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Katy Grimes

Irvine City Council Abolishes Preposterous ‘Living Wage’ – Kills Biz Licensing Tax

Flexing Republican muscle, the Irvine City Council is making headway on repealing years of heavy-handed Democrat policies, which are bad for business, and worse for taxpayers.

On the heels of passage of the new Los Angeles minimum wage of $15.00 per hour by 2020, the new GOP supermajority in Irvine just repealed its “living wage” ordinance. While the rest of the state seems to be pushing for mandatory minimum wage laws, or higher minimum wage laws under Democrat majorities, killing free market principles, as well as driving up the cost of city contracts, and preventing many employable students from getting important work experience, Irvine is doing things differently.

Irvine skyline

The Irvine City Council voted last week to repeal its Living Wage Ordinance, the only of its kind in all of Orange County. Where Republicans are governing, ridiculous and burdensome top-down mandates get cut.

The City of Irvine website explains the living wage:

“The Living Wage Ordinance requires a contractor entering into City contracts that are subject to the ordinance to pay its covered employees an hourly rate, comparable health benefits and paid time off (such as vacation, sick, holiday, and jury duty) as set by the most current City Council Resolution (the Resolution) establishing compensation policy for employees.”

Councilwoman Christina Shea, who brought the issue to the council, said she was most concerned that the ordinance requires contractors to pay a living wage to all of their employees working in Orange County, and not just those working under an Irvine city contract. “The taxpayers are paying this inflated contract cost – it’s a burden and unnecessary,” Shea explained in an interview. Shea also said the living wage requirement has Irvine taxpayers subsidizing workers in other Orange County cities. “That’s not something we should ever do beyond our borders.”

Christina Shea

Shea said the issue came to her attention when a custodian recently backed out of a contract with the city of Irvine because the living wage ordinance would actually cost him an additional $100,000 to pay all of his employees the living wage, and not just those working in Irvine.

The Irvine minimum hourly rate is $10.82 per hour, as long as the contractor provides the employee with health benefits and paid time off that are equal to or exceed those offered to City employees, according to the City of Irvine website. “An additional ‘benefit factor’ must be added to the above hourly rate if those covered employees are not offered health and paid time off benefits that are equal to or exceed those offered to City employees. The ‘benefit factor’ is based on the City’s cost to provide these benefits to its employees. The current ‘benefit factor’ is set at $2.52 per hour and must be added to the base minimum rate of $10.82 per hour for a total rate of $13.34 per hour,” according to the city.

Shea explained that since the living wage ordinance applied only to companies with city contracts valued at $100,000 or more a year, it would only impact 15 contracts. “California needs to do everything it can to be pro-business,” Shea said. “Unlike the rest of the state, we’re just a small little island; we’re here to encourage businesses small and large.”

“The living wage is not a living wage at all,” Councilmember and Mayor Pro Tem Jeff Lalloway said in an interview. “It’s a liberal paradigm… a feel good wage. Instead of creating policies that allow people to flourish, liberal policies regulate and tax the upper class and business.”

Lalloway expressed concern over the inflated costs taxpayers are burdened with under policies like the living wage. “We’re unnaturally inflating the amount we’re paying for services in the city. I don’t know how that’s consistent with our fiduciary responsibility.”

Jeff Lalloway

On his Facebook page, Irvine Mayor Steven Choi said, “We’re striving to make Irvine as responsible with the public’s hard-earned tax dollars as we can!”

Councilwoman Lynn Schott was the fourth vote in favor of ending the “living wage” ordinance.

The sole “no” vote came from Councilwoman Beth Krom, the only Democrat on the council from the previous Democrat majority. Krom had many of her supporters at the council meeting, after a front page Orange County Register story ran the day before the meeting, which gave the time and date of the hearing. The Register, whose headline announced, “City may repeal living wage law,” does not normally do this for city council meetings, Lalloway said.

The odd living wage ordinance was passed in 2007 when the council was run by Democrats and then-Mayor Larry Agran, who served a total of 28 years on and off the council since first being elected in 1978.

Democrats held a majority on the council for ten years, 2002—2012, and Irvine city government grew significantly.

Years of “government malfeasance,” Agran’s “political thievery,” and his gross mishandling of the planning and development of Irvine’s Great Park in the decommissioned El Toro Marine Air Corps Station, was apparently finally enough for voters. “During Agran’s 12-year reign, not a single major proposed feature was built even though $200 million evaporated from the park construction kitty,” the OC Weekly reported. “There’s the $125,000 playground set that, when Agran’s consultants finished submitting change orders, cost $1.25 million.”

Republicans finally took control of Irvine.

Repealing Taxes

Additionally, and perhaps more remarkable than the living wage repeal, the Irvine City Council did something unprecedented – they recently voted to repeal a tax. “The Business License Tax, a regressive tax, charging huge Fortune 500 companies the same as a mom and pop business, will be eliminated thereby returning almost $1 million in tax revenue to our residents,” Lalloway explained. “Now, if only other governments would follow our lead.”

Business license taxes are simply a money grab by municipalities, Lalloway said. “Businesses in Irvine are required to pay an annual $51 fee – $50 goes to the city, $1 to the state,” the Orange County Register reported. “The program nets the city nearly $1 million, but it costs about $600,000 to implement. Lalloway called the program “inefficient, and burdensome to smaller businesses.”

Interestingly, on the business tax-repeal, only three of the four Irvine City Council Republicans supported it. Lynn Schott supported ending the business license fee, but Republican Mayor Steve Choi voted against the tax repeal.

“You’re going to start seeing businesses leave and close their doors. The other side to the argument is we’ve got to stimulate business,” Councilwoman Shea added. “We want to encourage businesses to do business here.”

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