LA WATCHDOG - On the afternoon of Tuesday, April 9, Mayor Antonio Villaraigosa delivered his last State of the City Address to a selected audience at UCLA’s Royce Hall. Once again, the man with the million dollar smile waxed eloquently about the progress the City has made during his administration in reducing crime, improving mass transportation, creating the greenest big city in the country, promoting education, and during the last few years, helping to grow our local economy and create good paying jobs.
But are we really better off than we were on July 1, 2005 when Villaraigosa became the 41st mayor of Los Angeles?
Absolutely not as the City’s finances have deteriorated to the point that questions about the City’s insolvency are common place.
Over the last seven years, the unfunded pension liability of the City’s two pension plans has ballooned by over $7 billion, an average of $1 billion a year, to $11.5 billion, implying a funded ratio of only 68%.
However, if a more realistic investment rate assumption was used, this liability would approach $20 billion (55% funded).
Our streets, sidewalks, curbs, parks, trees, and the rest of our infrastructure have deteriorated over the last eight years, so much so that the deferred maintenance ticket is way north of $10 billion.
But Villaraigosa does not appear to be concerned about the $25 to $30 billion of debt and other liabilities that he is dumping on our children and grandchildren as he did not mention the City’s fiscal crisis in his State of the City Address.
The Mayor conveniently failed to mention the billions in hidden costs associated with the downsizing of the City’s work force by 5,000 positions. These include the exceptionally generous Early Retirement Incentive Program that decimated the City’s management ranks and the cost to Ratepayers of dumping 1,600 surplus City employees on our Department of Water and Power.
Nor did he mention the projected four year budget deficit of $1.1 billion caused by the out of control $750 million escalation in salaries, benefits, and pension contributions that exceed the growth in tax revenues by almost $300 million.
On Monday, April 22, Villaraigosa will release his final “balanced” budget. It will more than likely provide for 10,000 cops and increases in the Fire Department’s funding, contrary to the well publicized threats of layoffs by Police Chief Charlie Beck that were used to terrorize voters into supporting Proposition A, the permanent half cent increase in our already high sales tax.
The Mayor’s proposed budget, benefitting from hefty increases in tax revenues for this year and next year as well as lower pension fund contributions, will not only eliminate the previously projected $216 million deficit, but will provide surplus cash to fund a $70 million Budget Stabilization Fund and stabilize the City’s Reserve Fund.
But this hocus pocus, last minute swing of $250 to $300 million since the March election just confirms why hard working Angelenos do not trust Villaraigosa, City Council President Herb Wesson, Police Chief Charlie Beck, and the rest of the special interests that occupy the sewer known as City Hall.
While Villaraigosa did not offer any solutions to the City’s Structural Deficit - where the increases in labor expenditures exceed the growth in revenues, he told KTTV on Wednesday that employees should be paying 18% to 20% of their salaries for their retirement benefits and 18% to 20% of the cost of their very generous healthcare benefits.
These two recommendations would “save” the City over $300 million a year, an amount substantially less than the massive increases in salaries and benefits over the last eight years.
However, it remains to be seen if the Mayor will be a leader of fiscal reform by incorporating these two suggestions into his upcoming budget, incurring the wrath and fury of the City’s politically powerful unions.
However, it remains to be seen if the Mayor will be a leader of fiscal reform by incorporating these two suggestions into his upcoming budget and whether he is willing to incur the wrath of the City’s politically powerful unions.
Over the years, Mayor Villaraigosa has said on numerous occasions that the City must make “tough choices” to “live within its means.” But like so many other of his utterances, this is just lip service.
As he knows, a true LIVE WTHIN ITS MEANS charter amendment would require the City to develop and adhere to a Five year Financial Plan, pass two year balanced budgets based on Generally Accepted Accounting Principles, and over the next 10 to 15 years, fully fund the City’s two seriously underfunded pension plans and repair our lunar cratered streets and the rest of our failing infrastructure.
So are we better off today than we were eight years ago? Are you kidding!
And during his last 75 days in office, will Villaraigosa redeem himself by using the leverage of his endorsement to demand that the Pixie and the Prince propose a comprehensive plan to balance the budget, fund our pension plans, and fix our streets?
Not a chance.
As a result of Villaraigosa’s fiscal follies and his absolute failure to lead or engage in realistic budget, pension, and work place reform, Antonio Villaraigosa’s legacy will be that of the Mayor Who Broke LA.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.) Graphic credit: LA Daily News.
-cw
CityWatch
Vol 11 Issue 31
Pub: Apr 16, 2013