CommentsLA WATCHDOG--The Editorial Board of the Los Angeles Times believes that Mayor Eric Garcetti made the right decision in not running for President of the United States, stating that “Los Angeles is a big, complicated [see below] city with serious challenges and tremendous opportunities. It’s a city that needs a full-time, fully invested mayor.
The editorial listed many areas that need leadership: homelessness, affordable housing, racial profiling, mass transit, and schools. Also included are water recapture, recycling, potholes, earthquake retrofitting, attracting 21stcentury jobs, business development, pushing a local tax measure for LAUSD, and preparing for the Olympics.
Unfortunately, The Times failed to mention the elephant in the room: The City’s dire financial situation.
This year’s budget is not balanced despite record revenues of $6.2 billion. The City has over-expenditures of $84 million through October according the latest report from the City Administrative Officer. The budget also does not take into consideration raises of an estimated $40 million for the civilian workers who have been without a contract since June 30. The budget also includes $100 million that was diverted from the already underfunded rainy day funds.
The City is projecting a deficit of $160 million next year despite another year of record revenues. However, when you factor in raises for the police, firefighters, and civilian workers, the shortfall balloons to $275 million.
Over the next four years, the City’s cumulative deficit is expected to exceed $4 billion when considering employees raises, increased funding for the City’s deteriorating infrastructure, and proper funding of the City’s two pension plans assuming a more realistic investment rate assumption.
This river of red ink, where the deficits exceed 15% of revenues every year, is referred to the City’s Structural Deficit, where the growth in expenditures exceeds revenues.
The City also has significant long-term liabilities, including a $15 billion unfunded pension liability (72% funded) and $10 billion of deferred maintenance. At the same time, the City wants to spend over $1 billion to revitalize 11 miles of the Los Angeles River, at least $2 billion to expand the Civic Center surrounding City Hall, and another $500 million to expand the Convention Center.
There are also other significant financial, reputational, and operational issues. These include, among others, runaway salary increases, pension reform, allegations of corruption, inefficient operations that need to be benchmarked, a protracted decision making process influenced by politicians and union leaders, multiple layers of bureaucracy, the failure to hold people at all levels accountable, cumbersome work rules, and inadequate management information systems.
The Times, its editorial board, its management, and its new owner, Patrick Soon-Shiong, can no longer give Garcetti a free pass. City revenues have increased 36% since he took office, but we still have an unbalanced budget, a $4 billion Structural Deficit, an unfunded pension liability of over $15 billion, and deferred maintenance of over $10 billion.
Rather, the Los Angeles Times, our paper of record, must hold Mayor Eric Garcetti accountable to restore the financial health of the City, because without the adequate financial resources, services will be cut, public safety compromised, and many fine programs and initiatives tabled for the lack of cash.
The Times needs to hold Garcetti to his Back to Basics pledge: The City of Los Angeles must live within its financial means.
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Los Angeles is not complicated compared to other big cities. Its main responsibilities are public safety and infrastructure. The Los Angeles Unified School District is responsible for education. Metro handles mass transit. The County is responsible for public health and hospitals, social programs, welfare, criminal justice, and the jails.
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Quotes from Eric Garcetti that he should honor.
“As long as I am your mayor, I won’t duck bad news. I am going to own it and I am going to attack it.”
“I did what mayors do. When we see a problem, we jump in and fix it.”
“Solving problems, that’s what we [mayors] do in the real world.”
(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
