LA WATCHDOG--“When Garcetti became mayor, he pledged to get “back to basics.” There should be nothing more basic than balancing the budget.” Los Angeles Times Editorial, November 10, 2019
The City Administrative Officer recently disclosed that, despite record revenues, the City’s budget is $200 million in the red and that that the City is projecting deficits for the next four years ranging from $200 to $400 million. This mess is primarily due to the new labor agreements with the police, firefighters, and selected civilian labor units.
But this is just the tip of this scandalous iceberg.
For openers, Mayor Eric Garcetti and City Council President Herb Wesson, along with Councilmen Koretz and Kerkorian, knew that these new labor agreements would wreak havoc on the City’s finances based on input supplied to them by the City Administrative Officer. Nevertheless, they entered into these budget busting contracts that were negotiated in secret with the campaign funding union leaders and ramrodded through the City Council without any discussion or meaningful disclosure by the CAO.
Fortunately, the Los Angeles Times was all over this financial fiasco with a spot on editorial, What Do You Know, LA Is in Financial Peril Again, on November 10th. In the Sunday edition, the editorial was entitled, L.A.’s Riches to Rags Budget.
In April, Garcetti was crowing about the elimination of the City’s Structural Deficit. Over the next four years, the Four Year Budget Outlook showed a surplus in each of the next four years, topping out at $78 million in Fiscal Year 2023-24. Over the next four years, the cumulative surplus totaled $200 million.
But that was a big fat lie because the projections did not account for the proper funding of the new labor agreements, the Reserve Fund, our infrastructure (think lunar cratered streets), and our two underfunded pension plans.
Based on reasonable adjustments to reflect the proper funding of the City’s operations, the $78 million surplus in the spring morphed into a $1 billion deficit. But this was not news to Garcetti, Wesson, Koretz, and Krekorian because they were the chief architects of this cover-up.
But based on the CAO’s assumptions, the City is now looking at a $400 million deficit for the Fiscal Year 2023-24, a sharp increase from the $78 million surplus. And with adjustments for even more employee raises in the third and fourth years ($150-200 million), the buildup of the Reserve Fund ($50 million), and the proper funding of our infrastructure ($250 million) and pension plans (at least $500 million), the Structural Deficit soars to $1.4 billion in the fourth year.
Over the next four years, the adjusted cumulative deficit will total over $4.6 billion. This will be financed by an even lower level of services and calls for even more taxes as Garcetti and the Herb Wesson led City Council will hold basic services such as public safety and the homeless as hostages to fund these budget busting labor agreements.
But before we even consider new taxes, whether they be the Split Roll, a new homeless tax, or Wesson’s county income tax, Garcetti, Wesson, Koretz, Krekorian, and the CAO need to come clean with us on the City’s budget and finances and their plans to balance the budget and eliminate the Structural Deficit. Until then, vote NO on any tax increase and raise hell with your Council Member.
Remember, this is our money and City Hall works for us, not the other way around.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: firstname.lastname@example.org.)