EASTSIDER-Looks like the LA City Council has started smokin’ some weed on the assumption that the Marijuana initiative will pass in November. Of course, math was never their forte even without mind altering substances. And as we know, the actual budget process is a closely held secret.
Here’s the Problem:
For context, we are living in the best of times if you’re an LA City politician. The developers are buying off elected officials at a record rate, housing and hi-rises are popping up all over like the giant popcorn bags at the movie theater (one refill for free), and as housing prices take off like the booster unit on a space shuttle, the city coffers haven’t seen life this good in years and years.
So what are these math majors going to do when the economy tanks again? We all know deep in our hearts that the frothy bubble of LA’s housing market is simply unsustainable. If history is a guide, the Council will stick their collective heads in the sand like ostriches, wringing their hands in helpless angst.
We’ve been here before in Los Angeles with the “great recession” of 2007-08 and it wasn’t pretty. The City Council was impotent and useless in their vain attempts to shift the blame and take fake actions. I see no reason it will be different this time.
Folks will lose jobs; they will discover what these taxes look like, not to mention property tax assessments on an $800,000 home in places like Echo Park, Silverlake, Glassell Park, Eagle Rock and the other chi chi areas. That 3% interest rate on a bank loan isn’t going to do much good to reduce their property tax bills.
And yet the Council can’t even balance this year’s budget! As Jack noted regarding the Mayor’s budget message, “on Wednesday, Mayor Eric Garcetti characterized his $5.6 billion budget for the upcoming fiscal year as a ‘strong spending plan that is balanced and responsible, with a record investment of $138 million to tackle the City’s homelessness crisis.’”
But “spending” is the operative word since the cumulative deficit over the next four years is expected to exceed $300 million as the growth in expenditures exceeds that of revenues. This compares to last year’s projection of a four year cumulative deficit of “only” $37 million.
When you discount the typical press conference horse puckey, the City budget doesn’t even balance in these best of times. Remember, to make this turkey fly, the City is proposing significant DWP Rate Increases, a tax to pay for the homeless that they have generated by dumping folks out of their homes to pave the way for new developments, and a tax to fix the City’s sidewalks. Read Jack’s column about Garcetti’s gee whiz speech in what the Mayor didn’t tell us.
And this litany doesn’t even count the proposed 1/2 cent additional Metro tax for the next 30 years, an LA County storm water tax, and a County parcel tax to fund Parks. All of this is on the November ballot, along with god knows what from the State.
While a lot of the ballot measures aren’t limited to the City of LA per se, if you add all of the City, County and Special District proposals, we are in for a lot of liability.
So, here’s a sample of what’s in store for us:
Rate Increases at LADWP
LADWP Increases of about 5% a year for five years (not including MWD ‘pass throughs.’)
While certain core rate increases are really needed to fix infrastructure problems like broken water mains and power outages, there are add-ons built into the transfer money to City Hall that pay for their pet projects. And the Council knows it.
The problem with the LADWP is that we don’t actually get to vote on any of this stuff -- the Council does all the voting.
LA City Sidewalk Fix
We don’t know exactly how much this will cost, but the City has already entered into a billion dollar plus legal settlement on the issue, while they have only set aside a token of what is needed in this year’s budget. We know they will be back for more money, be it this November or by some sleight of hand. We’ll see if they are bold enough to actually do a tax increase.
A Billion Dollars in Bonds for the LA River
This was the much-hailed plan where the Mayor went to Washington and allegedly got a whopping $1 billion to fund the project. But most of the money has disappeared, leaving the City holding the bag.
So it looks like a Community Redevelopment Agency style bond money coming down the road. Not a direct tax increase, but guess who’s on the hook if the math doesn’t work out? Taxpayers. Remember that LAUSD bond measure we got hit with?
And by the way, the reality is that this project is only going to benefit the rich anyhow.
A Homeless Plan includes $100 million just for the City -- with no idea where the money will come from.
While the City has set aside $30 million this year, although costs will actually be around $100 million just for the City, both the City and County are looking for funding.
Maybe a new tax, or a fee, but the bill is going to have to be paid.
Metro Tax Increase
I particularly like this one, since they are essentially doubling down on the existing $9 billion 1/2 cent sales tax that produced a ten percent drop in usage.
How About a County Storm Water Tax
For those who track political goings on, this is the one that was laughed off the ballot in 2013 when it got tagged with a line to the effect that, “God made the rain, and it took LA County to figure out how to tax it.” Smart money says they will avoid the November ballot and go for it later.
What I find galling is that all of these increases will definitely not benefit us middle and lower income folks.
Balanced budget? I don’t think so.
Here’s a thought -- hold on tight to your money, read the fine print, and don’t believe a word of the massively funded lobbyist campaigns that are going to be launched for the November ballot. AND VOTE! -- preferably for Bernie!
(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.