Tax Plans Pit Entertainment, Cable Interests : Budget: Furious lobbying from sports and movie industries is expected against the proposed admissions tax. Cable operators aim to keep plan for levy on their business from resurfacing.

The city of Los Angeles’ attempt to plug a $13-million hole in next year’s budget is pitting two politically savvy and well-financed industries against each other in one of the most intense City Hall lobbying campaigns in years.

Entertainment industry officials and cable television operators are going head to head to see which--if either--will be hit with taxes needed to shore up Los Angeles’ sagging finances.

Both are veterans of City Hall lobbying and have made sizable campaign contributions to the mayor and City Council in recent years. And both are now knocking on the doors of elected officials to press their case that someone else ought to bear any new tax burden.

Facing what he called “one of the worst fiscal crises” in Los Angeles history, Mayor Tom Bradley last month submitted a $3.9-billion proposed budget for 1991-92 that would impose $77 million in new taxes--including a 10% levy on cable television bills.

The cable industry, through a multimedia campaign that cost more than $500,000, won the first round in the budget battle this week as it persuaded the City Council to reject Bradley’s proposed assessment on cable television bills.

The council then replaced the cable levy with a 10% tax on admissions to most movies, plays and sporting events in Los Angeles--a measure that Bradley has vowed to veto.

Now council members are bracing for what they expect will be a sophisticated lobbying campaign to keep the entertainment admissions tax from even getting to Bradley’s desk.

“If we lose, it will set a dangerous precedent,” said Kathleen Milnes, director of government affairs for the Alliance of Motion Picture and Television Producers. “This is a big deal.”

An entertainment industry coalition this week hired well-connected lawyer Lisa Specht of the Los Angeles firm of Manatt, Phelps & Phillips to head its lobbying effort. Today, theater owners around the city will begin a petition drive, urging patrons to contact their council representatives.

Cable operators are waging a defensive action to make sure the cable tax proposal does not resurface as the council scrambles to find a revenue source to balance the budget, which takes effect July 1.

“We would be naive to think that the last word has been uttered on the cable tax,” said John Gibbs, president of the Los Angeles Cable Operators Assn. “The issue is not over.”

As Councilman Richard Alatorre put it: “It’s just getting started.”

Both the cable business and the greater entertainment industry, including movie studios, theater owners and music and sports promoters, are old hands at working the political machinery.

In the last six years, the entertainment and sports industries--from movie studios to theater operators, concert promoters, professional sports impressarios and movie stars--have contributed nearly $1.4 million to Los Angeles politicians, with two-thirds of it going to Bradley.

In the same period, the cable industry contributed just one-tenth of that amount--$161,324, with about one-third of the funds going to the mayor and the remainder spread among council members. But the cable operators’ lobbying prowess has been well established over the years in a series of controversial franchise licensing campaigns that included lavish travel and entertainment for council members.

“It’s a lot of dough,” said City Councilman Ernani Bernardi, sponsor of the admissions tax, referring to contributions accepted by the mayor. “It’s spoken pretty loudly before, and it looks like it will again.”

Bill Chandler, a spokesman for Bradley, bristled at any suggestion that the mayor’s planned veto of the entertainment admissions tax would be influenced by contributions. “It is outrageous to suggest there were any other factors in the mayor’s long-term and unequivocal opposition to this tax. The mayor’s negative response was immediate; He did not take a look at campaign records before he made his . . . response.”

Bruce Corwin, president of Metropolitan Theatres and a key Bradley fund-raiser, said he has contacted every council member, urging them to rescind the measure. But Corwin, a longtime friend, supporter and adviser to Bradley, said: “I’ve had no contact with the mayor.”

Councilman Zev Yaroslavsky said the entertainment industry has long enjoyed preferential treatment in Los Angeles. “It’s our home industry,” Yaroslavsky said. “It’s the most favored industry in the city, and we’ve gone overboard to be accommodating.”

For instance, the council has placed a $10,000 cap on the city’s business tax for motion picture studios based in Los Angeles--saving some companies hundreds of thousands of dollars a year.

