LA’s Moment of Truth: Ruin or Resurrection?

City unions say they gave back in June, they gave more in September and they’re not going to give back any more.

Neighborhood Council members say they too gave back and they have a right under the City Charter and city law  to be fairly treated.

All through the city, the interests, special and not so special, are stirring to protect what they’ve got or in the case of the business community looking forward to profiting handsomely by creating jobs, presumably the poverty level jobs City Hall is so well known for, with subsidies worth three times what the workers are paid.

This is exactly what the mayor and City Council leaders had in mind when they ordered City Administrative Officer Miguel Santana to work so closely with them to develop a plan to stave off BANKRUPTCY– the 10-letter word that would forever be emblazoned on their political tombstones.

And so we get a hodgepodge of drastic cuts in staff and public services, huge fee increases, legally questionable raids on special funds, dumps of hundreds of city workers into jobs at the Harbor, Airport and DWP that they have no particular qualifications for but likely will wind up getting big raises for taking.

Most of all we get to see the city we love dismantled piece by piece, privatized to raise cash to get through this year and maybe next no matter how it perpetuates this financial crisis and imperils the city’s future for decades to come.

SEIU 721 leader Julie Butcher has come up with this list of what could be privatized under the CAO’s plan: Fleet services, Street Improvement projects, Street Sweeping, Trees, Printing,
Median Island maintenance, El Pueblo, Landscaping & maintenance, LA Zoo, Golf courses
20% of Recreation & Parks landscaping, 1 animal shelter, Animal license canvassing, Parking meters, Parking structures, Convention Center, Ontario airport.

There’s actually a lot more, nearly everything the city does except police and fire services would be gutted or sold off. And if we actually go along with Antonio’s Folly, it won’t be long before we are looking for buyers for LAX, the DWP and the 1,300 pristine acres of Chatsworth Reservoir, a developer’s dream.

This isn’t a plan to save LA. It’s a bill of indictment for the failure of the city leadership to provide efficient quality services at a reasonable price. Page after page proves their incompetence beyond a reasonable doubt.

If you have any doubt, I dare you to read through the 800 pages of documents CAO Santana and his staff produced to justify selling off our parking structures and even meters and the plan to restructure city government.

These reports are an admission of guilt, grounds to remove them all from office.

We would be better off breaking the city into many cities than exacerbate our problems by doing what the city’s leadership has proposed.

It doesn’t have to be this way.

We are not helpless children or powerless peons. They are certainly not lords and ladies, kings and queens.

We can stop being victims and patsies.

If unions want good jobs and good benefits that are secure…if ordinary citizens want a seat at the table of power…if business men and women want to prosper…if the unemployed want jobs…if the civic elite want a city to be proud of…then we have to stop thinking small and selfishly.

This is our LA, a city built out of great dreams of unlimited wealth and freedom, a city of grandiose ideas and ideals, a city of reinvention and hope.

Petty greed and arrogance have pushed us to the brink of bankruptcy and ruin. A strategy that amounts to every interest for itself will push us over that cliff.

There is only one way to save our city and ourselves.

We — the unions, the ordinary citizens, the business community, the jobless, the elite — must come together and seize this moment and dictate the terms of surrender to our elected leaders and the policies by which we will become solvent again and move forward for mutual benefit.

I am just one voice crying out in the silence of the Internet but I’ve seen this crisis coming for a long time.

I may be wrong about this or that but I believe with all my heart and soul that this is the moment in history when we become a real city that respects and values all its people and their interests or we become a city of rich and poor with glittery shrines to wealth rising up out of the misery in the slums.

All I can say is I don’t want to live in that kind of hellhole.

I want to be dancing in the streets and celebrating the greatness of the City of Angels in all its glory, the promised land where people from all over the world, from all different backgrounds have come together to create a beacon of hope to the world.

The (Self) Betrayal of Antonio Villaraigosa

I don’t know if Antonio Villaraigosa is a liar, or even a crook — though I’ve got my suspicions about some of his cronies.

But I do know he has a hard time taking responsibility for his actions, living up to his promises and facing the truth head-on.
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That’s why I put up his 2009 State of the City speech and highlighted the phrases that leap off the page to me, phrases that show he deflected all responsibility for the city’s financial condition, pandered politically to segments of the population and quoted a Japanese proverb (Adversity is the foundation of virtue) as if to give moral weight to his commitment to fix what he had broken.

