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The New York Sun


L.A. Heads Left

July 22, 2003

By Steven Malanga

Frustrated in Washington, the left these days is increasingly pursuing its agenda locally, especially in municipalities where legislators are more favorably disposed to its agenda than in our nation’s capital. By scoring big victories in just a few important state capitals and in key cities, the left is reshaping the economic landscape for millions of Americans and imposing new costs and regulations on thousands of businesses.

Here in New York we’ve seen how a new, more liberal City Council elected in 2001 has become a wellspring of support for ultra-liberal, anti-business legislation, within the last year passing the most inclusive living wage bill in the country and the most restrictive legislation on record to rein in high-interest bank loans, among other actions.

But New York is not alone in this tilt. In California, the left is succeeding on an even grander scale, sparking fears among the state’s industries that California’s business environment is being deeply damaged by anti-competitive taxes, increasing regulation, and heavy government spending.

Businesses in Los Angeles, which lost around 34,000 private sector jobs last year, are struggling so badly that they’ve actually commissioned a poll to see how widespread the economic suffering is among city firms — and what’s causing it. Nearly a third of L.A.’s companies say that heavy government regulation has become the number one obstacle to economic growth in the area, while another quarter say steep taxes are the main thing holding back the economy, according to preliminary results from a survey by the Los Angeles Development Corp. The grumbling is especially loud from the area’s shrinking manufacturing and wholesaling companies. More than 40% cited heavy regulations and another 35% excessive taxes as the biggest barriers for businesses trying to grow.

The companies have lots to gripe about. The state’s economic environment is already considered inhospitable, ranking even lower than New York State’s as a desirable place to do business, according to a recent Tax Foundation study, which placed California next to last among the 50 states, while New York ranked seventh from the bottom. The study reports that California has some of the highest state business taxes in the nation, and workers’ compensation costs are soaring, up as much as 70% in one year for some firms. The state is hemorrhaging jobs — losing 375,000 since March 2001, when the economy turned south. Yet despite this already hostile business climate, state legislators, faced with a gaping $38 billion budget deficit, are considering yet more taxes and have done nothing about reforming workers’ compensation. L.A.’s business leaders hoped that the poll would dissuade state leaders from adding to firms’ heavy tax burden and pursue cost-saving reforms instead.

California’s tax-friendly state legislators are bad enough. But L.A. firms are facing a new threat, right on their doorstep. Over the last two years, L.A.’s local government has taken a turn left, with liberal James Hahn’s victory in the 2001 mayoral race and, more recently, the election of several ultra-liberals, including Hahn’s chief opponent in the 2001 race, Antonio Villaraigosa, to the L.A. City Council, giving that body more of a leftward tilt.

Like New York City, instead of fighting for L.A.’s reeling private sector, local politicians are making things much worse by cooking up a whole menu of new anti-business regulations. One proposal the City Council is considering, for example, forces builders to set aside up to 20% of any new private-sector housing construction for low- to moderate-income people. Also on the table: a law that sharply restricts the development within the city of big retailers like Wal-Mart. And progressives in the city are pushing for a law that requires any business planning a commercial development to file an onerous “community-impact report” with the city; city planners will then use the report to impose various intrusive, higherthan-state standards for jobs, wages, and community responsibilities on the firm before letting it build.

No wonder that L.A. businesses are getting so tetchy. Battered by state and city, pretty soon they may decide they’ve had enough. Sound familiar?

Original Source:



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