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L.A. Manager Says City Should Boost Property-Sales Taxes

Los Angeles should consider raising taxes on real-estate sales to deal with continuing budget deficits, the city administrative officer said.

The second-largest U.S. city by population has whittled the deficit to a projected $238 million in the current fiscal year, from $529 million in the year that ended in June 2010, Chief Administrative Officer Miguel Santana said today in a report. Further reductions aren’t likely without additional revenue because of a projected 4.2 percent annual increase in costs such as salaries, pensions, health care, and workers’ compensation, he said.

The city, with a budget of $7.2 billion for fiscal 2013, has faced deficits totaling $1.6 billion over the past four years and is considering turning over its zoo and convention center to private management to save money.

“In order to fund the cost of services demanded by city residents, voters should be given the opportunity to support them with increased taxes,” Santana said in the report.

In addition to raising the tax on property sales, currently $4.50 per $1,000 in value, Santana said the city should consider increasing the tax on parking lots, currently 10 percent of revenue.

His report also recommended reviewing taxes on sales, entertainment tickets, utilities, hotels, gross receipts and petroleum extraction.

The City Council will need to decide by Oct. 31 which options to present to voters in the next municipal election, scheduled for March 5, the report said.

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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