BUDGET LA - On Monday, the Budget & Finance Committee (B&F) got more truth that it has heard in many months.
B&F heard Miguel Santana’s “Four-Year Budget Outlook and Update to the Three-Year Plan to Fiscal Sustainability.” Mr. Santana has been going over the state of the City’s Financial Condition at several meetings for the past month. Although everyone blames the City’s deficits on the Great Recession, the fact is that the City’s General Fund income has been unchanged, at $ 4.4 billion for every year of Mr. Villaraigosa’s tenure as Mayor.
No matter that the Mayor and City Council have decreased City expenses by negotiating concessions from City Employees; decreasing our workforce from 36,667 (FY2007) to 32,274 (FY 2012) employees by:
1. Employing “Managed Hiring” in which resignations and “natural” retirement positions are deleted,
2. Appling the Early Retirement Incentive Program (ERIP) which removed 4,900 of the most experienced (and, of course) most expensive employees from City service.
3. Decreasing the City’s contribution to the employee’s Pension Plans by requiring employees increase their contributions to their personal pension plans (which originally ranged from 4% - 7%) to 11% of their base salary.
Every one of the last six years, employee contracts (COLAs) and relentlessly increasing Pension Costs have “refilled the pot” with expenses rising, over and over again, above revenue. Still, the Mayor continues to propose and the City Council continues to approve Budgets that are $ 250 million to $ 400 million more than expected revenues.
This year, the bottom line is that the City faces a $ 220 million “Structural Deficit” at the start of FY2012-2013 (July 1, 2012). Mr. Santana points to the fact the contracted increases in expenses are rising at 4.3% while projected (and this projection may be over-estimated) increases in income may be less than 2.0%. He is hoping for a 3.0% increase in revenues each year but that is only a hope … we can not be sure.
He said that the City has never met its goal to create and protect a Reserve Fund of 5% of the General Fund (Just coincidentally, that would be $ 220 million.) He points to the three decreases in the City’s Bond Ratings (currently AA-minus) which depend, among other things, on a healthy Reserve Fund. Our ability to issue Bonds and the cost (Interest Rate) of those Bonds depends on good Bond Ratings…and L.A.’s Bond Ratings are not the best.
Mr. Santana predicts that we may be able to balance the budget in FY2012-2013 (between July 1, 2012 and June 30, 2013) by:
1. Improved collection methods (estimates vary from $ 20 million to $ 150 million in “new”
revenue,
2. Doubling the Documentary Transfer Tax (the tax paid when a property is sold) from
$ 4.50 per $ 1,000 Sale Value to $ 9.00 per $ 1,000. (estimated “new” revenue would be
about $ 100 million per year.
3. Increasing the Parking User’s Tax from 10% to 15% (estimated “new” revenue would be
about $ 40 million per year.
… but we will still need major increases in income (more taxes, fees, etc.) and/or major cuts in personnel and services are very necessary to balance the future budgets.
Labor Representatives at the meeting spoke of the $ 800 million or more that City Employees have saved the City over the past five years by the measures described, above, plus the reassurances of Management that their efforts were sufficient and further demands would not be made. They were aware that the Mayor was predicting major layoffs in FY 2012-2013 and viewed that as breaking a promise.
Departments interviewed by the Neighborhood Council Budget Advocates (NCBAs) said that they had already eliminated as much as they could and further financial cutbacks would produce significant decreases in their delivery of services.
The B&F Members had copies of the NCBA White Paper and its Appendix which itemized recent Controller’s Audits. The Audits suggest a possible $100 to $150 million in “new” money from better collection methods.
They heard Ron Galperin, Chair of the Commission on Revenue Enhancement (CORE), suggest that the CORE recommendations could gather $ 100 million, immediately; some of that is the same as the Controller’s suggestions. He deplored the absence of an Inspector General; an office approved and funded over a year ago.
The CAO brushed these documents aside, with an underscored statement that “…while there is room for improvement in the City’s billing and collections operations, the idea that the City’s financial woes and structural deficit can be solved through improvements in collections is a myth.” Well, Mr. CAO, no one said this was a “cure all” but don’t you think we should work on it, diligently?
With all of this truth before them, the people in the room acted as if they were enemies when they all have the same goals:
1. To balance our City’s Budget and create a Sustainable, Balanced Budget,
2. To produce more commerce,
3. To make our City employee and community jobs secure and
4, To permanently improve our quality of life.
On Friday, April 20 the Mayor will make public his FY2012-2013 Budget Proposals and on Friday, April 27, the Budget & Finance Committee will begin reviewing, dissecting, taking testimony and deliberating the Mayor’s Budget in detail. We will see how or if Performance Based Budgeting Data are incorporated in the Planning Department and Bureau of Street Lighting contributions. We will see if any Performance Based Data accompany the material for any other departments. All departments have been asked to gather Performance Base Data materials.
Now is the time. It is the time for all concerned parties to get together, to work together and to keep the promise of Los Angeles alive and thriving. Can you “follow the money?” That is where our City will go.
(Dan Wiseman is a long-time neighborhood council activist an alternate on the Neighborhood Council Budget Advocates Committee and secretary of the Los Angeles Neighborhood Council Alliance.) –cw
Tags: City Budget, Miguel Santana, Mayor Villaraigosa, Mayor’s Budget, NCBA
CityWatch
Vol 10 Issue 32
Pub: Apr 20, 2012
