LA WATCHDOG--The City of Los Angeles is hemorrhaging cash. So why are Mayor Eric Garcetti and the City Council entering into deals that are providing almost $1 billion of tax breaks for projects that already have excellent rates of return for their deep pocketed investors?
LA WATCHDOG--One of Mayor Eric Garcetti’s Back to Basics Priority Outcomes was the repair our streets. But after almost five years as Mayor, very little progress has been made as “nearly 40% of our City streets have a D or F rating and more than 8,700 miles of streets in the City need rehabilitation” according to a recent motion filed by Councilmen Mitch Englander and Joe Buscaino.
LA WATCHDOG--At the conclusion of a six hour meeting of the City Council’s Energy, Climate Change, and Environment Committee (formerly known as the Energy and Environment Committee) to discuss the City’s botched rollout of the monopolistic Exclusive Trash Franchise system, most came away with the impression that little had been accomplished other than letting the Committee members blow off a lot steam.
LA WATCHDOG--The five members of the City Council’s Energy, Climate Change, and Environmental Justice Committee will have the opportunity on Tuesday afternoon at City Hall to unload their frustrations on the seven waste haulers over the 28,000 service complaints received by the City in connection with the botched rollout of the City’s monopolistic Commercial Waste Exclusive Franchise System.
LA WATCHDOG--While America gears up for Super Sunday where the Philadelphia Eagles are looking to upset the England Patriots, few realize that the National Football League and the four television networks (CBS, NBC, Fox, and ABC/ESPN/Disney) are the primary culprits in the rapid rise in our cable bills.
LA WATCHDOG--One of the major arguments that the proponents of establishing the municipally owned Bank of Los Angeles is that this new financial institution will service the pot industry by taking deposits and facilitating credit card transactions. But it seems that their judgment has been clouded by smoking too much dope.
LA WATCHDOG--The City of Los Angeles is proposing a $103 million tax break to subsidize the development of a $454 million, 1,130 room hotel complex at the corner of Figueroa and Pico, strategically located in the booming South Park area of DTLA, directly across the street from Gilbert Lindsey Plaza and the Los Angeles Convention Center.
LA WATCHDOG--Alexander Nazaryan’s Op-Ed column in the Los Angeles Times, Let’s Compare Eric Garcetti and Bill de Blasio, paints a positive image of Mayor Eric Garcetti, an “embodiment of pragmatic politics,” compared to New York City Mayor Bill de Blasio, an “ideologue driven by a self-serving fervor who easts his pizza with a knife and fork.”
LA WATCHDOG—(Editor’s note: Jack Humphreville is currently snowed in on the east coast. LA’s Watchdog will return on Thursday. In the interim, here’s a replay of Jack’s most read column of 2017.) Why are Councilmembers Paul Krekorian, the Chair of the Budget & Finance Committee, and Paul Koretz, the Chair of the Personnel Committee, and Mayor Eric Garcetti unwilling to be transparent about the City’s pension crisis that contributes to its never ending Structural Deficit and is crowding out basic services to Angelenos?
LA WATCHDOG--It has been over a year since Miguel Santana announced that he was resigning as the City Administrative Officer to become the President and Chief Executive Officer of the Los Angeles County Fair Association. And despite the call for a nationwide search for the most important job in the City of Los Angeles, we still do not have a permanent City Administrative Officer which makes you wonder why.
LA WATCHDOG--Hollywood is for sale!
LA WATCHDOG--The unfunded liability for the Department of Water and Power’s retirement liabilities improved as a result of the 12.7% return on invested assets for the fiscal year ending June 30, 2016. As a result, the shortfall decreased from $2.8 billion (81% funded) to $1.8 billion (88% funded).
