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LA WATCHDOG - Over the last six years, Los Angeles City payroll and related benefits have increased by $720 million, a 24% bump, as average salaries have increased to $82,000 a year, not including very generous benefits. And contributions to the City’s two pension plans have increased by $540 million (over 150%) as pension liabilities ballooned by almost $10 billion, a 40% increase.
So what is the source of all the cash that is needed to fund these out of control personnel costs?
One source of ready cash was the money needed to maintain and repair our infrastructure: our streets and bridges (ranked the worst in the nation), sidewalks, parks, stormwater drains, street lights, and buildings. The City has also short changed its motor vehicle fleet such as police cars, fire engines, and garbage trucks and has neglected to modernize our Stone Age computer systems and hardware.
As a result, the City has an undisclosed liability that is estimated to be in excess of $10 BILLION, an amount that needs to be invested in the City’s infrastructure over the next ten years.
And this amount does not include the tens of billions needed by our Department of Water and Power and the City’s sewer system.
The City also has an unfunded pension liability of $9.5 BILLION for its two pension funds that benefit over 68,500 active and retired members. And this amount is understated by more than $3.5 billion because of the unsustainable Investment Rate Assumption of 7.75%.
So how do our Elected Elite propose to attack this undisclosed $20 BILLION black hole and at the same time “balance” the budget that is projected to have a four year deficit of over $900 million?
Who better to ask for realistic solutions than the candidates for Mayor and Controller?
What are Controller Wendy Greuel’s solutions? After all, on July 1, 2009, this self proclaimed “independent fiscal watchdog for the people of Los Angeles” stated that her “first order of business as City Controller will be to undertake a comprehensive analysis of the financial health of the City, complete with revenue projections and cost estimates, including our looming pension obligations.” (Link)
And how does former City Council President Eric Garcetti propose to attack this serious financial issue? He is obviously very familiar with these issues as he was the leader of the super secretive Executive Employees Relations Committee (the “EERC”) that approved, behind closed doors, all of the increases in personnel costs after collective bargaining “negotiations” with the campaign funding union leadership.
And what does long time EERC member Dennis Zine have to say?
We need to hear from all the candidates for office as to their detailed plans and underlying assumptions, in large part because any meaningful solutions are bound to infuriate campaign funding union leadership that have their own self serving agenda that is not in the best interests of Angelenos.
And the old adage of “waste, fraud, and abuse” does not cut it. We need specifics.
● Will the candidate propose layoffs, furloughs, job sharing, and reductions in pay for civilian workers?
● Will any such changes include the police and fire departments?
● Will the candidate’s plan include meaningful pension reform, such as increased employee contributions, lower cost of living adjustments, a higher retirement age, a lower annual credit, the elimination of spiking, a final base pay based on a three to five year average, and the establishment of a defined contribution plan?
● Will the candidate support a more realistic Investment Rate Assumption, even if it increases the unfunded pension liability and requires a higher pension contribution from the City and maybe its employees?
● Will post retirement medical benefits be subject to modification?
● Will pension reform apply to existing and retired employees?
● Will there be a reduction in current medical benefits, including higher premiums, higher copayments, and increased deductibles, just like there are in the private sector?
● Will there be a reduction in the number of paid holidays (12) and the number of paid sick days (18)?
● Will retiring employees be entitled to lump sum payments at retirement for unused vacation and sick days?
● Will the City enter into public-private partnerships to “preserve and improve municipal services while providing the City with fiscal relief?” This would include not only the Zoo, the municipal golf courses, the Convention Center, the operation of City parking garages and lots, and Animal Shelters as discussed in the Mayor’s Budget Survey, but possibly Recreation and Parks, Public Works, General Services, Fleet Services, Information Technology, and/or other capital and people intensive departments.
● Will the City be prohibited from dumping excess employees (and their pension liabilities) on DWP, the Port, LAX, and special revenue departments?
● Will the City be allowed to burden the special revenue and proprietary departments with excess overhead charges?
● Will the City be prohibited from requiring special revenue and proprietary departments to perform services for General Fund departments for free or at prices substantially below the true cost?
● Will the candidate’s plan include the elimination of the EERC so that all collective bargaining would be conducted in an open and transparent manner?
● Will the candidate propose new taxes or fees, such as a parcel tax to maintain and enhance fire and paramedic services? And if the new taxes or fees are not enacted, what is the corresponding offset?
● Will the candidate propose the issuance of new debt to finance infrastructure improvements? And if so, how much?
● Will the candidate endorse the application of Generally Accepted Accounting Principles that require the recognition of $100 million of deferred raises for civilian employees and another $100 million of banked overtime for the Police Department?
● And finally, will the candidate support the Financial Control Board or some other mechanism to oversee the finances of the City and require that the City lives within its means?
As a start, the City Administrative Officer, in conjunction with the Neighborhood Councils and other interested stakeholders, should develop a comprehensive Five Year Operational and Financial Plan(s) that includes a balanced budget based on Generally Accepted Accounting Principles, money for our lunar cratered streets and rapidly deteriorating infrastructure and our seriously unfunded pension plans, and the underlying assumptions, priorities, and tradeoffs.
The City election is in 13 months. And now is the time to demand that candidates for Mayor, Controller, and the City Council provide voters with specifics as to how they will address the City’s fiscal crisis over the next five to ten years.
We need facts, figures and priorities, not more odorous hot air from the City Hall barnyard.
(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at: [email protected]) –cw
Tags: Jack Humphreville, black hole, City Budget, Budget Crisis, candidates, electeds, Dennis Zine, Eric Garcetti, Wendy Greuel
CityWatch
Vol 10 Issue 10
Pub: Feb 3, 2012