Sales tax goes up to 9.75% (Source: Burbank Leader)

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Sales tax goes up to 9.75%

It rises another half-percentage point, after having gone from
8.25% to 9.25% in April.

By Zain Shauk

Published: Last Updated Wednesday, July 1, 2009 12:05 AM PDT
BURBANK — Los Angeles County shoppers will pay an extra half-cent on their purchases starting today, when the sales tax will jump to nearly 10% as part of an effort to fund regional public transportation developments, including new carpool lanes on a local stretch of the Golden State (5) Freeway.

The Measure R sales tax, approved by more than two-thirds of voters in November, is expected to generate $40 billion over 30 years for a series of Metropolitan Transportation Authority rail, bus, highway and road projects throughout the county, but will also add a burden on citizens and businesses during the recession, officials said.

Auto dealers will likely face the largest effect as shoppers feel the weight of a series of recent tax and fee increases, including the sales tax rising from 8.25% to 9.75%, said Glendale City Councilman Ara Najarian, who takes over today as chairman of the MTA’s Board of Directors.

“I think there may be some big-ticket retailers for whom the consumers will receive a significant increase in their total price,” Najarian said. “Those type of retailers may see a drop [in sales].”

The Measure R tax will hit consumer budgets just months after California instituted a 1% sales tax hike and nearly doubled the vehicle license fee, from 0.65% to 1.15% of a car’s value, as part of a plan to balance the state’s budget.

The collective tax and fee hikes will present another hurdle for the 15 dealerships along the Brand Boulevard of Cars in Glendale, many of which have struggled to attract customers during the recession. At least one dealer was mindful of the additional challenge, although he was optimistic that customers would ignore the hike, despite its nearing 10%.

“Of course I’m worried about it,” said Rich Smith, chief financial officer for Ellis Family Stores, which owns Glendale Dodge on Brand. “Do I think it’ll impact business? I really don’t because it’s not something that we really have a choice to pay or not to pay.”

But the overall effect of the series of hikes might be financially damaging for residents, even in light of the potential benefits of public transportation improvements, said former Glendale Mayor Larry Zarian, member of the California Transportation Commission.

The most significant local project will expand the Golden State Freeway to add new carpool lanes between the Ventura (134) Freeway and the Hollywood (170) Freeway.

That project is in its design stage and is set to begin construction in the fall, MTA spokesman Rick Jager said. It should be completed by 2013.

Zarian supported the local projects, but was opposed to the timing of the tax hike.

“When you pay increased taxes, you have less money to spend on your home, less money to go out and buy things from businesses,” Zarian said, contending that the effect of the latest surge in taxes would not help with the area’s economic recovery.

Najarian opposed Measure R when it went to voters because he felt area residents would pay equally for projects but not receive as many direct benefits from local construction as other communities, like the Westside and downtown Los Angeles.

Among Measure R’s most expensive projects will be the so-called Subway to the Sea, which will expand the Purple Line from downtown into Westwood, with longer-range plans for the beach communities. The allocation for that expansion is set at $4.2 billion, while another rail line to run from downtown Los Angeles to Culver City along Exposition Boulevard is projected to cost about $1.6 billion.

The Golden State Freeway carpool lane project, by comparison, is set at $610 million.

“I don’t think that we were getting a fair amount in relation to the money that we were putting in,” Najarian said, later adding that the Glendale-Burbank area was being short-changed. “We’re probably the least funded of any particular region.”

But Measure R received strong voter support, and the local freeway lane expansion project will offer valuable relief to an area that is expected to become more congested, said Kelly Markham, spokeswoman for the California Department of Transportation’s local district.

“There’s been a lot of concern about the increasing use of [Bob Hope Airport] in Burbank, and also the redevelopment of Empire Center has generated a lot more traffic, so we are seeing a lot more congestion there,” she said.

Increased local traffic along the Golden State Freeway has made the carpool lanes necessary to relieve congestion in Glendale and Burbank, Najarian and Zarian said.

And with widespread voter approval for Measure R, the MTA may have more weight as it tries to get all of its projects moving immediately, said Najarian, adding that the board may seek White House support to help get the developments started sooner than later.

“Because the residents of L.A. have agreed to this tax, that gives us a lot of credibility when we go to Washington and ask for special attention for our county, because not many other counties in the nation have done that, where the residents have stepped up to the plate to accept a higher tax for transportation projects,” Najarian said.



 ZAIN SHAUK covers education. He may be reached at (818) 637-3238 or by e-mail at zain.shauk@latimes.com.