LA WATCHDOG--As a result of Raul Bocanegra’s resignation from the State Assembly, taxpayers will have to foot the bill for a special election to fill his seat. This will more than likely include two trips to the polls, a primary and then a runoff, costing taxpayers an estimated $2 million, if not more. And this does not take into consideration the distraction caused by this special election or the campaign dollars spent by the aspiring candidates. (Photos above: State Senators Kevin de Leon, left and Ricardo Lara)
LA WATCHDOG--On Tuesday, November 28, the politically appointed Board of Water and Power Commissioners rubber stamped the transfer of $242 million of Ratepayer money from the DWP’s debt burdened Power System to City Hall without any meaningful discussion.
LA WATCHDOG--As a result of an expose in the Los Angeles Times that disclosed numerous incidents of groping and sexual harassment, State Assemblyman Raul Bocanegra (D-Pacoima) announced that he will not seek reelection and that he will resign from the California State Assembly on September 1, the end of the legislative session.
LA WATCHDOG--Why are Councilmembers Paul Krekorian, the Chair of the Budget & Finance Committee, and Paul Koretz, the Chair of the Personnel Committee, and Mayor Eric Garcetti unwilling to be transparent about the City’s pension crisis that contributes to its never ending Structural Deficit and is crowding out basic services to Angelenos?
LA WATCHDOG--For the last four seasons, three million Southern California households have been unable to watch the Dodgers in the comfort of their own homes because of a business dispute between two media giants, Charter Communications, the owner of Time Warner Cable now doing business as Spectrum, and Direct TV, a wholly owned subsidiary of AT&T, the world’s largest telecommunications company with a market capitalization exceeding $200 billion.
LA WATCHDOG--Ever since The New York Times broke the story on October 4th about the sexual harassment and rape allegations against Hollywood mogul Harvey Weinstein, numerous other victims have surfaced, naming not only Harvey Weinstein, but other Hollywood predators, including filmmaker Brett Ratner, actor Kevin Spacey, and director James Toback. And no doubt there will be others who have used their power and status to prey on those lower down on the food chain.
LA WATCHDOG--On April 20, 2018, Mayor Eric Garcetti will submit his Proposed Budget for the fiscal year beginning on July 1, 2018 to the City Council. Between now and then, the Mayor and the City Council will develop the budget behind closed doors without any input from the public, including the charter authorized Neighborhood Councils.
LA WATCHDOG--On Monday, The Weinstein Company (the “Company”) “announced that it has entered into a preliminary agreement with Colony Capital (“Colony”) to provide an immediate capital infusion into the Company. In addition, the Company has entered a negotiating period with Colony Capital for a potential sale of all or a significant portion of the Company's assets.”
The Weinstein Company Announces Investment from Colony Capital.
The Weinstein Company has been under siege since early October when The New York Times revealed sexual harassment and rape allegations against Harvey Weinstein, the Company’s founder, co-chairman, and celebrated rainmaker.
As a result of Harvey Weinstein’s rampant sexual misconduct, the Company in its current form is essentially out of business. After all, what self-respecting member of the Hollywood community, whether it be the talent or their agents, would work with (or even talk to) this sexual predator.
LA WATCHDOG--The four Garcetti appointed trustees of the Board of Administration of the Los Angeles City Employees’ Retirement System (“LACERS”) have demonstrated that they have placed their personal interests ahead of those of the almost 43,000 members who are dependent on LACERS for their retirement benefits.
LA WATCHDOG--On April 20, slightly less than seven months from now, Mayor Eric Garcetti will submit his proposed budget for the fiscal year beginning July 1, 2018 to the City Council for its consideration. While the Budget and Finance Committee will hold hearings over the following weeks, the budget is already a done deal, having been negotiated behind closed doors between the Mayor and City Council with input from the leaders of the City’s unions.
LA WATCHDOG--On September 13, Controller Ron Galperin released a first ever Report Card for our Department of Recreation and Parks. It was based on interviews by consultants with over 3,700 park using Angelenos and onsite reviews of 40 of our 95 community parks. (Photo above: Los Angeles Controller Ron Galperin announces Rec & Parks Report Card.)
