TAX CUTS JUST START OF BETTER ECONOMY.

Byline: BRENDAN L. HUFFMAN Local View

WITH the recent news that the city of Los Angeles has become the 16th- most-expensive city in America in which to do business, it is clear that City Council members need to take additional steps to make our city more competitive. But tax cuts for businesses are only part of the solution.

Despite the fact that Los Angeles is phasing in a 15 percent business-tax cut over five years, the city's ranking rose in this year's annual Kosmont-Rose Institute Cost of Doing Business Survey. The survey ranks 398 cities throughout the nation and measures strengths and weaknesses of each business climate, including taxes, utility fees, incentives and permits.

In the business community, we know full well that a 15 percent tax cut is not enough to lure large employers to Los Angeles when thriving cities down the street, such as Burbank and Glendale, don't even charge business taxes. And we also know that cutting taxes and simplifying the process led to a dramatic increase in business-tax revenues to city coffers: from $290 million in 1999 to $424 million in 2006.

Certainly, exempting all businesses grossing less than $100,000 annually -- approximately 60 percent of Los Angeles' businesses -- was a proud moment at City Hall in 2004. However, those businesses do not represent a significant employer base. Much more needs to be done to attract businesses with hundreds of employees and significant taxpaying potential. Today, approximately 20 percent of Los Angeles businesses pay 80 percent of the city's total revenues. These are the types of employers the city should be targeting.

It is expected that Los Angeles will fully implement the 15 percent tax cut on businesses by 2009, but the tax cuts should not stop there. City Council members -- following the lead of Wendy Greuel and Eric Garcetti -- should continue the phase-in so that we can overcome the perception that the tax cut is merely a cosmetic change.

Furthermore, additional reforms -- such as eliminating the double taxation of ``pass-throughs'' and further reducing the number of tax categories -- will help retain businesses already in Los Angeles and improve our image.

Ironically, since the City Council took a big step forward with business-tax reform in 2004, it has taken several steps back with anti-business ordinances, such as the new grocery-worker retention ordinance and pending ordinances to require hotels near Los Angeles International Airport to pay their employees the city's prevailing wage. If City Hall is serious about improving Los Angeles's business climate, it will work with the business community to grow our economy and create well-paying jobs as well as new tax-revenue sources.

State legislators must do their part as well. While workers' compensation and health care costs are still higher here than in most states, as are the number of lawsuits against employers, more and more bills are being championed in Sacramento that unfortunately reinforce the perception that California is a tough place to grow a business.

The Kosmont-Rose survey should serve as a wake-up call for city and state lawmakers: We must make our cities more competitive in order to create jobs and grow our tax revenues.