LA WATCHDOG-The Mayor’s Proposed Budget assumes that increased revenues of almost $200 million will help close next year’s General Fund deficit of $238 million.
The Mayor is expecting to reap $48 million in additional property taxes as a result of the controversial dissolution of the Community Redevelopment Agency. He is also expecting $33 million to be funneled to the General Fund from the Special Parking Revenue Fund as a result of some tricky financial maneuvers that will free up surplus funds.
Complementing this $81 million infusion is a $119 million increase over this year’s Adopted Budget in Licenses, Permits, Fees, and Fines ($42 million); the Business and Sales Taxes ($37 million); the Hotel Tax ($22 million); and Parking Fines and Users’ Tax ($18 million).
However, there is a minor problem. This $119 million bump in revenues may be overly optimistic as they exceed Controller Wendy Greuel’s March 1 estimates by over $100 million.
The Mayor’s Proposed Budget also includes the $249 million Power System Transfer Fee from our Department of Water and Power, even though this transfer may be prohibited by Proposition 26 since it is not a fee for service.
In addition to the Mayor’s overly optimistic revenue projections, he once again is understating expenses.
In a repeat of last year’s stunt, the Mayor is relying on the continued deferral of civilian raises and the banking of police overtime, all of which come home to roost after the Mayor has left office.
The Mayor’s Proposed Budget does not include adequate operating funds in the General Fund to maintain and repair our deteriorating infrastructure such as our streets, sidewalks and curbs, parks, and outdated computer systems. Rather, Mayor Villaraigosa is playing it fast and loose, hitting up Special Funds or proposition accounts for money intended for other uses, not to finance ordinary operating expenses.
The City is also failing to properly fund its two pension plans, continuing to rely on overly optimistic rates of return on its investment portfolios in addition to previously manipulating the underlying assumptions to lower the annual required contributions.
Nor does the Mayor’s Proposed Budget have any contingencies or reserves to cover an adverse judgment in connection with the $750 million class action lawsuit relating to the illegal collection of the Telephone Utility Tax from 2005 to 2007.
The Mayor did address Pension Reform for the newly hired civilian employees through a number of changes to the current plan. However, the impact will be limited over the next five years, especially given that the City has a hard hiring freeze.
Interestingly, the Mayor’s Pension Reform does not address issues associated with current and retired employees as recommended by the Little Hoover Commission.
The Mayor’s Proposed Budget does little to address the out of control increases in salaries, benefits, and pensions which will continue to outstrip the overly optimistic growth in revenues, resulting in a cumulative budget deficit of over $1 billion for the four years beginning on July 1, 2013.
Over the next month, the Budget and Finance Committee, headed by the newly appointed chair, Paul Krekorian, and the City Council will dig into the inner workings of the 1,600 pages associated with the Mayor’s Proposed Budget, exposing the underlying operational and financial shenanigans.
The Mayor’s Proposed Budget is a house of cards, built on faulty, unrealistic, and overly optimistic revenue and expense assumptions, leaving no room for any contingencies. But that was to be expected from our upwardly mobile Mayor, the chair of Democratic National Convention, who is auditioning for his next gig, boasting that Los Angeles has more solar powered parking meters than any other city in the whole wide world.
But will the Herb Wesson-led City Council endorse real reform by initiating comprehensive pension reform and calling for a ballot measure to require the City to “Live Within Its Means?”
And will our politically ambitious elected officials stand up to the Mayor, stop the tsunami of red ink, and endorse real reform of the City’s finances?
Will Wendy Greuel, Eric Garcetti, Dennis Zine, and Jan Perry work on our behalf and expose this flimflam budget for what is really is: another “kick the can down the road,” Enron like fraud on all hard working Angelenos, perpetrated by none other than the Mayor Who Broke LA?
In 315 days, on March 5, 2013, Election Day, Angelenos will remember their friends. And foes.
(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, LA Watchdog, Mayor’s Budget
CityWatch
Vol 10 Issue 33
Pub: Apr 24, 2012