Overall, these 40 community parks received a grade of B (an 86) based on the equal weighting of 12 measurements. But this hides the fact that many Angelenos are concerned about their safety in the parks (46%) and the poorly maintained bathrooms (37%), especially in three of the five surveyed areas.
Of the 40 parks that were surveyed, 16 (40%) received a D on the restroom maintenance. But that percentage leaped to 57% (16 of the 28 parks) for the East San Fernando Valley, Metropolitan, and South LA / Harbor Areas. On the other hand, the West San Fernando and Westside Areas had no failing restrooms and had an overall of grade of a B on restrooms.
One the underlying reasons for the lack of safety and the foul restrooms is that the Department’s budget has been decimated by City Hall.
Under the City’s “full cost recovery” program that was instituted in 2010 by Mayor Villaraigosa and then City Council President Eric Garcetti, $410 million has been diverted from the operating budget of the Department of Recreation and Parks.
This year alone, Recreation & Parks is being hit up for $71 million, including $25 million for utilities (water and power), $2 million for refuse collection, and $44 million for “General Fund Reimbursement” to cover pension contributions, human resource benefits, and other related expenses. This represents 38% of the charter mandated appropriation of $186 million.
As a result, the Department’s headcount has been reduced by almost a third, resulting in less maintenance and even fewer programs and activities.
But the “full cost recovery” program does not apply to any City department other than the Library, whose appropriations, like those of Recreation and Parks, are mandated by the City Charter. However, in 2011, 63% of the voters approved Measure L which increased the Library’s charter mandated appropriation by 71%.
LA WATCHDOG--On Thursday, Amazon announced that it was opening a search for second headquarters city (HQ2) in North America and was requesting proposals from interested state/province, county, and city governments by October 19.
LA WATCHDOG--The rollout of the City’s Commercial Waste Exclusive Franchise System has caused sticker shock to many businesses, multi-family buildings, and homeowner associations as they have been bushwhacked by rates that in “many instances ….. have doubled, tripled, and even quadrupled, with the inclusion of new fee assessments that did not exist under the previous private hauler agreements” according to a letter sent by Councilmember Mike Bonin to Councilwoman Nury Martinez, the Chair of the Energy, Climate Change, and Environmental Justice Committee of the Los Angeles City Council.
LA WATCHDOG--It is not government’s obligation to provide services, but to see that they are provided. – New York Governor Mario Cuomo
LA WATCHDOG--Mayor Eric Garcetti and the four other members of the Executive Employee Relations Committee (Council members Wesson, Englander, Krekorian, and Koretz) are negotiating new contracts with the Coalition of City Unions and the Police Protective League. The current agreements expire on June 30, 2018.
LA WATCHDOG--As part of LA’s Clean Energy Future program, Mayor Eric Garcetti and the Los Angeles City Council and its Energy, Climate Change, and Environmental Justice Committee (formerly known as the Energy and Environment Committee) have called for the Department of Water and Power to study and develop a plan for DWP to generate 100% of its power requirements from renewable energy resources.
LA WATCHDOG--President Trump is threatening to trash the 23 year old North American Free Trade Agreement (“NAFTA”) because he is bent out of shape by our $63 billion trade deficit with Mexico. But that would be a huge error and not in the best interests of the United States and Southern California.
LA WATCHDOG--Our streets are some of the worst in the country, hardly worthy of a world class city that will be hosting the 2028 Olympics. Yet the repair and maintenance of our 28,000 lane miles of residential and arterial streets is not a priority for City Hall.
Over the last two years, Mayor Eric Garcetti and the Budget and Finance Chair Paul Krekorian have cut the funding from the General Fund to the Pavement Preservation Program by over 50% (from $52.3 million to $25.5 million). At the same time, General Fund revenues have increased by $435 million.
Underlying the budget cut for the Pavement Preservation Program is the ever growing expenditures for personnel, ranging from increases in salaries; pension contributions; health, dental, and other benefits; workers’ compensation benefits; and police overtime.
