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County marijuana tax for homeless services to appear on November's ballot

Los Angeles County voters will decide this fall whether to tax marijuana businesses to help pay for housing and health services for the homeless.

The ballot measure, approved Tuesday by the Board of Supervisors, seeks to take a potentially significant new source of government revenues, from marijuana sales and use it to address one of the region’s oldest and most intractable problems. L.A.’s homeless population has been rising in recent years, and the proposed pot tax is part of a larger effort by city and county officials to finally put significantly more money behind easing the problems.

The board’s 3-2 vote comes two weeks after the Los Angeles City Council agreed to place a  $1.2-billion bond initiative on the November city ballot to build more housing for the homeless. The bond money could be used only for housing construction, not to provide services. Backers see both measures as a package and hope voters will approve both.

The county proposal calls for a 10% levy on the gross receipts of businesses that produce or distribute marijuana and related products. It would apply to medical marijuana operations as well as the recreational marijuana industry if California voters decide to legalize it in November.

County analysts estimated that the measure, which would require a two-thirds majority vote to pass, would raise as much as $130 million a year to pay for mental health and substance abuse treatment, rental subsidies, emergency housing and other services intended to get and keep people off the streets.

But how much revenue the tax would generate depends largely on whether California voters legalize marijuana and whether large numbers of illegal sellers enter legal venues. County officials estimate that only about $13 million of the annual revenue would come from the medical marijuana industry. 

If recreational marijuana is legalized at the state level, the county would not be able to begin collecting taxes on that industry until 2018. In the meantime, the county and cities will need to set up their own set of regulations on commercial marijuana businesses. 

Spurred by the growing visibility of homeless encampments throughout the county, there has been much talk in local government about a unified approach to addressing the problem. The most recent count by the Los Angeles Housing Services Authority found about 47,000 people were homeless throughout the county.

The county budgeted $100 million this year to carry out an ambitious new homeless agenda, but it does not have a dedicated source of funds for ongoing efforts.

Advocates and people who are currently or formerly homeless urged the supervisors to place a funding measure on the ballot.

Destiny Vazquez, 16, said she spent two years homeless off and on as a child, but now lives with her grandmother and volunteers with an organization that helps the homeless.

“I am here as their voice, because I didn’t ask to be homeless either,” she said. Her mother, Nereida Vazquez, 39, who said she is now homeless again, accompanied her daughter to the meeting. 

Tuesday’s vote comes after months of debate about the best way for L.A. County to raise more money for the homeless.

Initially, the board had hoped to pursue a  “millionaire’s tax” on high-income earners. But the county does not have the legal authority to raise income taxes, so officials pushed for a change in state law that would have allowed them to go forward.

After that effort failed, Supervisor Mark Ridley-Thomas proposed placing a property tax on the ballot and then backed a quarter-cent sales tax. Both of those plans would have raised more money than the pot tax. Neither proposal was able to get majority support on the board.

A number of advocates urged the board to consider the sales tax, which would raise the most money -- an estimated $355 million a year -- and could be implemented more quickly than a marijuana tax. But most said they would also support a marijuana tax.

“We know that we will not see another opportunity in terms of public attention on homelessness and voter turnout like we will in November,” said Katie Hill, executive director of the group People Assisting the Homeless.

Supervisors Sheila Kuehl, Hilda Solis and Don Knabe voted for the marijuana tax, with Michael D. Antonovich and Ridley-Thomas voting against.

Kuehl and Solis hailed the vote as a major step toward addressing the county’s homeless crisis. But Ridley-Thomas said that the county needed more time to look at the issues surrounding a marijuana tax and that he had not given up on the sales tax. Antonovich expressed concerns about the health and safety effects of legalizing marijuana.

Knabe said he is not a proponent of marijuana, but if California voters decide legalize it, "we ought to get a piece of the action, because it will help those that we need to help."

Public health and law enforcement officials expressed concerns about whether high taxes on the legal marijuana industry would drive more consumers back to the black market. L.A. County Sheriff Jim McDonnell sent a letter that said the level of homelessness in the county is “dire,” but urged the board to look at measures other than marijuana.

Collecting from marijuana businesses, which typically run on cash, will also raise potential security issues for county tax collectors. Treasurer-Tax Collector Joseph Kelly said his office might hire armored cars to pick the money up.

The supervisors went into a closed-door meeting ahead of the discussion of marijuana and the homeless tax, which were not on the closed session agenda. Ridley-Thomas said the closed session was needed to talk about a “confidential attorney-client privileged communication” the board had received the night before. Kuehl and Solis argued that the issues could be discussed in public, but were voted down by the other three. 

Kuehl said afterward that the supervisors had discussed the items that were on the closed session agenda, but also discussed a memo from county counsel on potential liability and federal law issues related to marijuana.

“To me, it could have easily been said in public,” she said, but added that she thought the topic was appropriate for closed session because it dealt with potential litigation.