Neighborhood Councils to City Hall: Live within Your Means

NC voices showed up … by invitation … at City Council on Wednesday and provided clear and unequivocal advice on the management of the City’s budget: Change the Charter and require the City to Live Within Its Means; develop a Five-Year Strategic Financial Plan; deal with the elephant in the budget room … Control Employee Costs; implement Performance-based Budgeting.

There was more: declare a Fiscal Emergency for the City and allow the Mayor to invoke a one-year salary reduction to help close the deficit …engage in real Pension Plan Reform … 21 recommendations in all. Check them out here.

And, it didn’t take long for Tom LaBonge to let the Neighborhood Council folk know that government is not a business and thus business principles don’t apply here … or Ed Reyes to play the diversity card and repeat yet again his claim that the Neighborhood Council budget advice would be less suspect if only the faces at the table were more diverse.

There was some  sugar early in the session, however. Councilman Paul Krekorian introduced the NC reps. He said that LA’s Neighborhood Councils have come a long way and the hard work and sophistication of the NC Budget Advocates justified this second such appearance before the City Council.

Councilmember Joe Buscaino provided another layer of credibility to the NCBA Report by for a quick review and report back from the City’s CAO.
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Heinrich Keifer set the presentation up: “I am honored to come before you to be part of today’s Neighborhood Council Budget Advocate Presentation. Like last year, many of this year’s 29 Budget Advocates have met with the various departments, bureaus, and labor groups representing the city’s management, prime workforce and labor unions.

“As you may already know, the Neighborhood Council Budget Advocates were elected by the Representatives from 95 Neighborhood Councils on October 29 at the Mayor’s Budget Day.    

“The Budget Advocates have meet, discussed our history of involvement in the budget process, once again deciding to establish specific committees to focus on specific departments and issues.  Out of our meetings with many departments and bureaus, the Mayor’s office, the CAO, and many other key people, and after additional research which included examples of what has been done in other cities, we have complied what we believe to be a list of 21 solid “budget and management” recommendations that can and should be implemented.” (The rest of Keifer’s remarks here.)
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The NC Budget Advocates have submitted a 33 page report (“A Culture of Excellence”) to the Mayor and the Council. At Wednesday’s Council meeting, they concentrated on a 21 item Summary of Recommendations and highlighted three of them.

Greater Wilshire Budget Rep and CityWatch columnist Jack Humphreville offered up the first broadside: change the Charter and require the City to live within its means.

Here’s how Humphreville explained it: “To promote a financially sustainable future for our barely solvent City, the Neighborhood Council Budget Advocates recommend that the City be “required to develop a Five-Year Strategic, Operational, and Financial Plan mandating multi-year Balanced Budgets based on Generally Accepted Accounting Principles and that provides full funding for our infrastructure and pensions.”

“The City has demonstrated that it is unable to “Live Within Its Means” as it confronts a $222 million budget gap next year, and that, unfortunately, is based on overly optimistic revenue assumptions.  

“The so called “balanced” budget is hardly balanced.

“Deferred civilian raises and banked police overtime are not expensed, but have been earned.

“The “balanced” budget does not provide adequate funding for the repair and maintenance of our infrastructure, including, but certainly not limited to, our lunar cratered streets (the second worse in the country), our sidewalks and curbs, our parks and trees, and our Stone Age computer systems.

“Nor does the “balanced” budget provide for adequate contributions to our two pension plans that are only 73% funded, with a combined shortfall approaching $10 billion, and that is based on overly optimistic investment returns.  And to make matters worse, the mandated pension contributions have been lowered by manipulating the rate of healthcare inflation.   

“Over the next four years, out of control personnel expense (consisting of salaries, medical benefits, pensions, and workers compensation) is projected to increase by $828 million, $325 million more that the total increase in General Fund Revenues.

“No wonder why we have a Structural Deficit, where expenses are increasing faster than revenues.    

“The City’s very solvency is at risk as the City Administrative Officer is projecting a four year budget deficit of about $1.4 billion.  And once again, the City is relying on some very optimistic assumptions.

