378,000.
The difference is that there has not been nearly as much attention paid to the lavish compensation of officials in public/private partnerships. Nor is this information as easy to organize in the kind of databases that are being put together for teachers, city managers and other public employees around the country. But taxpayers are still funding these pay packages.
What are they getting for this investment of public money? LA Inc. spends about $7 million a year on “advertising and promotion.” The justification for that spending is that tourism is a major portion of the county’s economy. But is there any need to spend public money to advertise Los Angeles as a tourist destination?
Los Angeles is already the center of the American entertainment industry, which provides more free advertising for the area than any quasi-governmental entity could manage. It’s pretty widely understood, in the United States and abroad, that Malibu has beautiful beaches and Rodeo Drive offers a unique upscale shopping experience. I do not remember a time when I did not know the word “Hollywood.” What could LA Inc. possibly be offering in the way of tourism-boosting that would justify its cost?
As an extra irony, that cost is coming out of the other end of the tourism business. By not imposing massive hotel taxes and airport fees in the first place, LA could help its tourism business in a way that can be justified without flimflammery: If you make it less expensive to come here, people will be more likely to come here.
(Tim Cavanaugh is a columnist for Reason.com where this article was first posted.) -cw
Tags: LA Inc, non-profit, Cavanaugh, hotel tax, airport fees
Vol 9 Issue 51
Pub: June 28, 2011