He might better have had his speechwriter dig out the Zen koan: If you do the right thing for the wrong reason, or the wrong thing for the right reason, what if you die?

The right reason that the mayor outlined was his committment to take the drastic steps needed skillfully scale the city work force and spending down to a level in line with falling revenue.

Thumbnail image for antoniosmiles.jpgThe heart of his plan to deal with the fiscal crisis was that he was not going to “take a meat cleaver to essential services — threatening
meals for the poor, housing for the homeless, libraries for our
students, job assistance for the unemployed and police patrols in our
neighborhoods.

Instead, he was going to surgically remove the “deadwood” as he told Times editors days later.

Of course, that isn’t what he — or the City Council — did.

He took a shotgun to the city work force and blew it to pieces with a sweetened retirement package that is getting rid of the talented and invaluable senior staff along with whatever “deadwood” has volunteered for it.

Huge gaps in managerial skill and experience are left in every department. There was nothing targeted about the ERIP, nothing strategic. It was open to just about anyone who wanted so a lot of the people who grabbed it could afford to retire with five extra years of service credit and $15,000 in cash to buy more.

Why would any capable person stay aboard a sinking ship if they didn’t have to?

And now he’s taking the mess he made of city government and grinding it into mush with 1,000 layoffs that will only buy a few months before the city can no longer pay its bills, time enough to sell off airports, golf courses, parking structures and meters, the zoo and Convention Center and buy a little more before the city has to file for bankruptcy.
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By then there will be nothing much of value left to sell, except maybe the DWP, LAX, the parks and vast open spaces like Chatsworth Reservoir.

Nine months after his State of the City speech, what he has done to make matters so much
worse, turned a crisis into a catastrophe.

He didn’t do
what he said he was going to do. He hasn’t even had the courage to speak to the public about the budget catastrophe in all that time, preferring to flit from photo op to photo op boosting achievements in small things while the city falls apart and dreams of a better tomorrow turn into a nightmarish vision of a city without hope.

There was nothing mysterious about the city’s worsening financial condition. Year after year, city bureaucrats warned of the deepening deficit.

As Walter Moore noted during his campaign for mayor, the City Administrative warned at least five times from 2005 to 2007 that the city was running more than $200 million in the red and needed to act prudently.

Thumbnail image for antoniopensive.gifInstead of dealing with the problem, the mayor kept on hiring and hiring thousands of more city workers, kept on raisiing fees, taxes and rates and then spending more, most of it on poverty programs instead of basic services and infrastructure, kept on cutting sweetheart deals with unions, developers and contractors.

And now he wants to gut the Parks, Library, Planning, Neighborhood Empowerment, Building and Safety and other departments that do provide services citywide.

Even worse, he and the Council want to slam these cuts through without allowing any time for analysis or public debate.

They are seven months into this fiscal year and still have a $200 million deficit. They borrowed more than $1 billion to be able to pay their bills and don’t have enough cash to pay the bills, in no small part because only a few hundred of the ERIP volunteers have actually left their jobs and will still be in them for many months more.

Today, they are raiding dozens of special funds of millions of dollars because they are out of cash. Next week, they will start ordering layoffs without regard to the functioning of departments, layoffs of the youngest workers, just like the ERIP got rid of the oldest.

Nothing they have done or are doing has anything to do with running the city for the benefit of the public. They are chasing the numbers of falling revenue downhill without a plan.
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City unions are in an uproar after having been dragged to the bargaining table with a gun at their heads three times in less than a year. Their own positive ideas for reducing spending have been largely ignored, their members are as furious at their leadership as they are at city officials.

The activist community has awakened and begun to mobilize into a force to be reckoned with.

Council members, few with any experience beyond serving in government staff jobs before being elected to positions as the nation’s highest paid city elected officials, see the danger to themselves and are looking for whatever deceit and subterfuge will protect them from the wrath of the people.

They will do anything except face the truth and find the courage to lead the city out of the darkness.

There is no light at the end of this tunnel.

The only hope is that a new civic culture will arise out of the ashes of City Hall’s failure.

