Tue, May

2015: Another Year of Kicking the Can Down the Road


LA WATCHDOG--On April 9, 2014, the LA 2020 Commission endorsed a series of actionable recommendations designed to “enhance transparency and accountability in City Hall, put the City on a path to fiscal stability, and renew job creation in Los Angeles.”   

In January of 2015, City Council President Herb Wesson buried the Commission’s report, including the recommendations involving the our City’s finances, its pension plans, the governance of our Department of Water and Power, and the updating of the City’s Community Plans. 

LA 2020 called for the creation of the Office of Transparency and Accountability to oversee our cash strapped City’s finances.  But Paul Krekorian, the chair of the Budget and Finance Committee, tells us that the city’s budget is balanced, despite the fact that there is no plan or money to repair our lunar cratered streets and that the City raided its rainy day Reserve Fund for $150 million despite record tax revenues. 

The Commission also called for the establishment of a “Commission on Retirement Security” to “review the City’s retirement obligations in order to promote an accurate understanding of the facts” and to make “concrete recommendations on how to achieve equilibrium on retirement costs by 2020.”  This is a reasonable suggestion as the City’s two pension plans are underfunded by $13.5 billion (assuming a more realistic investment rate assumption of 6½%), representing a funded ratio of only 71%. 

The city is also underfunding its pension plans by at least $400 million a year by relying on the overly optimistic 7½% investment rate assumption, a rate that Paul Koretz, the chair of the Personnel Committee believes is too low since he is smarter than Warren Buffett who recommended a rate of 6½%. 

This twelve member blue ribbon commission, including IBEW Union Bo$$ Brian d’Arcy, called for the establishment of an independent, professionally staffed Los Angeles Utility Rate Commission that would appoint the General Manager and set rates with the intent of limiting the interference in the operations and finances of DWP by City Hall. To the surprise of no one, Felipe Fuentes, the chair of the Energy and Environment Committee, ignored this reform as the City continues to use DWP and its Ratepayers as an ATM. 

The LA 2020 Commission also called on the City to update its 35 Community Plans every five years.  This would allow residents, businesses, investors, and City Hall to have a clearer understanding of the zoning rules and regulations so that they are not “subject to the whims of special interests, nimbyism, and individual elected officials.”  However, reform has been rejected by Jose Huizar, the chair of the Planning and Land Use Management Committee, as the real estate speculators and developers, their lobbyists and lawyers, contractors, and their cronies has been a major source of campaign cash. 

While Mayor Eric Garcetti and the Herb Wesson (photo right) led City Council will close out 2015 with high fives knowing that they snookered us for yet another year, 2016 has the potential to be very different. 

The City’s finances are under pressure as this year’s budget is already $100 million in the red because of excessive legal settlements.  Next year, the City will have to finance its new labor agreement with the City’s civilian workers that will end up costing us over $100 million beginning in 2017.  Pension contributions will increase as the return on the pension plans’ investment portfolios are significantly below the overly optimistic investment rate assumption of 7½%. 

DWP will be front and center because of the five year, 30%, $1.4 billion increase in our utility rates.  And the pressure for reform has increased as the charter mandated Industrial, Economic, and Administrative - overseen by Controller Ron Galperin, Garcetti, and Wesson - has called for a change in the governance of the inefficient DWP because there are no clear lines of authority.  

Wesson and Garcetti may tell us to buzz off once again.  But the need for our votes in the November election will provide us mushrooms (in the dark covered with manure) with considerable leverage. 

In November, we will have the opportunity to approve the Neighborhood Integrity Initiative that will require the City to do “real planning,” eliminating the right of the local councilmember to “up-zone” gridlocking developments that are inconsistent with our neighborhoods.  This initiative will be opposed by our Elected Elite who are addicted to the campaign cash they receive from the real estate “gang.”    

There will also be several ballot measures to increase our taxes, despite the fact that we are one of the highest taxed states in the country with one of the lowest growth rates.  This includes a new half cent increase in our sales tax to finance transportation projects, of which 25% is returned to the City.  

In March of 2013, 55% of the voters rejected a half cent increase in our sales tax as we did not trust City Hall which refused to reform its finances and Live Within Its Means.  This was in spite of massive campaign contributions by the real estate community to Herb Wesson’s campaign slush fund in support of Proposition A.  

In November, we will be able to send a clear message by voting NO on the proposed tax increases and YES on the Neighborhood Integrity Initiative. 

In 2015, Garcetti, Wesson, and the City Hall gang kicked the can down the road.  In 2016, we can kick them in the can. 


(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  [email protected])






Vol 14 Issue 1

Pub: Jan 1, 2016




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