Garcetti Opposed to Sales Tax Increase, Brown to Abandon High Speed Rail

SPECIAL REPORT-At a Tuesday morning press conference, Mayor Eric Garcetti will announce that he is opposed to the proposed street tax, where our sales tax will be increased by a half cent to 9½%, one of the highest rates in the nation.  According to Mayor Garcetti, this regressive tax will fall disproportionately on lower and middle income residents and will have an adverse impact on the City’s reputation, its economy, and its ability to attract investment and create good middle class jobs. 

Mayor Garcetti will also announce the elimination of the $250 million, 8% Transfer Fee from the Department of Water and Power to the City’s General Fund.  This less than transparent fee has never been popular with the Ratepayers and is now subject to legal review as a result of the approval of Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) in November of 2010. 

Mayor Garcetti proposes to pay for the repair of our streets and sidewalks and the elimination of the 8% Transfer Fee through a new program where the State will provide the City with a block grant equal to $100 for every resident. This program will be phased in over two years and will result in a $400 million infusion to the City’s cash strapped General Fund. 

At noon on Tuesday, Governor Jerry Brown will hold a press conference in the Bradley Room at City Hall. The Governor, along with Assembly Speaker John Perez and Senate President pro Tem Darrel Steinberg, will announce their support for the $4 billion block grant program because “it is a more efficient way to spend the State’s surplus” as municipalities are “more efficient” in providing core services to all Californians. 

In a stunning development, Governor Brown will fund the $4 billion block grant program from the savings derived from halting all work on his pet project, the High Speed Rail system that connects Los Angeles and San Francisco.  According to sources close to the Governor, he called it quits when new estimates indicated that the system will now cost more than $100 billion as prior plans included serious engineering mistakes and overly optimistic assumptions. There was also the high likelihood of massive change orders and significant cost overruns.  This new analysis also concluded that ridership and revenue projections were overly optimistic, that the system will lose money on an operating basis, and, as a result, will be unable to fund any interest or principal payments or provide an adequate return for private investors.  

The new $4 billion block grant program that was devised by Mayor Garcetti and Governor Brown in secret negotiations over the last seven months represents an historic step as the State is taking concrete steps to cede resources to local governments. 

Happy days are here again.


(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee,  The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- He can be reached at: Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.) 








Vol 12 Issue 27

Pub: Apr 1, 2014