Somehow the unions must come to realize the commitments from city officials are worthless. Business leaders must see the city can’t deliver on promises to create thousands of jobs and revive the economy. And ordinary citizens must look beyond their grievances and their anger and seize the moment to find common ground with each other and with these other interests that are more powerful and better organized.

Thumbnail image for antonio-failure.jpgWe cry out for a leader who can bring us together and save us from disaster. We thought Antonio Villaraigosa might that leader five years ago. We were wrong. He has betrayed our hopes and dreams.

Worst of all, he has betrayed himself — and for that there is no redemption.   

Words That Come Back to Haunt Antonio

EDITOR’S NOTE LA was already in serious financial trouble last April when the mayor delivered his State of City Speech. It’s nine months later and the situation is worse. You be the judge of whether he delivered on what he promised. The highlighted phrases will make it easier to judge.

STATE OF THE CITY SPEECH BY MAYOR ANTONIO VILLARAIGOSA, APRIL 14, 2009

Fellow Angelenos:

These are no ordinary times in the City of Los Angeles, or for that matter, any place where people depend on the global economy..

Here in L.A., the recession is taking a terrible toll.  230,000
Angelenos now standing on unemployment lines.  The jobless rate
simmering at 12% and rising. The mortgage crisis has now forced 21,000
of our families to box up their belongings and vacate their homes, many
experiencing for the first time in their lives the humiliating pain —
the frustration — that comes in having to put your hand out and rely
on the help of strangers to survive.


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We have thousands of business owners struggling to make payroll. 
Trade flows and ship traffic are idling at the port.  And the recession
has done lasting damage to one of our most vital civic institutions:
our great newspapers.

Needless to say, the recession has hit government particularly hard.

The need for our services is up.  Revenue to pay for them is down.
Here in L.A., we face a $530-million  deficit this year alone.

The situation at the state level — where the system seems hardwired
for failure — is even more extreme.  That’s why it is absolutely
critical that we lock arms and approve the bipartisan budget
stabilization package on May 19 to prevent us from destroying the very
services that Californians depend on.

When challenges seem daunting, it’s always helpful to recall the old Japanese proverb: “Adversity is the foundation of virtue.”

If this global economic crisis was brought on by the recklessness
and greed of the few,
pulling ourselves out of the ditch is going to
require the shared sacrifice of the many.  It’s going to take a bold
reassertion of our belief in community as a value – here in L.A. and
across America.


First off, we are going to need to support President Obama with everything we’ve got.

And we must all demonstrate a new willingness to roll up our sleeves and sacrifice for the common good.

Most of all, we are going to need to constantly remind ourselves of the philosophy that created the crisis in the first place.

For the last half-century, many have argued that our public
institutions are the enemy. 
An anti-government philosophy incubated in
Washington think tanks.  A philosophy that says sensible financial
regulation is bad for the economy.  That progressive taxation equals
class warfare.

They spread the fiction that frayed the fabric — arguing that the
social safety net traps people in poverty.  And they offered perhaps
history’s worst-ever financial advice: “Just do what Wall Street says
and, trust us, the dividends will trickle down to your 401(k)s.”

Here in California, it’s the same thinking that gave us the two-thirds budget vote and term limits.

Fundamentally it’s the politics of no. Of saying what we can’t do. No
to investment in the long term.  No to what we can do together as
parents and neighbors in communities, small towns and big cities across
our state.

Today, our path forward must focus on revitalizing our economy,
rejuvenating our middle class
and helping our hard-working families
weather this storm and emerge stronger on the other side.

And in practically every decision we make, we are going to need to rebuild this economy on a foundation of shared values.

If that sounds abstract, I’ll be a little more specific.  Next week,
I will present our budget proposal to the City Council.  It’s founded
on two fundamental principles:  protecting services and preserving the
jobs people need in this recession.

I’ll be the first to admit: This budget relies on the willing
partnership of our city workers, hopefully even the courageous
leadership of their union leaders.

This year’s $530-million shortfall could grow to a billion dollars
in 2010
because of the market damage to our pension funds. This is not
a reason to panic.
  This is a reason for urgency.  A reason to come to
the table with new ideas.  To recognize that there is no time to
waste.  There is not a single moment to spare.

