Tuesday, April 27, 2010
Los Angeles Is Scared
"Los Angeles is struggling to raise money and cut costs to fill a $200 million budget gap that could force thousands of layoffs and drive the city into bankruptcy. ... Officials ... worried that without the cuts, more businesses and jobs would flee the city, which has a 12.5% unemployment rate. ... 'If we didn't roll that [tax] back, there was a real chance many of them would leave,' said Austin Buetner, the mayor's new economic chief. 'They're high-paying businesses and the wages are spent in our city,' he said. ... Analysts say giving up cash for the prmise of job creation can be risky and doesn't always work. 'State and local governments are going to have to place their bets on what will bring in greater revenue and keep more jobs,' said Jessica Levinson, director of political reform for the nonpartisan Center for Governmental Studies in Los Angeles. 'It's a balancing act that every jurisdiction will have to face. Few governments have any room for error. Cutting taxes can mean laying off teachers and police officers to save cash. 'Most cities, counties and the states are strapped for cash and can't afford to make an ill-conceived gamble,' Ms. Levinson said", Tamara Audi at the WSJ, 9 March 2010, link:
Even LA taxpayers "vote with their feet". We'll see if LA's internet company tax reductions start a trend. Do you still want to own muni bonds?