Now, said Yaroslavsky, chairman of the council’s Finance and Revenue Committee, it is time the industry paid its share.

“I think that if there is one group of people we need to have a ‘hometown’ feeling for, it is the people who depend on city services,” said Yaroslavsky. “They have to take precedence over the entertainment industry and Dodgers.”

However, Tim Warner, president of the National Assn. of Theater Owners of California, said it is the poor who will suffer most from the entertainment admissions tax, which would be tacked onto tickets for a wide variety of theater and stadium events. Warner and others in the business say that movies and baseball games are inexpensive entertainment favored by low-income families. To hit them with a narrowly focused tax, Warner said, is discriminatory and unfair.

Bradley agreed.

“To be hit with a 10% tax just for trying to get a little enjoyment out of life is absolutely unacceptable,” the mayor said earlier this week.

Cable operators made the same pitch. Cable programming, they argued, is the preferred entertainment for those who cannot afford to go out.

Some council members are having trouble distinguishing the difference.

“We’re taxing those who go out, instead of those who stay home,” said Councilman Michael Woo, one of the four council members who voted against the entertainment tax. “It doesn’t make sense to me that that is more fair.”

Meanwhile, also jumping into the fray are the city’s real estate agents, who are hoping for another chance to defeat the $52-million real estate transfer tax that Bradley proposed and the council approved this week. The industry fell two council votes short of blocking the tax, which would impose a new documentary transfer fee on the sale of real property. The fee would add $900 to the sale of an average $200,000 home.

Lobbyist Lynn Wessell, who represents the agents, said: “The bad news is we fell two votes short. The good news is it is coming up again.”

The council has until June 1 to present the mayor with its version of the budget. Bradley then has five days to accept or veto it. It would require 10 council votes to override a mayoral veto.

Real estate agents are hoping to flood the council offices with letters from irate constituents.

But the heaviest push is likely to come from entertainment industry officials and cable operators.

The cable industry is expected to keep up the pace of its well-financed, but largely grass-roots approach. Council members expect entertainment industry representatives to rely more on their existing contacts with council offices and to work through heavy-hitter lobbyists, such as lawyer Specht.

Big entertainment concerns such as the Alliance of Motion Picture and Television Producers and Spectacor, which manages the Coliseum, already have the influential lobbying firm of Rose & Kindel on retainer.

Milnes, of the producers alliance, said many studios will use their in-house lobbyists and existing political contacts to run a largely behind-closed-doors campaign.

“The city is going to be in financial trouble for some time,” said Milnes. “We need to send a message that this is not an acceptable form of taxation.”

Political Contributions

Mayor Tom Bradley proposed a 10% tax on cable television bills to help balance his proposed budget of $3.9 billion for the 1991-92 fiscal year. But the City Council eliminated that measure, and passed a 10% admissions tax on entertainment and sporting events. Bradley has said he will veto it.

The entertainment and cable industries have lobbied against the tax proposals. Both industries have made political contributions to the mayor and the council. Here are the top 10 contributors from 1983 to 1989:

ENTERTAINMENT INDUSTRY Total Contributions: $1,380,573 To the Mayor: $912,861 To the Council: $467,712 The Top 10 contributors: Cosby Waller Entertainment $92,700 Metropolitan Theatres: $63,398 Pacific Theatres: $57,152 Creative Artists Agency: $56,100 Embassy Communications: $45,550 Gene Autry interests: $44,500 A & M Records: $38,210 Los Angeles Dodgers: $34,288 California Sports: $30,000 MCA Inc.: $29,150 CABLE TV INDUSTRY Total Contributions: $161,324 To the Mayor: $47,749 To the Council: $113,575 The Top 10 contributors: United Cable Television: $40,150 Valley Cable TV Inc.: $29,250 Group W Cable Inc.: $23,850 Communicom: $16,950 American Cable Systems: $14,700 Copley/Colony Communications: $8,250 Jack Barry Cable: $6,850 Falcon Communications: $6,674 Cablevision: $2,950 Buenavision Telecomm.: $1,125