---
[ ARCHIVE ](https://mail.citywatchla.com/archive)
# LA on Edge of Bankruptcy … What Happened to the Daylight?
May 14 2012
Written by Paul Hatfield.
[](https://www.addtoany.com/share)
PERSPECTIVE - Every career politician currently serving in City Hall will deny that bankruptcy is an option for the City of Los Angeles.
Don’t get me wrong – bankruptcy is something I would like to see the city avoid, but if our present officials do not deal with growing cost of retirement and health benefits, we will head down that path.
The problem is that the City Council and Mayor live in a virtual reality where public employee unions rule at any cost.
Many experts talk about the unfunded pension liability of public retirement plans and how it will bring municipalities down. They are correct. Unfortunately, the solid math behind these calculations is enough to make your eyes glaze over. If you ever want to get rid of houseguests who have overstayed their welcome, just talk about unfunded liabilities and they will be out the door within five minutes. I can offer a few other accounting subjects if you are interested or just invite me over for dinner and I will guarantee that the evening will end by 9 PM.
Unfortunately, most registered voters in Los Angeles react with the same disinterest when it comes to this complex subject. They don’t realize it is no different from the negative amortization that was at the root of much of the nation’s mortgage crisis. You can’t keep piling on accrued debt and not expect to pay the bill.
The city does not have the power to create money as the federal government does. If it does not restructure its labor contracts (either through bankruptcy or renegotiation) the only choices left are to pass these costs on to the residents in one of two ways: higher taxes and/or fewer services.
Since higher taxes are a hard sell (and who could blame taxpayers for their reluctance to pay more for incompetence), our elected officials are committed to reducing services.
The city’s Chief Administrative Officer, Miguel Santana, projects that retirement benefits will consume over 30% of the general fund within a few short years – that’s up from 20% today. That is a 50% increase in retirement costs with no services to show for the added drain on the city’s treasury. That is a ratio the public can understand, but it underreported in the local media and rarely discussed in town hall meetings with city officials.
That’s unfortunate.
As long as they can turn the lights on, take a shower, flush the toilet and drive on the streets, residents will not care if city employee compensation is strangling the general fund. They will not notice that services and quality of life are slowly but steadily eroding.
It is what I refer to as virtual bankruptcy. It is an insidious process that strips away expectations by gradually lowering the bar of service. Our leaders know that and are counting on us to not compare performance levels from year to year. For example, how frequently does the average person call for assistance from the fire department? Not very often. For most of us, we cannot recall how long it took for emergency services to respond to our last 911 call. There is no frame of reference.
Eventually, a tipping point will be reached. It will be similar to what many of us experience around early September. After over two months of diminishing daylight we suddenly realize that the days have become shorter – no more time for an evening walk after a hard day’s work; night closes in earlier; we hunker down by 7 PM and watch one-sided cable news shows to ward off the gloom.
[And just like in the Direct TV commercials, we get mad.](http://www.youtube.com/watch?v=7udQSHWpL88) We pick up the phone and call our city council members and give them an earful. They finally listen because our votes cannot be taken for granted any longer. If they don’t, they end up tarred and feathered.
So, the question is, when will night fall on the City of Los Angeles?
Will it be too late before we notice?
Will we all end up in anger management?
Will our officials be tarred and feathered?
