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Los Angeles City Budgets Never Add Up

PERSPECTIVE - As with any survey, my general advice is to be wary of the objective questions.  Multiple choice answers can be manipulated to support almost any angle.

Read the questionnaire thoroughly and think about it as a whole before recording a single response . For your convenience, here’s a PDF version - it is more difficult to access on the survey website. I plan on using the alternate open responses to express my views and recommendations and will not confine my remarks to the limited space.

Regardless of how you approach the survey, remember at least one thing:  the finished products – approved budgets – have not been balanced in years, otherwise the city would not be facing yet another significant deficit.

Consider the following:

Wendy Greuel’s e-mail blasts claim how her department’s audits have identified over $100 million in wasteful spending and fraud.

The mayor and City Council have taken credit for cuts amounting to hundreds of millions in spending over the last few years – $336 million from the 2011-12 fiscal year budget alone; $492 million the year before.

General Fund revenues (excluding fund transfers) have been fairly flat since 2007, when the recession made its presence felt, floating between $4 billion to $4.4 billion. Certainly not as severe as one would expect under the circumstances.

So why is the projected deficit for the current year $70 million and next year’s at $250 million?

It is because the budget numbers do not add up.

If the city is as lean and mean in budgeting as officials claim, and if we believe in Greuel’s puffery concerning the elimination of waste and fraud, we should not be facing a shortfall anywhere close to the over $300 million projected for this year and the next.

Mayoral candidate Austin Beutner, who had the benefit of an inside look at how the city operates, has described the city’s accounting and budget process as a fraud. If I were the mayor, City Controller, Chief Administrative Officer or Chair of the City Council’s Budget Committee, I would take his remarks seriously and refute them if untrue. Beutner is not some fringe pundit to be ignored. Silence by our elected officials, in this case, amounts to affirmation.

Enron appeared to be profitable, but was hiding losses in undisclosed special purpose entities. The City of Los Angeles hides its costs by deferring cash payouts to subsequent years, pushing pension costs out as far as possible, and delaying maintenance of streets and sidewalks.

Pushing $100 million of current personnel expenses to subsequent years is the most recent example of the fraud foisted by the mayor and his allies in other elected offices.  $75 million in capital improvements have also been deferred in order to “balance” the budget over the last two fiscal years – just wait until you see the capital spending plug in the upcoming budget if the City Council approves sticking $1.5 billion in sidewalk repairs to property owners.

One-time revenue increases were used to plug gaps but, even if they had materialized, would have been fleeting and done nothing to deal with the ongoing, structural issues the city faces.

Missed opportunities, such as the recent audit disclosure of unrealized potential revenue for street furniture advertising, are indicative of serious management problems….or it could simply mean that the Public Works Board, who oversees the contract, does not have the resources or wherewithal to administer such activities.  Even the best contracts will fail to yield expected results if managers and staff lack skills. Greuel’s reports rarely, if ever, evaluate the competence of the persons in charge.

Therein lies part of the problem.  What do you expect of City Hall’s attempt at producing a balanced budget if the people running the process are not cut out for the job?

Remember that in the 2013 citywide elections.

For now, tell the mayor what’s really in your heart and what is wrong with his administration.

It will take more than selecting one response from 5 or 6 choices as an answer to a question.

(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village.  He blogs at Village to Village, contributes to CityWatch and can be reached at: –cw

Vol 10 Issue 6
Pub: Jan 19, 2012