Wed, Jul

Does Budget & Finance Have the Chops to Reform the City’s Finances?

LA WATCHDOG - On Tuesday, the Paul Krekorian-led Budget and Finance Committee will begin two long, tedious weeks of public hearings to review and analyze Mayor Villaraigosa’s recently released $7.7 billion “balanced” budget.  These meetings will give each department head the opportunity to outline why his/her very special department needs more money to make America safe for democracy and Los Angeles a better place to live. 

Any discussion of individual departments must not only include their budgets and plans, but incorporate the City’s newly instituted “performance based budgeting” criteria.  This will require departments to analyze the efficiency of their existing operations and how they can improve their levels of service.  Departments will also need to “benchmark” their performance against other public and private entities so that we know that we are getting the proper bang for our buck. 


This will provide the Budget and Finance Committee the necessary information to analyze the individual budget request or, in the case of noncore functions, whether it makes sense for our cash strapped City to enter into a public private partnership or other outsourcing arrangement. 

The Budget and Finance Committee must also determine whether it supports the policies underlying Mayor Villaraigosa’s proposed “balanced” budget and the $15 million budget surplus in four years.  To achieve this goal, the Mayor’s budget eliminates the 5.5% raise for 60% of the City’s civilian workforce that is due on January 1, proposes that all civilian workers pay 10% of the premium for their very generous health care plan, and provides for no raises or cost of living adjustments for any City employees over the next four years.  

This will no doubt result in interesting backroom discussions between the City Council and the campaign funding union leaders, especially given the call by Steve Lopez of The Los Angeles Times for public unions to “shoulder more of its health and retirement burden or risk the givebacks and layoffs that the rest of the [private sector] workforce has endured.” 

In analyzing the probability of achieving the $15 million budget surplus in fiscal 2017-18, the Budget and Finance Committee must also analyze whether the $475 million, 10% growth in General Fund Revenues over the next four years is realistic.  Underlying this multiyear revenue projection is a 14% increase in property taxes, a 13% increase sales tax revenues, a 27% increase in the Documentary Transfer Tax, and a 22% increase in the hotel tax.  

However, the most important task of the Budget and Finance Committee is to develop a long range financial plan to prevent the City from being insolvent. While City Hall is absolutely giddy over the $270 to $300 million increase in tax revenues that has reduced the four year cumulative deficit from $1.1 billion to “only” $350 million, the City still has a seriously understated unfunded pension liability of $11.5 billion and a deferred maintenance liability for our lunar cratered streets and the rest of our failing infrastructure of more than $10 billion. 

As we all know, this ever growing $20 to $25 billion liability - that is not adequately accounted for in the budget - will devour the City if it is not addressed. 

Unfortunately, the Mayor, the City Council, the Budget and Finance Committee, and our wannabe mayors, The Pixie and The Prince, do not have the chops to confront this ever growing liability for fear of alienating the campaign funding union leaders.  Rather, they have relied on nonrecurring revenues and funny money accounting to fund the Structural Deficit and conceal the ever growing pension and deferred maintenance liability. 

The failure of City Hall to engage in budget, pension, and work place reform is why we need a charter amendment that forces the City to LIVE WITHIN ITS MEANS.  This common sense amendment would require the City to develop and ADHERE to a Five Year Financial Plan, to pass two year balanced budgets based on Generally Accepted Accounting Principles, and over the next 10 to 15 years, to fix our lunar crater streets, cracked sidewalks, and the rest of our deteriorating infrastructure, and to fully fund our pension plans. 

LIVE WITHIN ITS MEANS will not restrict increased spending or higher taxes, nor would it prevent the City from cutting the gross receipts tax.  The only requirement is that the City balance the damn budget. 

Importantly, if the City is not in compliance, the Mayor, the City Attorney, the Controller, and all Council Members will not be entitled to any compensation or benefits. 

Since we are unable to trust our Elected Elite and their ring-kissing cronies, the first question to Paul Krekorian, Mitch Englander, Bill Rosendahl, Paul Koretz, and Tom LaBonge, the members of the Budget and Finance Committee is, “Do you support the LIVE WITHIN ITS MEANS charter amendment, and if not, why not.” 

Without reform, Los Angeles’ skeptical and lied-to voters will not approve any new taxes.  

(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.




Vol 11 Issue 34

Pub: Apr 26, 2013