CITY MAY INVITE BUSINESSES TO ADD JOBS, SUBTRACT TAXES.

Byline: Rick Orlov Daily News Staff Writer

City officials Monday proposed tax rebates tied to creation of new jobs, saying they want to strike more deals like the $96 million business-friendly package already given Dreamworks SKG studios in Playa Vista.

The proposal, first advanced by Councilwoman Laura Chick and reviewed Monday by the council's Community and Economic Development Committee, has become a central piece of Mayor Richard Riordan's program to replace jobs lost to defense and aerospace cutbacks.

Initially, the city plans to set aside $5 million for the first year of the program, if it is adopted by the council.

City officials, who are facing an estimated $200 million shortfall next year, said they believe sales tax revenue resulting from more businesses will offset the cost of the incentives.

"We consider this a key component to sending out the message the city is business-friendly," Deputy Mayor Mike Keeley, Riordan's chief operating officer, told the committee.

Business leaders, from the Greater Los Angeles Chamber of Commerce to the Valley Industry and Commerce Association and Economic Development Corp. of Los Angeles County, backed the proposal.

"This is an extremely important signal to send to businesses, both large and small," said Bob Scott of VICA and the United Chambers of Commerce. "This will improve the job climate for all of the city."

Lee Harrington, president of the Economic Development Corp., said the new policy is needed to help the city fend off competition from its neighbors.

"You have to recognize the realities, and the realities are other cities are trying to take business from Los Angeles," Harrington said.

Criticism of the proposal came from Robert Benson, an attorney from the National Lawyers Guild, who argued that the plan gives away too much to businesses.

"This is another example of pro-corporate growth policies and is nothing more than corporate welfare," Benson said.

To quality for the program, businesses that expand or want to move to Los Angeles would have to create a minimum of 10 new jobs in economically depressed areas, or 20 new jobs in other parts of the city.

Under the proposal, companies would be given a rebate of $1,900 for every new worker hired.

An example provided to the committee cited the case of a firm that created 20 jobs. At $1,900 per job, it would earn a tax rebate of $38,000, providing that the amount did not exceed a cap.

The proposed rebate cap would be the sum of a firm's annual utility user tax, business tax and a portion of its development fee.

Businesses would get extra credits for creating higher paying jobs.

For instance, the rebates would increase by 0.5 percent for jobs paying more than $15 an hour; by an additional 0.75 percent for jobs created in a redevelopment or underdeveloped area; and by 1.25 percent for jobs that result in the hiring of Los Angeles residents.