For this year alone, the $213 million increase in personnel expenditures exceeded the growth in General Fund revenues by $10 million. This shortfall results in a “service insolvency,” where the City is able to pay its bills (primarily salaries and benefits), but basic services are neglected or “crowded out.” These services include the maintenance of our streets, sidewalks, parks, urban forest, and the rest of the City’s infrastructure as well as desperately needed investments in computer technology and management information systems.
Overall, the budget for the Pavement Preservation Program has been cut 17% over the past two years, from $157 million to $131 million. Sources of revenue other than the General Fund ($25 million) have remained stable, including the Special Gas Tax ($65 million), local return revenues from the Metro related sales taxes ($32 million from Measure R and Proposition C),and the Street Damage Restoration Fee ($9 million).
The City claims that this cut in the Pavement Preservation Program will not result in a lower level of service. Through “operational efficiencies and cost effective methods of implementation,” the City will be able to repair 2,400 miles of streets, up from 2,200 in in 2015.
The Pavement Preservation Program is designed to maintain the condition of our streets in their current average poor condition. But it does not address the 8,200 miles of failed D and F streets that are in need of very expensive resurfacing or reconstruction.
The ticket to repair and maintain our failed streets is estimated to be in the range of $3 to $4 billion over the next fifteen to twenty years. This will require a tax increase of about $250 million a year. This is the equivalent of a 5% increase in our property taxes, a half cent increase in our sales tax to 10%, or a parcel tax of $320.
There are ways to eliminate or mitigate this general tax increase.
The City could allocate a greater share of the $250 million in Local Return revenue from the Metro related sales tax, especially those related to Measure R (2008) and Measure M (2016) to our failed streets. The same for the local return of an estimated $100 million from the State’s new $5.2 billion a year gas and vehicle tax. The City could also be more aggressive in collecting the Street Damage Restoration Fee as was recommended by Controller Ron Galperin.
The City could also allocate a portion of its increased budget revenues to our failed streets. Over the next four years, revenues are projected to increase by $650 million.
Alternatively, we would benefit from outsourcing the repair and maintenance of our streets to independent contractors who would not be burdened by the City’s overly restrictive work rules. They are probably more efficient than the poorly managed Bureau of Street Services that was panned in Controller Galperin’s 2014 audit.
Before the City considers another massive tax increase, it needs to not only develop a detailed operational plan for the repair and maintenance of our 28,000 miles of streets, but also a comprehensive financial plan for the City that considers alternative sources of financing and eliminates the “service insolvency” that adversely impacts our quality of life.
Over the last year, Angelenos have been hit with $1.6 billion in new taxes. This includes our share of the tax increases implemented by the Metro and the County (40%) and the State (10%). This is the equivalent a 30% increase in our property taxes or a 2½ cent increase in our sales tax.
Can we afford to be hit with another massive tax by the City?
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: email@example.com.)
LA WATCHDOG--On Tuesday, Los Angeles City Council President Herb Wesson made a motion to look into the feasibility of creating the “Bank of Los Angeles” with a vision statement of “financing the building of affordable housing,” making loans to “small business entrepreneurs,” and accommodating the cannabis industry and its banking requirements.
LA WATCHDOG--In an Op-Ed column Tax Land, Not Development last week in the Los Angeles Times, three professors at the UCLA Luskin School of Public Affairs have proposed a “flat tax of $3 per day on every parcel in the City” to fund affordable housing in the City of Los Angeles. This “small land tax” would replace the proposed linkage fee on new residential and commercial development that would raise “only” $100 million a year, an amount that the three professors deem insufficient to solve the City’s housing problem.
LA WATCHDOG--In his second inaugural speech that would make any upwardly mobile politician proud, Mayor Eric Garcetti took credit for the City’s economic recovery and promised us a glorious and prosperous future. But he was short on the details.
