CONSULTANT STUDY OF GROSS RECEIPTS TAX BY THE BLUE SKY CONSULTING GROUP ON BEHALF OF THE OFFICE OF ECONOMIC ANALYSIS
In response to a letter from Councilmember Garcetti dated November 17, 2011, the Office of Economic Analysis (OEA) was asked to retain a consultant to analyze certain elements of prior reports relative to the elimination, reduction or modification of the City's Gross Receipts Tax (GRT). The purpose of the OEA is to provide independent fiscal and economic analysis to assist and support the City's legislative decision- making process. Accordingly, the OEA released a Request for Bids (RFB) to OEA consultant panelists on December 15, 2011 with a due date for receipt of RFB submissions of January 4, 2012. Three proposers submitted responses to the RFB by the due date. Panel review and proposal scoring took place through February 3, 2012.
Blue Sky Consulting Group (Blue Sky) was selected as the consultant to perform the GRT analysis and a Notice to Proceed was issued to Blue Sky on February 6, 2012. A draft of the final report was discussed with Blue Sky on March 21, 2012 and their final report relative-to the GRT was issued on March 22, 2012. The subject report and a one page summary are attached, along with a copy of the request from Councilmember Garcetti.
The OEA was approved in July 201 0 by the Council and Mayor to perform independent economic analysis on behalf of the City on an as-needed basis and the selection process described above is consistent with Council instruction (C.F. 09-2722).
Blue Sky concluded that eliminating the GRT would result in an increase in employment and economic output in the City; however, this increase would not be large enough to generate sufficient additional revenues for the City to offset the loss of the GRT. Blue Sky indicates that elimination of the GRT would lead to a net reduction in revenues of approximately $400 million annually.