Los Angeles Mayor Karen Bass’ bid to rewrite the city’s voter approved “mansion tax” fell apart on Thursday, with Bass and her allies pulling the state bill hours before its first critical vote.
Bass had worked with Sacramento legislators to draft a last-minute overhaul of Measure ULA, a tax hike on L.A. property sales above $5.3 million, preparing a bill that would reduce taxes charged on the sale of recently built apartment buildings, shopping centers and warehouses.
The bill had been scheduled to go Thursday before the state Assembly’s local government committee, which is chaired by State Assemblymember Juan Carrillo, D-Palmdale. Shortly before that meeting, Bass issued a statement saying she had decided to pull the bill and try again in January.
“Due to a need for additional amendments and further technical changes, I’ve asked both leaders to continue SB 423 so that we can make further improvements this fall and reintroduce in January,” she said.
Because the bill was submitted late in this year’s legislative session, lawmakers were no longer permitted to make technical fixes that “got missed” during the drafting of the bill, said former State Assembly Speaker Bob Hertzberg, who was tapped by Bass to hammer out the details of the ULA overhaul.
“No more changes can be made,” he said. “So she’ll make them in January and get the law into effect immediately thereafter. She’s still committed to it.”
Backers of the the bill had been hoping to address what they described as “unintended consequences” created by Measure ULA, arguing that the higher taxes sparked a slowdown in local housing production.
Supporters of Measure ULA pushed back aggressively on that premise, saying other economic factors are to blame for the slowdown in apartment construction.
Earlier this week, Hertzberg said he hoped that passage of the bill would also achieve a political goal: persuading business leaders, advocacy groups and others to withhold support from a state ballot proposal to place new limits on tax hikes.
That measure, planned for next year’s statewide ballot and backed by the Howard Jarvis Taxpayers Assn., would put new limits on local taxes while also nullifying Measure ULA, depriving the city of hundreds of millions of dollars for programs to address and prevent homelessness.
Jon Coupal, president of the taxpayer group, said his organization has no intention of pulling back its measure.
Backers of Measure ULA immediately voiced outrage over the last-minute bill, saying state lawmakers were trying do an end-run around the voters who approved the tax hike in 2022. They warned that a reduction the tax cuts proposed by state lawmakers would cut ULA proceeds by as much as 30%.
Some business leaders also expressed unhappiness with the bill.
On Thursday, the California Business Roundtable sent State Sen. Lena Gonzalez, one of the bill’s authors, a letter saying it did not go far enough.
“While we appreciate your hard work and consideration … we regret to inform you that SB 423 does not provide the solutions that are critically needed for the Los Angeles economy,” wrote the group’s president, Robert C. Lapsley.
United to House LA, the coalition that put Measure ULA on the ballot, welcomed the pulling of the bill, saying “tens of millions of dollars to fight displacement and homelessness must not be erased.”
“It makes no sense to capitulate to corporate interests who use the cover of flawed research and political threats to benefit themselves at the expense of working-class Angelenos,” the group said. “We should not be giving a tax break to developers with money intended for affordable housing and homelessness prevention.”
The bill’s two co-authors — Gonzalez and Assemblymember Tina McKinnor — said they will bring the proposal back next year.
“We … look forward to working with the business community, labor partners and housing advocates to get this policy right,” they said in a statement.
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