*(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village. He blogs at Village to Village, contributes to CityWatch and can be reached at: phinnoho@aol.com)* –cw
Tags: Paul Hatfield, City Hall, City Council, bankruptcy, Los Angeles, unions, LA unions, Miguel Santana
CityWatch
Vol 10 Issue 39
Pub: May 15, 2012
[  ](https://mail.citywatchla.com/component/banners/click/115 "Brian Goldsmith Vertical R. Col")
[  ](https://mail.citywatchla.com/component/banners/click/107 "LA DWP | Save $4K, Green | Priority Ad")
[  ](https://mail.citywatchla.com/component/banners/click/114 "McKinney Campaign")
[  ](https://mail.citywatchla.com/component/banners/click/82 "LA DWP #2 (Power Savers)")
[  ](https://mail.citywatchla.com/component/banners/click/98 "Donna Tryfman - HS1-1")
[  ](https://mail.citywatchla.com/component/banners/click/97 "Home - LA DWP #2 (Pay Water Bill Help)")
[  ](https://mail.citywatchla.com/component/banners/click/111 "David DeJute Campaign")
[  ](https://mail.citywatchla.com/component/banners/click/112 "Anna Reitano Vertical R. Col")
## Get The News In Your Email Inbox Mondays & Thursdays
Message
[  ](https://mail.citywatchla.com/component/banners/click/113 "Rhonda Haymon campaign")
[  ](https://mail.citywatchla.com/component/banners/click/110 "Something You Should Know")
---
## Featured CityWatch Stories
[  ](https://mail.citywatchla.com/election-2024/33624-prosecutor-democrat-city-attorney-mckinney-makes-his-case-to-los-angeles-voters)
### [Prosecutor, Democrat, City Attorney? McKinney Makes His Case to Los Angeles Voters](https://mail.citywatchla.com/election-2024/33624-prosecutor-democrat-city-attorney-mckinney-makes-his-case-to-los-angeles-voters)
ELECTION 2026 - The race for LA City Attorney has been laced with political accusations and allegations that when close…
[  ](https://mail.citywatchla.com/voices/33595-the-firms-that-never-lose-inside-la-countys-4-billion-settlement-machine)
### [The Firms That Never Lose: Inside LA County's $4 Billion Settlement Machine](https://mail.citywatchla.com/voices/33595-the-firms-that-never-lose-inside-la-countys-4-billion-settlement-machine)
THE NAVARRO REPORT - Los Angeles County has paid, or promised to pay, nearly $5 billion to resolve childhood sexual abu…
[  ](https://mail.citywatchla.com/election-2024/33608-karen-bass-is-collapsing-but-does-los-angeles-know-what-its-getting-with-nithya-raman)
### [Karen Bass Is Collapsing But Does Los Angeles Know What It’s Getting With Nithya Raman?](https://mail.citywatchla.com/election-2024/33608-karen-bass-is-collapsing-but-does-los-angeles-know-what-its-getting-with-nithya-raman)
THE BOTTOM LINE - Bass is hemorrhaging voter confidence. But rejecting the incumbent and embracing Raman’s political ag…
[  ](https://mail.citywatchla.com/los-angeles/33626-the-fools-blame-game)
### [The Fools’ Blame Game](https://mail.citywatchla.com/los-angeles/33626-the-fools-blame-game)
THE VIEW FROM HERE - Angelenos do not use elections to plot a wiser course of conduct for Los Angeles, but rather they…
[  ](https://mail.citywatchla.com/los-angeles/33619-california-film-tax-credits-arent-enough-the-guilds-need-to-change-too)
### [California Film Tax Credits Aren’t Enough. The Guilds Need to Change Too.](https://mail.citywatchla.com/los-angeles/33619-california-film-tax-credits-arent-enough-the-guilds-need-to-change-too)
LONNIE’S VIEW - California used to be the center of the movie and television universe. If you wanted to make movies, yo…
---
## [ ARCHIVE ](https://mail.citywatchla.com/archive)
[  ](https://mail.citywatchla.com/archive/15339-early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles)### [Early Intervention and Jobs are Key to Stemming Chronic Homelessness in Los Angeles](https://mail.citywatchla.com/archive/15339-early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles)
### [Tucker Carlson and Gay Rightwinger Blame California Wildfires On Hiring LGBTQ People](https://mail.citywatchla.com/archive/18755-tucker-carlson-and-gay-rightwinger-blame-california-wildfires-on-hiring-lgbtq-people)
### [Anti-LGBTQ Veep Just Can’t Stop Talking about Mayor Pete](https://mail.citywatchla.com/archive/17690-anti-lgbtq-veep-just-can-t-stop-talking-about-mayor-pete)
[  ](https://mail.citywatchla.com/archive/15316-news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties)### [NEWS PULSE: ‘Corrupt System’ Reason for Not Voting in 2018 … Majority Wants More Than Two Parties](https://mail.citywatchla.com/archive/15316-news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties)
[  ](https://mail.citywatchla.com/archive/10245-dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles)### [Dead Dog Set on Fire … Sparks Fears for Strays in Los Angeles](https://mail.citywatchla.com/archive/10245-dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles)