Six local initiatives could be on their way to next year’s ballot in the city of Los Angeles.
Labor unions have submitted two proposals seeking to penalize companies that pay their CEOs what the unions believe is too much money, two proposals requiring voter approval of certain contracts and major developments, and an increase to the hourly minimum wage citywide to match the $30 the City Council approved for hotel and airport concession workers by mid-2028.
Business groups have submitted just one initiative. It would repeal L.A.’s gross receipts tax.
As its name implies, the gross receipts tax takes a cut of the total revenue of businesses operating in the city of Los Angeles, regardless of whether those businesses are making profits or losing money. After an exclusion for very small businesses, the tax is collected on every $1,000 of revenue, and the rate varies with the type of business. Child care providers and tugboat operators pay $1.01 per $1,000. Hotel and rental housing businesses, shoe repair shops, retail stores and commercial office building owners pay $1.27. Parking lot operators and health maintenance organizations pay $4.25.
Repealing the gross receipts tax would reduce revenue to the city treasury by an estimated $742 million, according to the city attorney’s summary of the measure, which proponents call “The Los Angeles Cost of Living Relief Initiative.”
While the unions’ initiatives each require approximately 140,000 signatures to qualify for the ballot, the business groups’ initiative needs only 46,024, according to the city clerk. That’s because of Proposition 218, a taxpayer-protection initiative from the Howard Jarvis Taxpayers Association that voters approved in 1996. The provision that is now Article XIII C, Section 3 of the state constitution empowers voters to reduce or repeal “any local tax, assessment, fee or charge,” and local governments may not impose a signature requirement higher than 5% of the number of votes cast for governor in the last general election in that local jurisdiction.
Both the overtaxed residents of California and rapacious special interest groups should be on notice that voters can use the initiative power to reduce or repeal local taxes and other charges, with a signature requirement that is significantly lower than for other types of local measures. Qualification of tax cut initiatives is a real possibility.