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 IF IT'S BROKEN...FIX IT

Getting Serious about LA’s Sidewalk Repairs: A Five-Point ‘Let’s-Get-On-with-It’ Plan

Ken Alpern
FIXING LA-Last Tuesday night's City Council Board of Public Works and Budget Committees met and allowed a lot of good public input to a series of concerned and available Councilmembers and City officials. The attendance and input were both outstanding--I want to thank Councilmember Mike Bonin, in particular, for allowing the outreach and advice to…

Latino Politicians Putting Climate Change Ahead of Constituents

Joel Kotkin
POLITICS-Racial and economic inequality may be key issues facing America today, but the steps often pushed by progressives, including minority politicians, seem more likely to exacerbate these divisions than repair them. In a broad arc of policies affecting everything from housing to employment, the agenda being adopted serves to stunt upward…

Worlds Apart on Kathryn Steinle: When Political Opportunism Reigns Supreme

John Mirisch
MUSING WITH MIRISCH-The small Swedish Jewish Museum in Stockholm is tucked away on a side street. Discreet signage instructs would-be visitors to push a button which activates a camera, so they can be screened before they are granted entry. The museum's permanent exhibition fills one fairly small room. Most of the objects on display are Jewish…

Garcetti Passes, Wesson Fails

Jack Humphreville
LA WATCHDOG-Our Los Angeles Times has issued midterm letter grades for Controller Ron Galperin (B-) and City Attorney Mike Feuer (B+) and will be posting grades for City Council President Herb Wesson this Sunday and Mayor Eric Garcetti the following Sunday. Our City is facing many difficult issues, ranging from a lagging economy, relatively high…

What LA Really Needs: A Part-time City Council and a Part-time Mayor!

Dennis Zine
JUST THE FACTS-There are so many serious and pressing problems facing the City of Los Angeles and few if any real solutions are being proposed or implemented by our elected and appointed leaders at City Hall. I will start with the current city budget. Former Mayor Antonio Villaraigosa had a $7.7 billion total budget in the 2013-2014 fiscal year.…

Why Don’t the City’s Women Managers Hire More Women?

Denyse Selesnick
MY TURN-Perusing the web is a little like the soap operas of yesteryear. You get suckered in! One link leads to another link and then one is exposed to a barrage both facts and idiocy. The reason for this discussion was my attending a July Valley Alliance of Neighborhood Councils (VANC) meeting with the Department of Water and Power. General…

Cleaning Up LA City Hall: ‘It’s What’s Legal That’s the Problem’

Bob Gelfand
GELFAND’S WORLD-Everyone understands that developers own our city government. Sure, there are some officials here and there who are upright and independent, but recent history shows that the developers typically get their way in spite of public opposition. Whether it is a zoning change for an office tower or the required permits for a new mall,…

Not So Fast LA! Let’s Consider the Real Costs of Hosting the Olympics before We Jump In

Greg Nelson
SPORTS POLITICS-On Monday, Boston withdrew from its offer to be the nation’s bidder for the 2024 Summer Olympic Games. In January, Los Angeles finished second to Boston when the U.S. Olympic Committee made its decision. After Boston was selected to polish up its bid before submitting it to the International Olympic Committee for a final decision,…

Party Crashing for Political Access: Schwarzenegger and My Pantsuit

Charlotte Laws
CALIFORNIA ACCESS POLITICS-Party crashing—or gate-crashing, as it is sometimes called—is an art form that I stumbled upon as a teen. I taught myself how to finagle into any event, anywhere, anytime. It required being part private eye, part actress and part chutzpah machine. I had to think outside of the box, throw myself into the role, and whip my…

 

Reynolds Rap Video: Joey has hope for the pope in Philly.





Art or Ad? LA’s mural law written in gray ink

Escape the Room-Conan goes for the record … and the laffs


LADWP Rates Overview

 

 

  

 

 

 

LA’s $750 Million Time Bomb

LA WATCHDOG - On Monday, the California State Supreme Court, in a unanimous decision, ruled that a class action lawsuit challenging the validity of the City’s Telephone Users’ Tax (“TUT”) could proceed, overruling previous lower court decisions.

According to the City’s Official Statement, Los Angeles’ liability could be up to $750 million, the amount of the TUT collected between the time federal law changed and the effective date of Proposition S, the Communications Users Tax, that was approved by 66% of the voters in March 2008.

To put this in the proper perspective, $750 million equals 17% of this year’s General Fund.


In October 2006, Estuardo Ardon filed a class action lawsuit challenging the legality of LA’s TUT and seeking refunds for Angelenos of taxes illegally collected by the City over the previous two years, ever since the demise of the federal telephone excise tax.

However, in December 2006, Mayor Villaraigosa and the City objected, arguing that individuals must each file a government claim, putting the interests of the all knowing City ahead of those of ordinary, hard working Angelenos.  

While the resolution of this issue will take years, the City is benefiting from the new 9% Communications Users Tax that is levied on telephones, cell phones, and other communication services. This new tax replaced the 10% TUT, but included other methods of communication other than just plain old telephones.

But ironically, while revenues for the CUT increased to $288 million in the fiscal year ending June 30, 2009, this year’s anticipated collections are projected to be only $243 million, a decrease of $45 million, or 15%, from its peak in 2009.  

Underlying the lower CUT revenues is a decline in the use of plain old telephones and increased competition in the wireless market, resulting in significantly lower prices.

But this $750 million liability is a big league problem that is not going to go away.  Rather, it will continue to fester and grow because of monstrous legal fees and interest expense on the outstanding balance.  And when payment is due, it will become a major crisis.  

While the Mayor will no doubt pontificate about the “devastating” impact of this potential judgment on the City and its ability to provide core services such as public safety, and throw many barbs at the plaintiff’s evil supporters, City Hall needs to address this issue NOW rather than its usual response of “kicking the can down the road.”

To fund this $750 million liability, the City will probably issue yet another Judgment Obligation Bond, much like it did in June 2010 when it raised $51 million to fund its past sins on the backs of tomorrow’s citizens.  

But this new Judgment Obligation Bond will be the mother of all judgment obligation bonds, costing Angelenos over $1 BILLION when you factor in the interest payments and legal fees. The annual hit to the General Fund will be over $100 million.

Ouch.  

And thanks, Antonio. We will enjoy paying off this debt long after you have departed City Hall.

Note: Friends of the plaintiff included a diverse group: The Utility Reform Network (San Francisco), the Utility Consumers’ Action Network (San Diego), the Tax Foundation, the Consumer Federation of California, Consumer Action, and the Howard Jarvis Taxpayers Association.

(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at:     lajack@gmail.com )  –cw

Tags: California, State Supreme Court, Telephone Users Tax, liability, Los Angeles liability, Proposition S, Communications Users Tax, time bomb





CityWatch
Vol 9 Issue 60
Pub: July 29, 2011

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