And we have to act now.

To my fellow city workers: We face a stark — but clear — choice. 
We can reopen contracts and together write a jobs budget or we can stay
stuck on autopilot, on a path to a layoff budget.

We can do what some cities and states are proposing.  Despite the
deepening chill of this recession, we can turn out thousands of our
workers and take a meat cleaver to essential services – threatening
meals for the poor, housing for the homeless, libraries for our
students, job assistance for the unemployed and police patrols in our
neighborhoods.

Or we can ask everyone to come together, pitch in and be a small part of a bigger solution.

In recent weeks, I have reached out to the leadership of all of the
city unions with an offer of partnership.  I have asked them to join me
in forging a budget that prevents layoffs and protects vital services.

The alternative is too painful to contemplate.  If we are unable to
negotiate some flexibility in this emergency, we could be forced to lay
off more than 2,800 city workers
.

Continue reading Words That Come Back to Haunt Antonio

Loyalty Counts to Bill Bratton: Just Ask Jack Weiss and Michael Berkow

This one calls for a drum roll or two.

Jack Weiss, the ex-Councilman drummed out of office for doing such a poor job, and former Deputy LAPD Chief Michael Berkow, drummed out of town for his philandering ways, have landed top jobs running the Los Angeles offices of former Chief Bill Bratton’s new global security firm.

Good ol’ Bill Bratton, he knows how to look after his boys.

The Times has the press realease, uh story.
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“I got to see Jack in a role in which he was very supportive of the goals of the department. He drove the DNA issue. He knows how to dig down, get information, get results,” Bratton said.

“Jack has a very big Rolodex and, let’s face it, I need somebody who can get out of the gate very quickly, get through the door and show people what ARI can do.”

Weiss, who faced a recall effort in his CD5 seat and lost the City Attorney’s race, was equally effusive, about running the LA office of Altegrity Risk International, the firm Bratton heads that opens for business on Monday.
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Berkow, who was brought into the LAPD to handle internal affairs, got into trouible with affairs of his own after he threw a mattress into his office and took up residency where he worked. t cost the city $1 million to settle one female officer’s lawsuit. Berkow quit as chief in Savannah, Ga., shortly before Bratton announced he was leaving the LAPD.

He will be based in Los Angeles and head Altegrity
Security Consulting
, another firm formed by the merger of two large security firms.

The parent company is run by Michael Cherkasky, who was head of the Kroll Group which was one of the merger companies and was the federal court monitor for the LAPD.

Small world, isn’t it…and funny.

Bruno, LA’s Watchdog: City Hall Needs the Dog Whisperer More Than It Needs a Jobs Czar

He’s no Austin Powers.

LA’s new job czar Austin Beutner sat down with LA’s old column czar Steve Lopez of the Dog Trainer recently to reveal how he was going to reverse the city’s downward economic spiral with all the talents at the disposal of a billionaire willing to work for $1 a year.
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Unless all of us are willing to work for $1 a year, I wouldn’t get your hopes up.

Lopez said the idea to hire Beautner sprang from a meeting of Dick Riordan, Eli Broad, Michael Milken and Steve Soboroff, or what you could call the “Been There, Tried That Gang.”

Remember, it was not that long ago that at least two of these guys, Riordan and Soboroff, actually ran Los Angeles (Broad runs the world and Milken, well, that’s a whole other story), and if you haven’t figured it out yet from reading my master’s blog, our troubles didn’t start yesterday.

At its core, and without going into the entertaining but sometime stultifying detail supplied by my master, the city’s problems stem from its contracts with public employees.

That’s a problem for our elected city officials – who, by the way, make more than $1 a year — since their campaigns receive huge contributions from labor unions, many of which represent our pubic “servants.”

“He’s going to have to confront many, many special interest groups who have controlled the mayor of the city and council of the city — developers, unions, you name it,” Riordan told Lopez. “And I think it is a smart move on the mayor’s part to let somebody who does not have political aspirations make the tough moves.”

Then Lopez – who makes way more than $1 a year — added his two cents:

“You could call it politically smart, sure, the mayor standing clear of the dirty work he wants done, including likely confrontations with city employee unions that have bankrolled his campaigns in the past.

