LA WATCHDOG - You would never know that our City is facing a financial meltdown when listening to our globetrotting Mayor’s State of the City Address on Wednesday afternoon.
But our City is on the verge of insolvency, looking straight down the barrels of a double gauged shotgun at a $222 million budget deficit for the fiscal year beginning July 1, 2012 and a five year cumulative deficit of almost $1.7 billion.
And this black hole is understated as the projected revenues are overly optimistic and the City is playing Enron-like accounting games by banking police overtime and deferring civilian raises.
Nor do these projections adequately fund the repair and maintenance of our lunar cratered streets, our crumbling sidewalks and curbs, or the rest of our deteriorating infrastructure.
Nor has the Mayor provided for adequate contributions to the City’s two massively underfunded pension plans that rely on overly optimistic investment returns and recently manipulated assumptions that lowered the rate of healthcare inflation.
Instead of facing reality, Antonio Villaraigosa focused his campaign speech on the permanent extension of Measure R, the half cent sales tax that was approved the voters in November of 2008. This tax, due to expire in 30 years, was designed to fund $40 billion of transportation and congestion relief programs.
Unfortunately, as a result of the bait and switch tactics by our Ever So Clever Mayor, this “pay as you go” tax has been turned into a weapon of mass financial destruction.
In 2010, the Mayor proposed the 30/10 Initiative (now known as America Fast Forward), a debt laden funding scheme “that would accelerate construction of 12 key Metro expansion projects originally scheduled to be built over three decades – and complete them by 2019.”
And then in 2011, our Mayor proposed LA Road Works where the City would borrow $800 million to repave our streets, once again secured by the future tax revenues derived from the Measure R sales tax.
Of course, these two fiscally irresponsible scams would require the payment of billions and billions of dollars in interest payments as well as fat fees for the politically blessed investment bankers, lawyers, and consultants.
The proposed financial chicanery is only made worse by the minor detail that the politically controlled Metropolitan Transit Authority does not have the organizational capabilities or resources to effectively manage $40 billion of projects, most likely resulting in massive cost overruns.
While our upwardly mobile Mayor waxed eloquently about the employment, transportation, and environmental benefits of his tax proposal, this acceleration of revenues to fund operating expenses is just another form of intergenerational theft, not very different from the banking of police overtime or the deferral of civilian raises.
Politically, the Mayor’s proposal faces two political hurdles.
The first obstacle is Governor Jerry Brown who must approve this proposal in order for it to be on the ballot. But Brown’s approval is very questionable as yet another ballot measure that increases taxes will result in even more voter fatigue, where voters just reject all of the tax related measures, including the Governor’s proposal to increase taxes.
And then there is the issue of whether two-thirds of the voters will approve the proposed permanent extension of the half cent sales tax.
But that begs the question for all Angelenos: Do you trust Mayor Antonio Villaraigosa, the Herb Wesson led City Council, and all their self serving cronies who occupy City Hall?
Of course, these are the same know-it-alls who are responsible for the projected five year projected budget deficit of $1.7 billion; the out of control increases in salaries, benefits, and pensions; our failing infrastructure; the $10 billion unfunded pension liability; the bogus statistics from the Fire Department; the raids on treasury of our Department of Water and Power, including the recent $16 million extortion related to the Elysian Park Reservoir; and numerous other “dirty deeds” that make Los Angeles the nation’s second most corrupt city.
So given our understandable lack of trust and confidence in the Mayor Who Broke LA and City Hall in general, Angelenos must demand a charter amendment that requires the City to “Live within Its Means,” an expression ironically used on numerous occasions by Mayor Villaraigosa in his role as President of the U.S. Conference of Mayors and Chair of the Democratic National Convention.
Or put in a more succinct manner: No Reform. No R.
(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: [email protected]) –cw
Tags: Jack Humphreville, LA Watchdog, Mayor’s Budget, City Budget, Mayor Villaraigosa
CityWatch
Vol 10 Issue 32
Pub: Apr 20, 2012