By JOSE HERRERA
The Los Angeles City Council on Wednesday instructed the City Attorney’s Office to draft amendments to the so-called Olympic Wage Ordinance, as a threat to eliminate the city’s $800 million business tax took another step forward.
Council members voted unanimously Wednesday to place on the November ballot an initiative to eliminate the city’s business gross receipts tax. The council opted to let voters decide in the already scheduled November election rather than spend more than $30 million to conduct a special election.
“For the record, this is the ballot initiative that ends the gross receipts tax for the city, which amounts to today $800 million, and in the coming years a billion dollars or more of the city budget,” Council President Marqueece Harris-Dawson said.
“So this measure should it appear on the ballot and pass, it hampers our ability to have a city as we know it altogether,” he added.
City Administrative Officer Matt Szabo said the loss of the business tax would devastate the city, as it is the second-largest source of general fund tax revenue behind the property tax.
Szabo explained the business tax rates range from $1 per $1,000 of gross receipts to $4.25 per $1,000 with the exception of cannabis-related business taxes, which have different rates and would not be affected by the initiative.
If approved, the initiative would take effect Jan. 1, 2028, and eliminate the business tax in its entirety with the exception of cannabis. Szabo said it would significantly reduce a revenue source for fiscal year 2027-28 and all subsequent fiscal years.
“It’s a permanent reduction,” Szabo said.
Officials said the city would be forced to implement reductions in services and programs.
The loss of an estimated $860 million for example, represents 100% of what the city currently spends on salaries and benefits for all firefighters, or everything the city would spend for more than 3,700 police officers next year, according to Szabo.
“Some of the proponents of this measure argue incredibly that the loss of business tax would not impact public safety,” Szabo said.
He further said the loss of the tax would impact the city’s homelessness response, street cleaning program, and jeopardize Olympic preparedness efforts.
If voters approve the initiative, Szabo urged the City Council to take immediate actions to include planned emergency reductions in the 2026-27 budget.
“We would start with an immediate declaration of fiscal emergency. This will allow us to begin the layoff process and thousands of layoffs would be required,” Szabo said. “That is not a question, that is a certainty.”
Councilwoman Imelda Padilla called the presentation a picture of an “economic apocalypse for the city.”
Harris-Dawson said the council is in the middle of negotiations, with the hopes of having proponents withdraw the measure from the ballot by or before Aug. 7, the deadline to do so.
United Airlines and the American Hotel and Lodging Association are among those driving the initiative, as previously identified by Councilwoman Katy Yaroslavsky, chair of the council’s Budget and Finance Committee.
The effort is also supported by a coalition of business groups called The LA Alliance for Tourism, Jobs and Progress, which submitted more than 73,000 signatures for the initiative in February. In late March, the Los Angeles County Registrar-Recorder/County Clerk announced that the measure had qualified for the ballot.
The coalition includes all three major Los Angeles business groups —the Central City Association, LA Chamber of Commerce and the Valley Industry Commerce Association, along with other organizations and individuals representing trade associations, small businesses and others.
Yaroslavsky had alleged these companies and some local businesses are pushing the plan because they “didn’t get their way” with the Olympic Wage Ordinance.
The City Council approved that ordinance last year, which increased the minimum wage to $22.50 per hour for hotel and airport workers with the goal of reaching $30 per hour by the 2028 Olympic Games.
It also enshrined other worker protections, and boosted health-related credits for employees.
Critics of the ordinance including hotel owners and concessionaires argued that it would force them to eliminate jobs, reduce hours and increase prices to cover the new wages. They also claimed it would further impact tourism as costs would dissuade travelers from shopping or traveling.
“This proposal is a common sense solution. No one is saying repeal the wage, just asking it to be spread out a little longer to help businesses be able to brace for that impact,” said Stuart Waldman, president of the Valley Industry and Commercial Association.
Meanwhile, hotel workers such as Rosa Manriquez urged the council to protect their wages.
“The industry is plainly saying that if you don’t cut wages and health care, they will try to destroy the budget of the city of Los Angeles,” Manriquez said.
In hopes of reaching an agreement, the council voted 9-6 Wednesday to instruct the City Attorney’s Office to amend the Olympic Wage Ordinance.
Wages for hotel and airport workers are scheduled to increase to $24 an hour by July 1. The amended proposal would alter the schedule of when future raises take effect, with workers earning $25 per hour starting on July 1, 2027, then by $27.50 per hour by July 1, 2028, $29 per hour by July 1, 2029, and $30 an hour by July 1, 2030. It also changes the healthcare benefit, which would take effect in July 2027 rather than 2026.
Harris-Dawson also proposed that employees have the ability to waive out of the health plan in lieu of cash if they are already covered by Medicare or other coverage. The council president removed this idea after it did not receive enough support by his colleagues.
Councilwoman Monica Rodriguez attempted to carve out exemptions for commercial restaurant lessees from the wage ordinance, citing a need to establish a distinction between hotel operators/owners and restaurants.
“I know it’s not cute to allow people to be able to successfully operate a business in this city, but they are the job creators of this city,” Rodriguez said.
Rodriguez’s amendment failed in a 10-5 vote.
The councilwoman is a vocal critic of the Olympic Wage Ordinance. She has argued it placed an unjust burden on the city’s hotels and airport concession operators amid a drop in tourism.
Harris-Dawson said a commitment exists between labor unions and the business community to continue to negotiate.
“I say this to all the parties involved, my expectation is that what comes back Tuesday will not be what we have in front of us today,” Harris-Dawson said.
“The details (of) how that happens still have to be worked out, but effectively, it’s our role as a council to mediate between sort of two opposing forces — the people who work for us and our residents of the city, and the people who have businesses and who, in many cases, are residents of this city,” Harris-Dawson added.
Following the City Council meeting, the Central City Association issued a statement thanking elected officials for advancing forward changes to the wage ordinance.
“Los Angeles cannot continue treating its job creators as an endless source of revenue while ignoring the cumulative impacts of rising costs, economic volatility and punitive tax structures,” the CCA said in a statement.
“When businesses can no longer absorb those pressures, they reduce operations, leave the city or shut down entirely. We must continue to work together to do all we can to protect those businesses, the millions of Angelenos they employ and city services they fund.”