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Wed, Dec

LA Watchdog

LA WATCHDOG--On Thursday, a federal grand jury threw the book on Councilman Jose Huizar, returning a 34-count indictment on “charges that he lead a criminal enterprise where he used his powerful position at City Hall to enrich himself and his close associates, and unlawfully gave favorable treatment to developers who financed and facilitated bribes and other illicit financial benefits.” 

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LA WATCHDOG--Matthew Garza, a 23 year veteran of the Los Angeles Police Department who served on Mayor Eric Garcetti’s Security Detail for over six years, has filed a complaint in Superior Court against the City of Los Angeles in which he alleges sexual harassment and a hostile work environment. 

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LA WATCHDOG--Carmel Partners, a San Francisco based real estate management firm that develops and owns residential real estate, and its 35 story luxury high rise at 520 Mateo Street in the Arts District were prominently mentioned in the FBI’s affidavit filed in connection with the recent arrest of Councilman Jose Huizar.

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LA WATCHDOG--Our cash strapped City is eyeing new sources of revenue to offset the adverse impact of Covid-19 on the City’s seven economically sensitive taxes* that provide over 72% of the City’s General Fund revenue in a normal year.

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LA WATCHDOG--On Tuesday morning, the FBI arrested Councilman Jose Huizar on “a federal racketeering charge that alleges he led a criminal enterprise that used his powerful position at City Hall to solicit and accept lucrative bribes and other financial benefits to enrich himself and his close associates in exchange for Huizar taking official actions favorable to the developers and others who financed and facilitated bribes.”  

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LA WATCHDOG--There are sins of commission where politicians and their bagmen get caught with their hands in the cookie jar.  And then there are sins of omission where our politicians ignore corruption, fail to call out or investigate a fellow member of the Council for corruption, or refuse to place a measure on the ballot that would “limit opportunities for corruption.”  

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LA WATCHDOG-According to the Los Angeles Times, “Mayor Eric Garcetti pledged that the city would ‘identify $250 million in cuts so we can invest in jobs, in health, in education, and in healing,’ especially in the city’s black community ‘as well as communities of color and women and people who have been left behind.’” 

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LA WATCHDOG-Mayor Eric Garcetti and the Los Angeles City Council were shocked, shocked by the revelation that one of its members, Jose Huizar, (photo above) was the principal player in pay-to-play corruption schemes involving the up zoning of large real estate developments, creating hundreds of millions of dollars in extra profits for unscrupulous developers.

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LA WATCHDOG--The Budget and Finance Committee met on Monday to receive input on the upcoming budget and the impact of the virus on City expenditures and its seven economically sensitive revenue streams.  As a result of this uncertainty, the upcoming budget will be a placeholder that will need to be updated on a periodic basis to reflect the changing economic environment. (Photo above: Budget and Finance committee Chair, Councilman Paul Krekorian.) 

But interestingly, the Committee and its members failed to acknowledge that the new labor agreements that were negotiated behind closed doors and that they approved blew a massive a $1.4 billion hole in the City’s budget over the next four years and required the City to raid its Reserve Fund.  The impact of the virus compounds the problem.    

Some of the members questioned the Mayor’s optimistic revenue projections, a valid concern. 

The City Council must respond by June 1.  

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The following are my remarks to the Committee. 

Prior to the virus, the City, despite record revenues, was projecting an annual deficit for the current fiscal year.  The Structural Deficit was expected to exceed $1.4 billion over the next four years as a result of the new labor agreements [that were approved after the adoption of this year’s budget.]. 

The impact of the virus on the City’s [revenues and] budget only compounds the problem of balancing the budget.  

The Budget Advocates developed ten recommendations in its White Paper to increase transparency into the City’s budget process that will, if implemented, begin the process of restoring Angelenos trust and confidence in City Hall. 

The key recommendations include: 

The establishment of an Office of Transparency and Accountability to oversee the City’s budget and finances on a real time basis. [Also, a recommendation of the LA 2020 Commission] 

All labor negotiations must be open and transparent and not result in any budget deficits, now and in the future.  

The creation of a Pension Commission to review and analyze the City’s two pension plans and develop recommendations to eliminate the $15 billion unfunded liability.  According to the City’s projections, the City’s contribution to the pension fund will consume about 25% of the General fund, up from the current level of 20%.  [A recommendation of the LA 2020 Commission] 

Develop a ten-year infrastructure plan that will begin to eliminate the $10 billion deferred maintenance budget. 

The Four-Year General Fund budget Outlook should include placeholders for future raises.  

Implement multiyear budgeting. [A recommendation of the LA 2020 Commission] 

Other recommendations include the Mayor submitting his Proposed Budget on February 1st, benchmarking the efficiency of the City’s department and operations, developing a strong Reserve Fund, and developing solutions to eliminate the Structural Deficit. 

To earn the vote of Angelenos on future tax increases, including the Split Roll, the City will need to earn the trust and confidence of Angelenos.  Implementing these recommendations will begin that process.

 

(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:  [email protected])

 -cw

 

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