Representing the communities of Westchester, Playa del Rey and Playa Vista


‘Under the Radar’ Fiscal Emergency Declared by LA Mayor and City Council

LA WATCHDOG - It is official.  On June 11, the Mayor approved the City Council’s June 5 Resolution, “Declaring a Fiscal Emergency and Authorizing Reduction in Work Hours by Appointing Authorities.”

[Link to resolution]

This Fiscal Emergency will allow our hard pressed City to “implement reduced work schedules or alternative means of generating payroll savings” in the 2012-13 Fiscal Year in “sufficient number and at levels necessary to ensure and improve the City’s fiscal stability.”
This six page Resolution had 47 recitals, some of which confirm that the City is “cooking the books” for the Budget that was approved by the Budget & Finance Committee and the City Council without any objections.

There are recitals outlining the reliance on $243 million of gimmicks to “balance” the Budget, consisting of one-time “solutions” to fund ongoing programs, uncertain revenues from the State and Federal Government, and “savings” resulting from deferring costs that will need to be addressed in the next year or two.

There is also the startling fact that 32% of the City’s General Fund is being devoured by pension contributions and healthcare expenditures.  And more than likely, the growth in these two expenditures will outpace the growth in General Fund revenues and continue to suffocate the City’s ability to perform its core services.

The City also faces almost $1 billion in potential liabilities, ranging from the $750 million Ardon class action lawsuit challenging the validity of the Telephone Users’ Tax to the $90 million related to alleged violations of the Fair Labor Standards Act to a $71 million action filed by the Los Angeles City Attorneys Association.  

On the other hand, there is no discussion about the possibility that $250 million transfer from our Department of Water and Power to the City’s General Fund may be prohibited by Proposition 26.

The City also discloses a projected deficit of $199 million for the year beginning July 1, 2013 that will increase to $315 million the following year.

But, as usual, there are no solutions for the continuing Structural Deficit or how to repair and maintain our broken roads, sidewalks, parks, and the rest of our deteriorating infrastructure.

Nor are there any solutions about how to properly finance the City’s two pension plans that have an unfunded pension liability approaching $10 billion (27.4% underfunded), an amount that is understated because of the reliance on overly optimistic rates of return on their investment portfolios.

But this is nothing new.  Last year at about this same time, the City also declared a Financial Emergency, passing a seven page resolution with 52 woe-is-me recitals.

But we Angelenos are sick and tired of excuses and of placing the blame on external sources when we all know that the Mayor and the City Council gave away the store to the campaign funding unions through massive increases in compensation and benefits.

So where are our slick politicians when it comes to offering constructive solutions to the City’s financial woes?   

Where are the solutions of wannabe mayor Eric Garcetti, who, as City Council President for the last six years, was one of the principle architects of the City’s financial fiasco?

And where are the solutions of wannabe mayor Wendy Greuel, a 20 year City Hall insider who as Controller pledged to be our “independent fiscal watchdog?”

And where are the solutions of wannabe controller Dennis Zine, a double dipping City Hall veteran who as a member of the closed door Executive Employee Relations Committee that approved the over the top increases in personnel costs?

To date, only one elected official, Jan Perry, along with selected advisors, has engaged in a constructive dialogue about how to reform the City’s finances through a Charter amendment that would be placed on the March 2013 ballot.

And only one candidate for mayor, “outsider” Kevin James, has embraced reform through his endorsement of a Charter amendment that would require the City to “Live Within Its Means.”

The most significant issue facing the City is a true Financial Emergency: its impending insolvency.  We have a Budget that is a sham, a Structural Deficit that is projected to be over $1 billion over the next four years, and a $20 Billion Black Hole consisting of unfunded pension liabilities and deferred maintenance on our streets and the rest of our infrastructure.

We do not need any more hot air from the slick talking con artists that occupy City Hall.  We need detailed solutions to the City’s financial crisis, including, but not limited to, a Charter amendment that requires the City to “Live Within Its Means.”

And do not forget the very simple rule.  No reform.  No new revenues.

(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at:   lajack@gmail.com) –cw

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