“Or you could ask yourself why he didn’t step up himself, long ago.”

Ask yourself?  Jeez, why doesn’t somebody from the Dog Trainer ask him?  Oh, that’s right, it did have a long profile of the mayor recently.  Unfortunately, it concentrated on the mayor’s diet – meatless Mondays – his new yoga regimen, his girlfriend and her dog, Monkey.

Riordan and Soboroff obviously didn’t brief Beutner on the stuff they tried – mostly dealing with the port and airport – that didn’t work.  He’s going to try it all again.

The job czar did tell Lopez he had a great idea to lure a Chinese car manufacturing plant to LA.

“Beutner might promise that he’ll get Villaraigosa and an A-list celebrity to show up at the Academy Awards presentation in the company’s electric cars, a great promo for all the world to see.”

And maybe the mayor can bring his girlfriend and her four-legged pal Monkey.

I’ve got a better idea.  Ron recently started to “retrain” me, as if I was ever trained in the first place.  It involves lots of new commands, increased discipline – and an electric collar that looks like it was designed by a dog-hating sadist.

Maybe the next time the Been There, Tried That Gang get together at one of their mansions, probably after Beutner realizes as a $1-a-year volunteer he won’t get anything done and quits, they consider a similar regimen for our mayor, in addition to the meatless Mondays and yoga, of course.

I wonder if Armani makes an electric collar?

Woof!

50 Reasons LA Is Bankrupt — Here’s One of Them

If you want to know why people have lost confidence in City Hall, here’s one of the reasons: Outrageous misconduct by city employees and officials that cost taxpayers millions of dollars with little or no accountability for those responsible.

Take the case of Fire Captain Frank Lima and the $4.8 million he was paid Aug. 12 in a reverse discrimination case. Lima had the audacity to treat a female recruit the same as a male one and flunked her when she couldn’t navigate a training exercise involving a 35-foot ladder. His reward: Reassignment and denial of a promotion. A jury awarded him $3.75 million 30 months ago but interest and attorney fees added to the final tally.

Or take the case of LAPD Officer Donald Bender who was stripped of rank and pulled out of the canine unit at LAX because he had the temerity to try to stop the unit’s only female officer, Patricia Fuller, from lewd jokes and innuendoes and exclusion from training sessions. He was paid $1.5 million this fiscal year with $1 million more due next year. She got $1.25 million last year and $1 million this year.

Firefighter Lewis “Steve” Bressler, in a similar case, got $3.3 million – twice what the jury awarded him because of interest and attorney fees. He suffered retaliation because tried to help a colleague suffering racial, sexual and sexual orientation discrimination.
 
There are a lot of other cases listed in City Attorney Carmen Trutanich’s report on liability costs that is being reviewed by the Council today, cases like $130,000 to Mary Cummins-Cobb for wrongful termination and $175,000 to Joseph Ward-Wallace for discrimination in the Fire Department, where workplace abuse has been common for decades.

Abuse of citizens has long been equally common in the Police Department where the estate of David Medina, who died after police used excessive force on him, was paid $450,000 over the last two years and Angelo Gousse – beaten, kicked, tightly handcuffs, called racial epithets and falsely arrested – is being paid $3 million this year and next.

I could go on and on with cases like the nearly $500,000 deposited with the courts because of judgments for gadflies and Venice boardwalk entertainers Michael Hunt and Matt Dowd for violations of their rights, the Council’s illegal “density bonus” ordinance and other violations of the law.

What’s missing from the report is what disciplinary actions and managerial reforms were carried out over these abuses that have led to $26.1 million in payouts in the first three months of the fiscal year alone.

All the Council cares about these days is money so they’ve got there eyes on the $16 million still left in the budget for liability lawsuits. So for a change they are on Trutanich’s side, hoping he continues to play hard ball in negotiating settlements and winning cases in court.

The Council also is getting around to taking a look at the City Treasurer’s six-week-old report that showed revenue from investments was coming up $20 million short — not that another $20 million or so here and there is going to make much of a dent when you’re running as deep in the red as the city is.

It’s going to take a massive amount of pressure from the community to scare the political life out of the Mayor and Council and give them the courage to actually face the fact that have failed miserably in their jobs, have their priorities all screwed up, pay too much for everything as if the people’s money was just so much play dough.

