BATTLE OF THE L.A. TAX-REFORM PLANS; RIORDAN COMES UNDER FIRE AS COUNCIL CRITICIZES CUTS.

Byline: Rick Orlov Daily News Staff Writer

Competing proposals to Los Angeles Mayor Richard Riordan's tax-reform plan emerged Tuesday, designed to reduce the impact on the loss of money to the city's general fund and including a lecture to the mayor.

Councilwoman Rita Walters told Riordan, who was making a rare appearance before a City Council committee, that she was concerned his proposal would cost the general fund $23 million.

``At a time when we're facing a $50 million deficit, I don't think it's wise to add $23 million to that,'' Walters said during the Ad Hoc Committee on Tax Reform meeting. ``We can't take care of the programs you and the council want to do.''

But Riordan said his proposal, which he wants to place before voters on the June 8 ballot, is designed to boost the local economy.

``One of the things we need to add to the tax base are good jobs,'' Riordan said. ``We want to keep businesses here and create those jobs, particularly in the more economically depressed areas. That will bring in more income to the city.

``Sometimes you have to take a gamble. We've studied this and we think it will be successful.''

The mayor's proposal seeks to reduce the number of business-tax categories from 64 to eight, provide an 8 percent, $23 million cut in business taxes and seek to increase the number of firms paying taxes.

Riordan said his proposal would result in the largest tax decrease in city history. Voter approval is needed because of Proposition 218.

In addition to reducing the number of tax categories and the tax rates, Riordan's proposal would exempt businesses earning under $5,000 from all taxes, give new businesses a one-year exemption and seek to have increased tax compliance to make up lost revenue and reduce overall business taxes by $23 million a year.

Riordan said the tax cuts would not go into effect until after a tax amnesty program is run during 2000 and the city could estimate what the loss to the general fund would be. The reform plan contains a new provision allowing the City Council and mayor to raise the business taxes if too much money is lost.

However, the mayor's suggestion for a tax amnesty program drew opposition from Walters and Councilwoman Jackie Goldberg.

Goldberg said she was concerned about the council having a new amnesty program so soon after one was conducted in 1995.

``If we keep doing these, people are not going to pay their taxes and just wait for the next amnesty,'' Goldberg said.

Riordan's plan also would increase the maximum amount paid by the film industry to $22,370 for major productions.

The plan calls for a one-year business-tax amnesty program to bring in a one-time benefit of $16 million to $25 million and provide an ongoing stream of new tax revenue of up to $25 million.

Goldberg came up with her own tax-reform proposal that would reduce the number of categories to 13 and keep the rate at its highest level of $5.91 per $1,000 gross receipts.

Her proposal would have an average tax reduction of $13.46 per business, compared with Riordan's average reduction of $96.27. However, she said it would cost the general fund $3 million a year.

Councilman Mike Feuer came up with his own refinement, changing the categories of 43 businesses so they would pay about what they do now.