LA WATCHDOG-The Second Financial Status Report of December 12 finally acknowledged that key assumptions underlying Mayor Villaraigosa’s final budget were the basis of a fraudulent attempt to hoodwink us into believing that this profligate mayor had eliminated the City’s Structural Deficit**and had developed a budget that produced a surplus of $15 million for the fiscal year 2017-18.
As a result of the unwillingness of a majority of the City’s civilian workers to forego an agreed upon raise of 5.5% on January 1 and to make other concessions, the Villaraigosa make believe surplus of $15 million in fiscal 2017-18 vaporized and turned into a real deficit of $83 million.
Despite record tax receipts, next year’s projected deficit is now expected to be $242 million, an increase of $90 million. To make matters worse, the cumulative deficit will more than double to over $700 million over the next four years. And that is if we are lucky given some of Villaraigosa’s other half-baked assumptions on personnel costs, pension contributions, and infrastructure maintenance.
But where was Paul Krekorian, the chair of the City Council’s Budget and Finance Committee, during the month long review of Mayor Villaraigosa’s budget? And why, after almost 50 hours of committee meetings, did Krekorian and his committee cohorts (Englander, Koretz, LaBonge, and Rosendahl) approve this phony baloney budget based on assumptions that they knew would be rejected by the union leadership.
But Krekorian’s failure to expose these budget shenanigans is consistent with his past behavior.
During the efforts by the City Hall establishment to pass Proposition A in March, why did Budget and Finance Chair Krekorian fail to disclose that the City was expecting $375 million in increased revenues and pension savings? Rather, our elected officials and Police Chief Charlie Beck resorted to scare tactics, threatening to down size the Police Department by 500 officers if the voters did not approve the permanent half cent increase in our sales tax to a mind boggling 9½%.
This windfall miraculously appeared only after 55% of the voters rejected this $200 million tax increase.
Since the approval of the budget in late May, the Budget and Finance Committee (Krekorian, Englander, Koretz, Blumenfield, and Bonin) has not engaged in any meaningful long term financial planning for our cash strapped City that is burdened with over $25 billion of unfunded pension liabilities, deferred maintenance, and long term debt.
Nor has the Budget and Finance Committee proposed or even discussed any solutions for the upcoming budget deficit of $242 million or the four year cumulative deficit of over $700 million.
Nor has this Committee made any efforts to benchmark the salaries and healthcare and pension benefits of City employees with other regional governments and private enterprise.
Nor has this Committee made any effort to benchmark the efficiency of the City’s far flung operations and the impact of any related work rules.
Nor has this Committee considered whether public private partnerships involving noncore operations would result in significant savings for our cash strapped City.
Nor has this Committee considered the budget impacts of calls for increased funding for the Police Department, the Fire Department, and Recreation and Parks, for relaxing the Managed Hiring Guidelines, or for more affordable housing.
In 2014, Paul Krekorian and his Budget and Finance Committee will discuss the proposed $3 billion Street Repair Bond (now branded as Save Our Streets LA, or SOS-LA) designed to finance the repair of the one third of our streets that are in a failed or near failed condition. But if past is any indication, this Committee’s knee jerk reaction, accompanied by lots of hot air, will be to approve the related $4.5 billion tax increase that raises our property taxes by up to 6%. But this blessing will be without a thorough review and analysis of the City’s finances and the upcoming report by the LA 2020 Commission headed by Mickey Kantor and Austin Beutner.
However, an analysis of the City’s finances will show that a tax increase is not necessary to finance these bonds as City revenues over the next five years are anticipated to increase by at least $500 million, over $400 million more than the $100 million needed to service these bonds.
Before placing a $4.5 billion tax increase on the November ballot that needs the approval of two-thirds of the voters, City Hall needs to earn our trust and confidence, especially after they lied to us in March, squandered billions on over the top increases in salaries, benefits, and pensions for City and DWP employees, and have failed to consider money saving alternatives to the current way of doing business.
The first step is to place a charter amendment on the ballot that would mandate that the City LIVE WITHIN ITS MEANS. This 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 fully fund the City’s two pension plans that are $10 billion underwater and to repair and maintain our streets, sidewalks, and the rest of our deteriorating infrastructure.
Krekorian does not support a LIVE WITHIN ITS MEANS charter amendment. The appropriate response of the failure of the Krekorian led Budget and Finance Committee, the Herb Wesson led City Council, and Mayor Eric Garcetti to adopt this ballot measure that stabilizes the City’s finances is for us to reject the SOS-LA ballot measure.
Now is the time for Paul Krekorian, the City Council, and Mayor Eric Garcetti to be leaders, taking the bold steps needed to solve the City’s financial woes, even if it means alienating the campaign funding leadership of the City’s unions.
Otherwise, SOS-LA will stand for Same Old Silliness in LA and this attempt to hold our streets for ransom will be rejected by the voters.
(**The Structural Deficit occurs when increases in salaries, benefits, and pension contributions are greater than the growth in tax revenues. During the Villaraigosa era, the increase in personnel costs exceeded the growth in revenues by about $600 million. This difference was funded by cuts in core services, including the maintenance of our streets, sidewalks, curbs, parks, and the rest of our failing infrastructure.)
(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.)
-cw
CityWatch
Vol 11 Issue 105
Pub: Dec 31, 2013