City Union Leader’s View of What Went Wrong

By Charley Mims
SEIU Local 347 Trustee, City Chief Construction Inspector, Griffith Park NC leader

(Originally posted today in comments)

There is so much misunderstanding and so much misleading and false information listed in the Blog article and in the mostly anonymous postings, that I hardly know where to begin! Let’s start with a little history. 
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Four and a half years ago the City of Los Angeles had 26 thousand plus employees. At the height of employment in 2009 the City had 30 thousand employees.

These people were hired by the Mayor and the City Council. If they had not hired 4 thousand employees, we would not be having this conversation now and the City budget would be
balanced. 

This is not a financial crisis. It is a leadership crisis.

As a City employee, a union leader, a community activist, and having served on the City’s retirement commission and on the Charter Reform Commission, I have personal knowledge of City operations and finances.

We do not have a “pension” crisis.

Continue reading City Union Leader’s View of What Went Wrong

B(ankruptcy)-Day at City Hall: Too Little, Too Late

What should have been done a year ago, or two years ago, or five years ago, is finally going to happen today at City Hall — and all of it behind closed doors. Public excluded.

First, the Mayor and City Council members on the Executive Employee Relations Committee will meet to discuss reopening employee contracts in the face of bankruptcy unless drastic measures are taken.

Then, the full City Council will go into closed session to take up the same issue followed by the Mayor meeting in private with department heads to tell them to fire 1,000 or more worker bees, the youngest and lowest-paid city workers with less than five years of city service.

Afterward, you can be sure you’ll hear how all those officials are victims of the economic downturn and doing their darndest best to avoid bankruptcy for the city and provide the same great service to you, their wonderful constituents they always have.

They are lying. They have failed in their sworn duties and have never done anything that isn’t for their own advantage or the advantage of the special interests who put them into office.

Here’s my take last night on NBC’s “The Filter with Fred Roggin” which is being re-broadcast at 11:30 a.m. this morning on Channel 4:

Compounding a Felony: Antonio’s ERIP Caused Chaos and Now His Layoff Plan Is Worse

The word is leaking out of City Hall from all directions: Mayor Antonio Villaraigosa is moving swiftly to get rid of 1,000 or more of the youngest and lowest-paid city workers without a strategic plan to preserve services or get rid of the people he once called “deadwood.”

The mayor, who increasingly is showing signs of panic in the face of the budget crisis, has called department heads to a meeting Tuesday afternoon with the goal of making it clear that the target of his layoff plan are those with less than five years employment with the city.

He also is asking for a list of what public services they recommend eliminating and has drawn a line against cuts in police. It’s unlikely he will hit the Fire Department given LA’s propensity for natural disasters.

Those public safety departments account for half of all general fund spending.so the impact on other city departments, already are losing 2,763 workers to the Early Retirement Incentive Program, will be enormous.

Although the question of layoffs was raised nearly a year ago, there has been no strategic planning on how to minimize the impact on important services to the public. In fact, the City Council has repeatedly emphasized protecting functions that generate revenue instead of those that provide general public services.

The ERIP itself has been a disaster for many departments with key senior managers deciding to retire with $15,000 in cash and pensions sweetened with five years extra service credit, enhancing pensions by about 12 percent.

Those retirements have left gaping holes in the ability of some departments to operate and the random elimination of those at the bottom who actually do much of the work will compound the chaos and further degrade city services.

Union leaders are set to meet Friday with top officials and appear to be ready to fight even as many of their rank-and-file members are challenging the decisions they made on ERIP and new contracts that contained hollow promises of no layoffs and deferred pay raises.

The business community and Neighborhood Council leaders have stressed that pension reform is the critical issue since the burden of a $10.5 billion unfunded pension liability is draining the general fund and pushing the city toward bankruptcy.

Neighborhood Council Leaders Offer Budget Solutions, Call for Dialogue to Avoid Bankruptcy

Neighborhood Council leaders will hold a press conference at 5:30 p.m. Monday outside the Braude Center at Van Nuys City Hall to offer solutions to LA’s budget crisis and call for full community involvement. At 6 p.m., the City Council Budget Committee chaired by Bernard Parks will hold its first in a series of public hearings on the crisis.

