- Written by Jack Humphreville
27 Jan 2012
LA WATCHDOG - To close next year’s projected budget deficit of $200 to $250 million, an amount that is seriously understated because of the funny money games our Elected Elite are playing, the Mayor has instructed all departments to submit two expenditure reduction proposals.
The first reduction proposal calls for a cut of 6% of this year’s General Fund appropriation and/or subsidy, but only after including the “obligatory salary increases,” not an insignificant amount.
The second reduction proposal bumps the cut to 12%.
Overall, these expense reductions of $250 to $500 million will be felt by the beleaguered City employees who will be either furloughed or laid off, and by long suffering Angelenos who will have to live with rapidly deteriorating roads and fewer services.
And once again, this “solution” is just more of the same old stuff, another one off gimmick that does not address the City’s Structural Deficit caused by out of control increases in salaries, pension contributions, and medical benefits. These personnel costs are projected to increase by $226 million next year and almost $740 million over the next four years.
Over the last six years, the super secretive Executive Employee Relations Committee (the “EERC”), under the fiscally irresponsible leadership of Mayor Villaraigosa and City Council President Eric Garcetti, has given away the store to the campaign funding union bosses.
In this six year period alone, the average compensation for members of the City’s two pension plans has increased by over 24% to almost $82,000 a year. And the police and fire fighters are now taking home an average of over $100,000 a year, and that is before very generous benefits.
And during the reign of Villaraigosa and Garcetti on the EERC, pension contributions have increased by over 150% and now chew up over 20% of the General Fund while human resource benefits are up 47% and comprise almost 13% of the General Fund.
Over the next four years, salaries are expected to increase by about $175 million, not including the fiscally irresponsible deferral of civilian raises and banked police overtime, while pension contributions and human resource benefits will represent over 40% of the General Fund compared to “only” 33% this year.
Despite the prospects of insolvency, Mayor Villaraigosa and the City Council have not even developed a plan to address the City’s fiscal crisis.
They have essentially ignored the City Administrative Officer’s March 18, 2011 report, Opportunity to Redefine and Strengthen Los Angeles City Government, despite its many excellent recommendations.
And where is the promised financial plan of Controller Wendy Greuel, the City’s financial watchdog?
Our Elected Elite’s failure to address the City’s budget crisis and its deteriorating infrastructure in a systematic manner is why we need a Financial Control Board to make sure the City lives within its means.
Now the Financial Control Board is not in the business of allocating scarce resources. That is the job of our Elected Elite.
Nor does the Financial Control Board determine tax policy. Again, that is the business of the Mayor and the City Council.
Nor is the Financial Control Board involved in drafting or implementing legislation.
Rather, the Financial Control Board would require the City to develop and ADHERE to a Five Year Operational and Financial Plan that requires a truly balanced budget based on Generally Accepted Accounting Principles, and also provides for the proper repair and maintenance of our infrastructure and the funding of our pension plans based on reasonable investment rate assumptions.
Angelenos can no longer afford the high priced gimmicks that are once again being proposed by The Mayor Who Broke LA.
We can no longer afford to neglect our lunar cratered streets, the worst in the nation.
Nor can we continue to underfund our two pension plans that are $9.5 billion underwater despite a 20% return last year.
We need to learn to live within our means. And unfortunately, given our weak kneed Elected Elite, we need a Financial Control Board to insure the City’s very solvency.
Vol 10 Issue 8
Pub: Jan 27, 2012