LA WATCHDOG--At the All Star break, our Los Angeles Dodgers have the best record (.678) in Major League Baseball, having won 61 games and losing only 29. Over the past month, they have notched 24 wins and only 4 losses, a winning percentage of an impressive 85.7% This streak included three game sweeps against the then first place Colorado Rockies and Arizona Diamondbacks, allowing the Bums to open a 7½ game lead over the second place Diamondbacks in the National League West.
LA WATCHDOG--One of the most frustrating things about driving in the City of Los Angeles is when a clueless or inconsiderate driver is unable to make it through the intersection before the light turns red, creating a gridlocked intersection. This results in even more congestion on our City’s already clogged streets, safety issues for both drivers (just ask Venus Williams) and pedestrians, increased pollution, and a bevy of frustrated drivers, many of whom express their displeasure by laying on their horns and making not so polite gestures with their hands and fingers.
LA WATCHDOG--On Monday afternoon of June 19, 2017, the Board of Water and Power Commissioners sent us a notice that they were holding a Special Meeting on the following day, Tuesday, June 20, at 11:30 in the morning, to approve the new contract between the Department of Water and Power and the IBEW, its domineering union that is led by campaign funding Union Bo$$ Brian d’Arcy.
LA WATCHDOG-- “There probably is more managerial ignorance on pension costs than any other cost item of remotely similar magnitude. And, as will become so expensively clear to citizens in future decades, there has been even greater electorate ignorance of governmental pension costs.” Warren Buffett (photo above), Berkshire Hathaway, 1975.
LA WATCHDOG--At a hastily called special meeting on Tuesday, the politically appointed Board of Water and Power Commissioners approved, with very little discussion, a new five year labor agreement between our Department of Water and Power and the IBEW, the union that represents over 90% of DWP’s employees.
UNDER THE RADAR--At 12:56 on Monday afternoon, June 19, 2017, we were notified by email that the politically appointed Board of Water and Power Commissioners will hold a Special Meeting on Tuesday, June 20, 2017 at 11:30 in the morning to approve a resolution authorizing Approval of Amendments to the Memoranda of Understanding for ten bargaining units represented by IBEW Union Bo$$ d’Arcy for the term October 1, 2017 through September 30, 2022.
LA WATCHDOG--Why has Councilmember Paul Krekorian, the Chair of the Budget and Finance Committee of the Los Angeles City Council, refused to address the massive unfunded pension liability of the City’s two pensions funds and the ever increasing annual required pension contributions that will devour the City’s budget and adversely impact the quality of life of future Angelenos?
LA WATCHDOG--On Wednesday, the City Council approved, behind closed doors, a Settlement Agreement involving a class action lawsuit against the City of Los Angeles and the Department of Water and Power that alleged that the City had illegally collected over $1.8 billion in Transfer Fees from DWP and its Ratepayers subsequent to the approval of Proposition 26 (The Supermajority Vote to Pass New Fees and Taxes) in November of 2010.
The plaintiffs also requested that the Transfer Fee be eliminated since it was not approved by the voters.
But once again, we are getting the shaft.
Under the terms of the settlement, DWP will place $52 million into a Settlement Fund. But at the end of the day, only $40 million will be available to the Ratepayers as the ambulance chasing lawyers who “represented the best interests” of the Ratepayers will be paid at least $10 million from the Settlement Fund.
The Net Settlement Fund of $40 million represents a meager 2.2% of the $1.8 billion that Ratepayers forked over to our profligate City to fund ever increasing salaries and pension contributions.
For the average household that uses 500 kilowatt hours a month, the total refund is whopping $10. This compares to $460 that the average Ratepayer forked over to DWP to finance the Transfer Fee over the past seven years.
LA WATCHDOG--Our cash strapped City is “exploring the implementation” of a Child Savings Account program for each public school kindergarten student who lives in the City of Los Angeles. This program would cost $2.7 million a year as $50 will allocated to each of the 44,000 (charter and non-charter) kindergarten students in the Los Angeles Unified School District. This amount includes matching funds for the 25% of the families who make an additional contributions, but does not include the 11,000 LAUSD students who do not live in the City.