Here are proposals that NC Budget Representatives drafted Saturday at the conclusion of a series of meetings of the BudgetLA Committee and the Saving LA Project. Many of them are in line with the proposals jointly put forth by the business community.

1) Pension Reform:Increase employees contributions to reflect market
rates

2) Raise eligible retirement age to social security age

3) Re-evaluate post-retirement health care benefits

4) Service credit purchase based on actuarial value

5) Add a neighborhood council member to all of the pension boards for
transparency and oversight

6) Consolidate the 3 agencies administering LA pension funds

7) Consider additional forms of pension reform including but not limited
to:
a) Defined contribution plans
b) Annuity based plans

8) Hire an independent legal council proficient in Chapter 9 filings to
explore and advise on the contractual, fiscal, and short/long term
effects of such a filing, and share that information with the
neighborhood council system in a timely manner

9) Review and analyze the amount of payroll reduction vs layoffs to
preserve essential services, not lower employee moral, and avoid
unnecessary layoffs in these troubling economic times.

10) Do a full department by department review and consolidate where
duplicate services exist.

11) Instruct the CAO to do a 5 year balanced budget plan in order to stop
the constant reactionary governing that currently exists. This too will
allow for a streamlining of departments and personnel needs.

12) Do a complete cost benefit analysis of E-RIP.

13) Lower the annual service credit for each year worked and cap total
pension benefits:
Currently,
employees of the city accrue benefits at 2.5%a year for public safety
employees, 2.19% a year for general city employees, and 2.1% a year for
DWP employees. Employees can retire at 90%to 100% of their final salary
as a pension benefit, depending on which plan they are in. We believe the
benefits should be capped at 65-75% of the total salary for all city
employees, not including overtime, unused
vacation and sick days, bonuses, or all other forms of
compensation.

14) Defined
benefit vs
contribution-The Mayor’s Budget Committee reviewed the pension reform
measures recommended by the Los Angeles County Business Federation. 
In general, we support most of the recommendations. There needs to be
some clarification and possibly some modification of the points raised by
the group (please see the attachment).
In conjunction with the Federation’s proposal, there is another
consideration that must be on the table when renegotiating labor
contracts with the City’s unions.

We believe it is time for the City to transition employees from the
current defined benefit program to a defined contribution plan.  We
recognize that the feasibility of such a transition would need to be
analyzed by experts independent of the various boards administering the
civilian and sworn plans. 

There would be up front costs, but there
could be potentially significant long-term cost savings to the city and
added flexibility to plan participants.  Up front costs could be
financed.

The transition need not be for all employees, for example, participants
nearing retirement or with considerable service should or would be
excluded.  However, other segments should be given a choice; more
recent hires along with all new hires should fall under a defined
contribution plan.

The reason for this recommendation is based on the unpredictable costs to
the city associated with funding defined benefit plans. The funding
requirements of these plans are subject to market swings, plan
administrator competence, very subjective assumptions and politics. 
Defined benefit plan participants, although they may assume they are
shielded from risk, are not completely- a recent Federal Court decision
involving one of San Diego’s plans defined the City’s subsidy of
pension and other benefit plans as a component of compensation – not a
constitutionally protected vested benefit.  In addition, municipal
bankruptcy can require new labor contracts with higher employee
contributions (not to mention lower wages).

Defined contribution plans entail assumption of risk by employees, but
the risks can be minimized by periodic, scheduled re-mixing of
investments, a service offered by managers of almost all such plans. More
importantly, the cost for the City will be predictable and
controllable.  Administration of these plans can be outsourced more
easily, thereby eliminating most in-house costs and achieving greater
efficiency.

In summary, the objective of the City must be to strike a balance between
the risks shared by employees and taxpayers with respect to all
retirement and health benefit programs.  This is essential to the
long-term financial health of the City and the avoidance of
bankruptcy.

Time is of the essence.  The longer we delay pension and benefit
reform, the greater the odds for bankruptcy.  The tipping point may
be closer than we think.

15) The committee urges the city council, the Mayor, The CAO, and
the controller not to employ gimmicks, no half way measures, no stop gap
measures and no deferring to the future unless all avenues of the fix
have been explored, analyzed and implemented.