“And that is why we need a “Live Within Its Means” charter amendment that mandates that the City develop and adhere to a Five Year Financial Plan that calls for multiyear balanced budgets based on Generally Accepted Accounting Principles; that requires the repair and maintenance of our failing infrastructure over the next ten years; that reins in the spiraling increases in salaries, benefits, and pensions; and that requires designated funding to cover any increases in spending (such as increases in wages or benefits) or decreases in revenues (such as the repeal of the gross receipts tax on businesses located in the City).” (Humphreville’s complete presentation here)
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Sunland-Tujunga’s Ed Novy told the Council that there’s an elephant in the budget room and we all know what it is … out of control personnel costs. In Novy’s own words: “Like last year, controlling employee costs is the “elephant in the room” that is crushing our city services.  

“We need reform.  Over the next five years, the City is projecting an increase of almost $1 billion for personnel costs (salaries, pensions, benefits, and workers compensation), which will adversely impact city services.  We need reform now.

“The mayor knows it, all of you, the members of the City Council, know it, and the public knows it.  

“In fact, 63% of the public who took the Mayor’s Budget Survey endorse pension reform.

“The pension reform needs to be comprehensive.  This reform should consist of not only increasing the age of retirement, but should also include higher employee contributions, increased contributions by retirees, the establishment of new tiers for future employees, retirement salary based on a five year average, the capping of benefits, the establishment of defined contribution plans for high wage employees, and the elimination of double dipping.” (Link to all of Novy’s remarks here.) 
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The NC reps also asked for performance-based budgeting and pointed out that 71% of the participants in the Mayor’s Budget Survey agreed with them. West Hills Joanne Yvanek-Garb covered this: “The Budget Advocates recommend that the City implement Performance Based Budgeting which will assist each department in providing better service by allowing it to allocate its scarce resources on a more efficient basis.  

“Interestingly, 71% of the participants in the Mayor’s Budget Survey endorsed a Performance Based Budgeting process as does the City Administrative Officer in his report of April 6.   Many other states, counties, cities, and municipalities have had great success with this method of budgeting.  We don’t even have to reinvent the wheel.  There are many examples of how to implement the process for all departments.  

“How does Performance Based Budgeting work.  Performance Based Budgeting is a customer based, performance driven, results oriented budget system.  

“Performance Based Budgeting is characterized by explicitly focusing on the outcomes, as well as evaluation of programs by measuring the relationship between resources and results. It helps assess performance of a program in terms of its effectiveness and efficiency. Enhanced efficiency provides savings that can be reallocated to enhance program delivery or add new services.

“Unlike the traditional line-item budget system that allocates resources based on organizational units and line item expenses, Performance Based Budgeting allocates resources based on service performance.  Planned and actual performance is measured in terms of service effectiveness and efficiency.” (Yvanek-Garb’s complete report here.) 
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The Mayor’s budget is due out next week. The City Council will spend the weeks following rearranging the pieces on the budget board in an effort to create the illusion of balance. How much time any of them will spend listening to Neighborhood Council recommendations or considering the NCBA report is questionable. Safe to predict, I think, not much. But that’s not to say the NC effort is for naught.

For one thing, as a result of NC involvement in the City’s budget process, more LA citizens know more about the City’s budget and the budget process than ever in the City’s history. If an informed electorate strengthens democracy … then that’s a good thing.

It is also safe to say that Neighborhood Councils are closer to a seat at the budget table now than most might have imagined. As a result of this process.

And, a serious number of individual Neighborhood Council stakeholders have enhanced their credibility … and thus their influence on budget decisions. As a result of this process.

And, all of that enhances the credibility and perception of the City’s Neighborhood Councils. And, if I’m right, that’s a good thing.

Neighborhood Councils over the years have become known for their interest in and passion for land use and development … and, especially in the early going, their lack of interest in the boring city budgeting process. Wouldn’t it be ironic if the real credibility-builder for LA’s Neighborhood Councils turns out to be fulfilling their Charter-mandate to advise the Mayor on his budget?

(Ken Draper is the editor of CityWatch. He can be reached at [email protected]) -cw

Tags: City Budget, NC Budget Advocates, NCBA, Jack Humphreville, City Council, Paul Krekorian






CityWatch
Vol 10 Issue 30
Pub: Apr 13, 2012