The Pols, the Hucksters, the City Hall Charlatans be Damned … Los Angeles Must “Live Within Its Means!”

LA WATCHDOG - The City’s very solvency is the most important issue facing the City of Los Angeles.  

And yet none of the five candidates for Mayor have presented any specific details on how they would balance the budget, finance the maintenance and repair of our lunar cratered streets and the rest of our deteriorating infrastructure, and fund the City’s two pension plans that are underwater to the tune of $10 billion, and that is based on overly optimistic rates of return.  

The Mayor’s Proposed Budget attempts to cure the structural deficit of $238 million that is the result of huge increases in salaries, benefits, and pension contributions. But that budget gap is more than $1 billion when adjusted for overly optimistic revenue projections, understated employee related expenses, and the failure to adequately fund our crumbling infrastructure and massively underfunded pension plans. 

And over the following four years, the City is forecasting a cumulative deficit of over $1 billion, and that overly optimistic projection is based on the same set of bogus assumptions as the Mayor’s Proposed Budget.

However, if the wannabe mayors detailed their specific solutions, the City’s special interest groups would go ballistic if they were the target of any budget reductions.  

But we can offer these five candidates an easy way out: endorse a charter amendment for the March ballot that will require the City to “Live Within Its Means,” an expression used on numerous occasions by Mayor Villaraigosa as he has crisscrossed the nation.

So rather than blathering on about “fraud, waste, and abuse” or speculating about the myth of millions in uncollected revenues, the candidates can endorse the “Live Within Its Means” charter amendment as outlined in the following Term Sheet.

This will allow the Mayor and the City Council to consider and develop the Budget for the year beginning July 1, 2013 in a reasoned way that addresses the City’s solvency and its $20 billion Black Hole.

Of course, the candidates for Mayor may tell us one thing and do another, especially after the lobbyists and special interest groups corner the Mayor and the Council in the polluted bowels of City Hall.

But without a charter amendment that requires the City to “Live Within Its Means,” the odds of Measure R being extended or any new taxes being approved by the voters are slim, very slim indeed.

No Real Reform: No R and No New Revenues.  

Here’s the plan.


The City will be required to develop and adhere to a Five Year Financial Plan (the “Plan”) for the General Fund, all Special Revenue Funds, and the Budget, excluding the three proprietary departments. The Plan will include detailed information, including, but not limited to, income statements, balance sheets, cash flows, and levels of outstanding debt.  

The Plan will also incorporate the financial requirements of the Infrastructure Plan, the Pension Funding Plan, and all other phases of the City’s operations.  

Each year, the City will be required to approve a two year Budget.

The Plan and the Budget are required to be balanced, where revenues exceed expenses, at all times.

The City will develop an Infrastructure Plan that will detail the financial requirements necessary to allow our infrastructure to be in a “good to excellent condition” by June 30, 2024.  Infrastructure includes, but is not limited to, streets, sidewalks and curbs, parks, street lights, buildings and facilities, sewers, storm water drainage, motor vehicles, and information technology systems.

The Infrastructure Plan will also include the budget for capital expenditures.

The City will develop a Pension Funding Plan that will detail how the City will fully fund its two underfunded pension plans (the Los Angeles City Employee Retirement System and the Fire and Police Pension Plans are only 72.6% funded) by June 30, 2024, using reasonable assumptions consistent with other pension plans.

After June 30, 2024, the City will maintain its infrastructure in a “good to excellent condition” and its pension plans will be at least 100% funded.  

The Plan and the Budget will require the City to have actual funding sources to finance any increases in spending or decreases in taxes.  

The Plan, the Budget, the Infrastructure Plan, and the Pension Funding Plan (collectively, the “Plans”) will be prepared based on Generally Accepted Accounting Principles.

The Mayor and a majority of the City Council will be required to approve the Plans.  

The Controller and the City’s independent accounting firm will each be required to attest that the Plans have been prepared in accordance with Generally Accepted Accounting Principles.

The Controller and the City’s independent accounting firm will each be required to attest that the Plan and the Budget are balanced, where revenues exceed expenditures.

Within 60 days of the end of each fiscal quarter (September 30, December 31, and March 31), and within 120 days of the fiscal year end (June 30), the Controller will be required to affirm that the Budget is balanced and is projected to be balanced in the future.    

The City Attorney will be required to attest that the Plan and the Budget meet all legal and regulatory requirements, including that all transfers involving City departments are legal, including those with the three Proprietary Departments.

The General Managers of all departments will be required to approve their sections of the Plans.

The General Managers of all departments will be required to notify the Mayor, the City Council, the Controller, and City Attorney if their department’s budget is not balanced at any point in time or is inconsistent with the Plans.

The Neighborhood Councils will be notified of all approvals and any notifications indicating that the Plans are not balanced.  

The City will have community presentations at least four times a year detailing the status of the Plans.

The Plans will be updated annually.

Beginning June 30, 2014, the City will be required to maintain a Reserve Fund equal to at least equal to 5% of General Fund Revenues.

The City will be required to maintain its existing bond ratings, and take all measures necessary to maintain such bond ratings.

In the case of a natural disaster, the target date envision by the Infrastructure Plan may be extended for one year.  

The City bears the burden of proof that the Plan, the Budget, the Infrastructure Plan, and Pension Funding Plan are consistent with a balanced budget, where revenues exceed expenditures based on Generally Accepted Accounting Principles.  
(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 -- He can be reached at: –cw

Tags: Jack Humphreville, LA Watchdog, Live Within Its Means, City, Los Angeles, city budget

Vol 10 Issue 37
Pub: May 8, 2012