In a surprising twist, Los Angeles Mayor Karen Bass has decided to withdraw her proposed changes to the city’s mansion tax, just hours before its crucial vote on Thursday. This move has left many scratching their heads about the future of the tax overhaul she had championed.
Bass had been collaborating with lawmakers in Sacramento to put together an urgent rewrite of Measure ULA. This measure, which raised taxes on property sales over $5.3 million, was aimed at easing the tax burden on sales of new apartment buildings, shopping centers, and warehouses. However, just before it was set to be heard by the local government committee, she announced that she was pulling it back, hoping to reintroduce it come January.
In her announcement, she mentioned the need for additional amendments and technical adjustments before moving forward, stating, “I’ve asked both leaders to continue SB 423 so we can refine it this fall and roll it out again in January.” This indicates that Bass is still committed to making these changes, but feels it’s essential to get it right first.
Former State Assembly Speaker Bob Hertzberg, who Bass selected to help fine-tune the overhaul details, explained that due to the late submission during the session, they were prevented from fixing any missed technical issues. “No more changes can be made. So, she’ll finalize them in January,” he noted.
The aim of the bill was also to mitigate what supporters described as unintended consequences from Measure ULA, which proponents believe has led to a downturn in housing development locally. Yet, supporters of Measure ULA are quick to argue that other economic factors are responsible for the fall-off in apartment construction.
Earlier in the week, Hertzberg had aspirations that the passing of the bill would also unearth further support from the business community and activists, who might otherwise back a more limiting tax hike proposal planned for next year’s vote. This measure, championed by the Howard Jarvis Taxpayers Association, would impose tighter regulations on local taxes and potentially negate Measure ULA, stripping the city of vital funds meant for addressing homelessness.
Despite the setback, Jon Coupal, the group’s president, reaffirmed that they have no reason to retract their proposal. After Bass’s announcement, supporters of Measure ULA expressed their discontent over the last-minute bill withdrawal, asserting that it seemed like an attempt by state lawmakers to sidestep the voters who passed the tax hike back in 2022. They cautioned that lawmakers’ suggested tax cuts could shrink ULA revenues by nearly 30%.
Some business leaders also voiced dissatisfaction with the version of the bill. The California Business Roundtable sent a corseted message to State Sen. Lena Gonzalez, one of the bill’s authors, stating the proposed legislation fell short of expectations. “While we appreciate your significant efforts, we regret to inform you that SB 423 fails to address critical needs for the Los Angeles economy,” penned their president, Robert C. Lapsley.
United to House LA, the coalition instrumental in bringing Measure ULA to the ballot, welcomed the withdrawal. They stressed the importance of keeping funds allocated for preventing displacement and combating homelessness intact, cautioning against catering to corporate pressures that compromise essential housing solutions.
The bill’s authors, Gonzalez and Assemblymember Tina McKinnor, expressed intentions to advance the proposal in the upcoming year, highlighting their commitment to collaborating with both the business community and housing advocates.
This piece initially appeared in Los Angeles Times.
