L.A. City Hall’s Perpetual Money Crisis: Next Year Just Keeps Getting Worse as the Bureaucrats Warned Long Ago

Do you remember when the economy crashed in October 2008 and how the city responded to what was certain to bring to a head years of overspending on sweetheart contracts with unions and contractors and gifts to the rich, years of living beyond the city’s means?

That’s right, it’s hard to remember how the mayor and City Council responded because they didn’t do a damn thing — nothing at all for a long, long time despite incessant warnings from the financial bureaucrats that drastic steps needed to be taken immediately.

Over and over, budget wizard Tom Coultas in the City Administrative Office warned the Council in public as he did on Dec. 12, 2009 that the city’s financial situation was very, very bad: “This is just the beginning. Next year is worse.”

Slow to act and feeble in the actions they took then and since, the mayor and City Council chased the financial numbers downhill without getting their arms around the obvious problem: City government costs too much and delivers too little.

They played smoke-and-mirror games to cook the books, hid the real costs of pensions and benefits, raided special funds for special services to meet their payroll. They borrowed heavily. They put off paying their bills for years to come with gimmicks like banking overtime.

They hid more than 1,500 workers by transferring them to the DWP where most got raises of 30 to 50 percent because of the IBEW premium. Hundreds of vacant jobs were eliminated and barely 400, many of them part-timers, actually were laid off.

The cornerstone of this policy for failure was the Early Retirement Incentive Program — ERIP.

It was like taking a shotgun to a giant flock of nuisance birds and seeing which ones were felled.

Except in this case with handsome rewards totaling nearly $400 million, the birds got to to choose who got the five years extra credit toward retirement — not death — and walk away with lifetime health care and 75 percent of their high salary. For someone making $100,000, which a lot of them were, it was worth nearly $12,000 extra a year for the rest of their lives

Instead of targeting people whose jobs were redundant or performance below standard, it was left to the employees themselves to decide under seniority rules. So those with the most seniority and often the most ability were first in line to get the hell out of City Hall.

Tom Coultas was one of those employees who took the money and ran. Who wouldn’t if it helped you max out on your pension with lifetime health care and you’re still in your 50s and have a long happy life ahead of you.

The funny thing is Tom Coultas is back on the city payroll, drawing his salary and his pension — like Dennis Zine the $300,000 a year traffic cop and Bernard Parks the $450,000 a year police chief.

There are 87 other ERIP retirees like Coultas back on the payroll (ERIP Rehires 3-2-12) and another 100 or so authorized to be rehired on similar 90- or 120-day contracts a year because they never should have been let go. They were people with irreplaceable skills and experience.

Nearly 200 of the 2,400 people who got early retirement are in line to be brought back because the city can’t function without them.

In fact, the city hasn’t functioned well. Departed employees in important jobs, furloughs that amounted to a denial of public services, and the loss of vital workers have contributed to a breakdown in City Hall’s functioning.

That’s why key workers are being recalled.

The feebleness of City Hall’s solutions to this problem haven’t just made next year worse than the one before but put off the costs for years to come. It is the never-ending budget crisis.

Even wannabe Mayor Wendy Greuel, the City Controller best known for her talent for covering her butt without actually doing anything.

Here’s some excepts from her “day late, dollar short” financial advice to the mayor and Council dated March 2, 2012, more than three years after the crisis began:

“. . . focus on structural budgetary changes instead of continued reliance on one-time revenues and expenditure deferrals.  One-time solutions intended as a bridge to better times may prove to be a bridge to nowhere if a full economic recovery does not rapidly materialize . . .  it is critical that you act strategically in making those cuts, so as to maintain the core functions of the City.  During the last few years, especially this and last year, the City has reduced services through reductions in the workforce, furloughs and the increased use of compensatory time-off . . .  furloughing employees is very effective when dealing with a cash flow problem, but it reduces services while achieving minimal indirect cost savings . . .  my growing  concern regarding the management of compensatory time-off . . .  From 2009-10 to 2010-11, this amount increased by $30.7 million. The dollar amount for banked overtime has almost doubled in the last two fiscal years; going from $43 million in 2008-2009 to $83 million in 2010-11 . . . Since we are once again using internal funds to balance this year’s budget (e.g., Reserve Fund, Special Parking Revenue Fund, etc.), we will have fewer resources for internal cash flow borrowing in 2012-13 . . .  the City’s financial statements was delayed once again due to financial reporting and accounting staff reductions in  City departments; limiting the ability of departments to respond to the Controller and  the external auditor’s requests for information.  We need to be very careful with budgetary reductions to financial reporting and accounting professionals . . .  If we lose our fiscal infrastructure, then users of City financial data, both internal and external, will not have the information needed to evaluate the fiscal health of the City.”

It is to laugh, such mealy-mouthed advice at this stage of the crisis. Nine months after the economy collapsed, the City Council timidly took up the question of what to do and got better advice from the bureaucrats before they were bullied and cowed into submission by how the mayor and Council politicized every aspect of city government. Here’s an excerpt of what they were told on May 5, 2009: