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A New Deal for L.A. — Road Map for an Efficient, Responsible and Solvent City Government

“If you’re not going to vote to extend taxes, you’re not going to vote
to cut, you’re not going to vote to do anything to redevelopment, so,
what the hell are you going to do? By the way, if you’re not
going to do anything, why do you take a pay check?”

Gov. Jerry Brown threw out that question to legislative Republicans blocking approval of tax extensions, budget cuts and abolition of community redevelopment agencies to eliminated California’s $26 billion budget deficit and restore the state to financial solvency.

The same question should be asked of the nation’s highest, highest perked and highest staffed municipal elected officials — the mayor and City Council of the City of Los Angeles.

They have failed for three years to confront the truth: City government is poorly managed, disorganized, wasteful, inefficient and its incompetence is compounded by salary, pension and health care costs that are — and were even before the economic meltdown — unaffordable.

Yet, Mayor Antonio Villaraigosa and the City Council went on a hiring frenzy at the height of the housing bubble.

For the last three years, their response has been a pathetic juggling of the books, shuffling money between accounts, one-time solutions like furloughs and reams of documents, studies and debate without substantive action.

The business community, Neighborhood Councils, the city’s financial bureaucrats — even to a degree city union leaders — all now agree that drastic actions must be taken now or bankruptcy will become the only viable option by July 2012.

Here’s how Gary Toebben, head of the LA Chamber of Commerce, put it this week in his Business Perspective column headlined “Budget Deficit IV Now Showing in LA”:

When Hollywood
produces a sequel, it is because the first film was a hit. This spring’s
Budget Deficit IV, starring the City of Los Angeles, does not fall into
that category. What started out as a PG rated show three years ago and
gained little attention has turned into a horror movie that should scare
every resident and taxpayer of Los Angeles. 

Some
of the actors in Budget Deficit IV would like to make us believe that
while the plot is heavy with drama, calling it a horror movie is simply
crying wolf. They assert that the villain in Budget Deficit I, II, III
and IV is a character called the Great Recession and that if we are just
patient, that villain will be swept away as the economy improves.
Miguel Santana, L.A.’s City Administrative Officer, says that portrayal
of the current budget deficit would be fiction. 

Speaking
to a group of L.A. Area Chamber members last Friday, Santana said the
actual numbers for the past four years and the financial projections for
the next four years tell a sobering story about a budget crisis that
would have unfolded even without the Great Recession. Santana points to a
long-term trend line of increased expenses for personnel, programs and
retiree benefits that surely and steadily increased the City’s budget
obligations every year and laid the foundation for a budget deficit even
when the economy was growing robustly. The budget deficit tsunami is
rushing in on Mayor Villaraigosa, members of the L.A. City Council and
citizens of Los Angeles, and we can no longer avoid tough cost-cutting
decisions.”

In a series of reports released in the last week, Santana has provided a road map to financial solvency that involves the usual grab bag of cooking the books and fee hike tricks along with a massive restructuring of city government, elimination of non-core services and the workers who provide those services and negotiations with city unions on reducing the cost of payroll and benefits.

The key documents released in the last week are the third quarter financial report (10-0600-S60_RPT_CAO_03-18-11[1].pdf) on how to get rid of the nearly $50 million deficit remaining this fiscal year, the amendments to that report approved by the Council Budget and Finance Committee, and lengthy report entitled “Opportunity to Strengthen and Redefine LA City Government.”

“We are living in an ‘age of permanent fiscal crisis’ that is challenging all levels of government,” Santana opens his report.

He noted LA’s unemployment rate is 14.4 percent, one of the nation’s highest, and the deficit for next fiscal year is estimated at $350 million and rising rapidly year after year to $548 million by 2014-15 even with an expected 10 percent increase in revenue.

Year after year, Santana’s office has warned “it only gets worse next year” and it has and will continue to get worse unless drastic measures are taken — and carried out effectively.

The Neighborhood Council Budget Advocates, a group of 20 volunteers led by Jay Handal, has dug deep into the city’s finances after many weeks of work and issued their own recommendations which were presented in person to the mayor who flashed his best smile and said thanks.

It’s called “Saving Jobs — Saving Services” (NC Budget Advocates.doc)and dovetails with a lot of the CAO recommendations, emphasizing increasing efficiency, generating new revenues, structural changes and reducing expenses.

The mainstream media ignored the report which was picked up only by Alice Walton’s The City Maven blog.

There are a few choice nuggets of City Hall incompetence noted in the report.

The LAPD.bought GPS systems for squad cars but
“the required software to operate the GPS systems was not purchased, thus making
the GPS systems inoperable.”

The Personnel Department’s Workers Comp Division is operating inefficiently on 26-year-old software, when it would cost $3.4 million to fix and help save the city millions every years.

Despite its bland bureaucratic language and occasional smiley faces, the CAO’s own road map for financial solvency is a far more damning indictment of City Hall’s failures — 219 pages of proposals to reduce spending by $440 million to $570 million requiring “responsible management and fiscal practices.”

Fiscal responsibility, core services, honesty, integrity, transparency — those were the core values embraced by every LA Clean Sweep candidate in the recent Council elections where voters chose instead to elect the same old faces of failure.

And that is the heart of the problem: Failure of leadership.

The business, civic and union leadership supported those faces of failure in the election.

Now, they have the chance to join with the community and provide the leadership needed to create a new deal for Los Angeles — a future that provide job security to city workers at an affordable cost, that protects basic services for healthy neighborhoods and a decent qualify of life for all, that preserves hopes for a better future for the city.

There is nothing in the record of City Hall to suggest that the leadership that is needed will come from within.

It will take a coalition of the rich and the poor, progressives and conservatives and everyone in between from every part of the city to force the changes that are needed and make sure they are carried out for the long-term benefit of all.

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5 Responses to A New Deal for L.A. — Road Map for an Efficient, Responsible and Solvent City Government

  1. Anonymous says:

    14% unemployment? That must be an error. After all, Austin Beutner ‘Job Czar’ is on the case.

  2. Anonymous says:

    Thanks to the Mayor and City Council and their dumb furloughs, hardly any work gets done. The attitude is that if they cut our pay, we owe nothing in return. Learn from the private sector. A pink slip allows an operation to function smoothly without creating this mess. The city is not being helped and there are no savings as there is little productivity. Put everything in perspective. Just having x number of bodies is an excercise in futility, which our dumb Mayor never seems to understand. Based on his thinking, 10,000 cops is the absolute number required or the city will be overtaken by a tsunami of criminals. Same logic is applied to all departments that produce very little but play the numbers game. Someday the city will understand that number of employees equals a certain level of productivity. Absent that, they should be let go.

  3. Anonymous says:

    I do believe that the City wants to go to bankruptcy as it will make all employee contracts null and void. City Council won’t have to worry anymore about health and pension retiree costs and simply renegotiate new terms in bankruptcy court. I believe many cities will do the same thing nationwide as unfunded pension and retiree health costs are soaring every year. Cities will not be able afford increasing amounts of these costs every year and then not afford basic services. A two-tier system only will work in the long term.
    Costa Mesa decided to layoff half their staff and then “poof”, half the unfunded pension and retiree health costs are gone, forever. In lieu they will hire consultants.
    So, it is either bankruptcy or go to consultant services to run most city departments.

  4. Anonymous says:

    If bankruptcy is the only way, will it also throw out the bums who led us there.

  5. Anonymous says:

    Beutner may be right after all, when he tells us the City will file for bankuptcy next year!!

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