Taxing 60 years ahead for jobs now

Aug. 23, 2012

By Katy Grimes

When the government tries to create jobs, taxpayers beware. Government-created jobs are always more expensive, paid for with special taxes and bonds, and often for projects that are unnecessary, overblown, and could have been done by the private sector.

However, we do not usually see governments impose taxes 60 years in advance to pay for for jobs today. AB 1446 by Assemblyman Mike Feurer, D- Los Angeles, will do just that.

AB 1446 will allow the Los Angeles Metropolitan Transportation Authority to extend Measure R, a sales tax increase approved by voters in 2008 that is in effect until 2039, and to raise billions of dollars in the coming years for construction of the Los Angeles subway light rail extension.

Voters and taxpayers are being conditioned to approve the supersizing of our financial obligations – it’s like taking a 30 year mortgage and stretching it to 50 or 60 years.

AB 1446 will allow Los Angeles to vote again on Measure R+, to extend the 2008 transportation sales tax for an additional 30 years, which supporters claim will accelerate the construction of regional traffic highway and transit projects and provide needed jobs.  If approved, Los Angeles residents will be paying the tax until 2069.

Many are saying that this particular rendition of a tax extension is not in the best interest of the community.

30/10 plan will be 60/10 plan

“The original Measure R was part of the mayor’s ambitious plan to extend various subway lines throughout transit-challenged Los Angeles,”LA Weekly reported. “He called it the “30/10″ plan, because — on the promise of 30 years’ worth of Measure R revenue — he could borrow the money from the federal government, and build in one decade what would normally take three.”

“Then there’s the question, locally, of whether a few more stops on the Metro rail system are really worth the billions we’ll be pumping into them.,” LA Weekly asked.

“What about the beleaguered bus system — the only current public transit option that can deliver a low-income worker from one end of sprawling L.A. County to the other? And what about the pockmarked roads and highways of L.A., whose cracks and potholes total lowriders and spill hot coffee on our collective lap daily?”

Opponents

“The original Measure R was a well-documented, well thought out piece of legislation that gave very specific details regarding projects, timelines and funding for the city’s transportation expansion plan,” Bernard Parks recently wrote in City Watch.

“This new extension, known as Measure R+, goes contrary to the original plan by not giving a specific timeline for the projects.  No new transportation projects are being added, the extra tax is simply to accelerate the speed of the current projects. To tax people until the year 2069 merely to speed up projects that have already been approved and funded is not in the community’s best interest,” Parks explained.

The bill

“This bill allows MTA to impose a transactions and use tax with no limit as to the duration of the tax,” bill analysis reads. “The Committee may wish to ask the author first why the existing 30-year authority granted in 2008 through legislation and approved by voters is not enough, and second, why, four years later, an extension is needed but no limit is specified. When does the author anticipate putting such a ballot measure forward for voters to decide whether to permanently extend this transactions and use tax?” the first bill analysis asked.

“According to the author, this bill is intended to give Los Angeles County voters the opportunity to extend the duration of a local source of funding for an ambitious program of transportation infrastructure projects that will transform the Los Angeles region. The anticipated new revenue can be bonded against to build projects in MTA’s transportation plan sooner.”

Voice of reason

“I don’t know why there was bipartisan support on this bill,” Assemblywoman Diane Harkey, R-Dana Point said. “The current MTA tax runs to 2039 and cannot be repealed by voters. This bill will extend another 30 years to 2069. The people will be paying more taxes, and not able to repeal until 2069, to the County of Los Angeles. Why?” Harkey asked.

“The jobs quoted are a drop in the bucket. Something else is going on,” Harkey said. “Los Angeles is one of the biggest problems in the state, once it starts spiraling down. Why do we have to tax years from now to get jobs now?” Harkey asked. “Debt is not going to help LA–tell LA to get its house in order.”

Background

The bill analysis gave the background on Los Angeles Measure R: “When Measure R was adopted, MTA estimated that the 30-year program was about $40 billion. Because of the recession and general economic malaise, MTA is now estimating that Measure R will generate about $36 billion by 2038. When Los Angeles Mayor Antonio Villaraigosa proposed to accelerate the construction of all 12 rail transit projects so that they would be completed in 10 years and not the usual 30 years, MTA began a search for additional revenue or funding mechanisms. This bill endeavors to solve the problem of insufficient revenue by removing the sunset on Measure R. Should the voters approve a new sales tax without a sunset, MTA may be able to issue additional debt and take advantage of the federal credit assistance program included in The Transportation Infrastructure Finance and Innovation Act.”

Size and scope of project

“While the vision that is driving the current effort to make the Measure R sales tax permanent is well-intentioned, it is disingenuous to the voters to give a blank check to the MTA,” L.A. County Supervisor Don Knabe said in a statement. “The sales tax currently does not expire until 2039, so there is no reason to extend it unless we want to spend the next generation’s money today.”

“If it passes, officials plan to borrow against future revenues to help expedite the transit projects funded by Measure R, including the Westside Subway Extension, so workers can break ground on the efforts in five years instead of 20,” the LA Times reported. “They would also need billions of dollars in federal loans to make that happen.”

Another snafu apparently is that Beverly Hills residents would need to approve putting subway tunnels under Beverly Hills High School.

“By continuing Measure R, we will be creating jobs, relieving highway congestion, and completing light rail and subway projects in one decade instead of three,” Peter Sanders, spokesman for LA Mayor Antonio Villaraigosa, told the Los Angeles Times.

But the jobs that Villaraigosa says will be created are just more union-wage jobs at the MTA, through big union contracts, with no proof that traffic congestion will really be alleviated, and no road repairs made. Voters, be very wary.