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Council sends business-receipts repeal initiative to November ballot after staff warns of large budget shortfall
Summary
City financial staff presented modeling that a repeal of the business receipts tax could cost the city hundreds of millions in the first year; the council voted to place the certified initiative on the Nov. 3 ballot rather than adopt it immediately.
The Los Angeles City Council voted on May 13 to place a certified initiative to repeal the city's business receipts tax on the Nov. 3, 2026 ballot after hearing a staff presentation on the measure's projected fiscal impact.
Why it matters: City staff told councilmembers the initiative (if adopted) would remove the non-cannabis business receipts tax, producing an immediate revenue gap that staff estimated at roughly $740 million in the first year and an average five-year loss on the order of $860 million. Officials warned the shortfall would require emergency fiscal actions including hiring freezes, layoffs and sharp service reductions unless alternative revenues or offsets were identified.
Council action and outcome Following the presentation, council discussed statutory options (adopt the ordinance directly, hold a special election at city expense, place the measure on the next regular election ballot) and the timeline for proponents to withdraw signatures. The council moved to put the initiative on the November ballot; when the list was closed the chair announced the motion had passed (the chair recorded "15 a favor").
What staff said City financial presenters explained the composition of the receipts tax and the scale of projected losses: staff showed scenarios estimating $740,000,000 in first-year losses and a modeled five-year average of roughly $860,000,000, and emphasized that those losses would materially affect general-fund services, including potential reductions in public-safety staffing and homelessness response programs.
What happens next The City Clerk and City Attorney will take steps to prepare ballot language and coordinate with county election officials. Staff also noted proponents have until Aug. 7 to withdraw the petition signatures certifying the initiative; if they do, the item could be removed before placement on the ballot. Council action was procedural (placing the certified initiative on a ballot) and did not itself change law.
Context Speakers in public comment tied both Items 19 and 20 to broader debates about who bears the cost of city services and how benefits from major events should be shared. The receipts-tax initiative, if enacted by voters, would require the city to reconcile its budget priorities with a permanently smaller revenue base for affected categories of business receipts.
