Photo: A rider aboard the ferry on San Diego Bay admires the city skyline in the morning. Credit: Don Bartletti / Los Angeles Times

LA Times Blog, July 18, 20100

To tourists, San Diego is a mecca. To denizens of the Los Angeles Basin, it’s their favorite weekend getaway.

But to government wonks, San Diego is ground-zero for the growing national debate about whether taxpayers can — or should — continue to provide the pensions and retiree health benefits that public employees were promised during more prosperous (and more confident) times.

After years of litigating, negotiating and arguing, the city still has a $2.2-billion unfunded pension liability and a $1.3-billion unfunded liability for retiree health benefits, according to a recent grand jury report. Progress toward whittling down those numbers was largely wiped out by the real estate bust and global recession.

Pension payments could gobble up half the city’s annual budget in 15 years, the grand jury said. In other regions, talk of pension reform is something that pops up at budget season and then recedes. In San Diego, it’s year-round. The editorial page of the San Diego Union-Tribune acts as the command-and-control center for the forces demanding that pensions be reduced.

Take last month:

+The grand jury suggested the city may need to file for bankruptcy (an idea dismissed by the city attorney, who says no legal precedent exists for reducing pension obligations that way).

+City Atty. Jan Goldsmith launched a lawsuit to whittle down the city’s share of pension fund payments based on a half-century-old legal opinion found gathering dust in the files.

+The taxpayers association released a report showing city pensions are better than military pensions.

+ A City Council member began a petition drive to qualify a ballot measure to outsource as many city jobs as possible so that city employees can be fired and replaced by cheaper private-sector workers. (The drive flopped but he promised to renew his efforts).

“City employees feel under assault,” said Bill Craig, 55, a city employee for 28 years, now an associate land surveyor at the city landfill.

And around and around it goes in San Diego: with employees fighting to save their pensions and benefits; residents unwilling to pay higher taxes; the libertarian-themed San Diego media ever vigilant; and elected officials trying to keep the city government afloat without angering anyone or endangering their political futures.

Jay M. Goldstone, the city’s chief operating officer, admits being flummoxed by San Diego’s political culture and its resistance to change. He’s a relative newcomer, having worked in Pasadena before being hired by Mayor Jerry Sanders.

“I call San Diego the anti-Reno,” Goldstone said. “Reno calls itself ‘the biggest little city’ in the world. San Diego is the ‘littlest big city.’ It has a very small-town mentality.”

With contracts, seniority protection and political clout, city employees are resistant to the idea of sacrificing their families’ futures to help bail out a city whose residents seem to believe good city services at bargain prices are a birth-right and where the politicians are afraid to oppose the anti-tax zeitgeist.

Attempts to end-run employee contracts and vested pension benefits through litigation have largely flopped. So has outsourcing.

The city’s pension deficit stems from decisions in 1996, 2000 and 2002 by the City Council to increase pensions while simultaneously decreasing the amount the city pays into the pension fund — banking on a rising stock market to make up the difference.

When the market tanked and the value of the pension fund’s investments declined, the deficit ballooned. What made San Diego the poster child for pension problems was not necessarily the deficit; lots of city and county governments have pension deficits.

What made San Diego different was that it failed to acknowledge that deficit in proposed bond offerings in 2004. When that deliberate omission by city officials was discovered, it set off a Securities and Exchange Commission investigation, a sharp decline in the city’s bond rating and a hunt by prosecutors for the malefactors.

The city’s preening self-description as America’s Finest City and its reputation for fiscal conservatism made the story of its financial woes too delicious for the national press to ignore. In 2005 the mayor, Dick Murphy, was driven to resign amid criticism that he was too slow to recognize the pension deficit problem.

Adding to the city employees’ sense of being unfairly attacked were failed attempts by the U.S. attorney and the district attorney to prosecute former pension board members who voted to increase pensions. In both cases, the allegations were dismissed by judges who said they were based on flimsy evidence and oddball interpretations of the law.

Sanders, elected in 2005 and easily reelected in 2008, soldiers on, talking confidently of plans for a new downtown library, a new city hall and an expanded convention center and announcing a major program to fix pothole-beset streets using bond funds.

His middle-of-the-road approach has brought criticism from opposing sides of the pension dispute — employees who believe he has betrayed them, and the impatient “just fix it” lobby that wants a more robust approach, possibly including bankruptcy, massive layoffs, and outsourcing.

Without a new source of revenue flowing to City Hall, the Sanders’ approach has been to trim, cut and squeeze the budget and wrestle city employees into new contracts and lower pensions for new hires.

Some 1,400 positions have been cut but most were empty; only about 200 employees have been laid off. The idea of a sales tax boost was floated this month but quickly abandoned.

Service cuts have been mostly niche: reduction in library hours, closure of neighborhood community service offices and the sale of the Police Department’s horses. Fire pits at city beaches were saved through private contributions.

Firefighter overtime has been trimmed, leading to some stations being unmanned during certain hours. And the city continues to have fewer police officers per capita than any big-city in the country, although the crime rate continues to plummet.

Sanders has promised a more comprehensive plan some time soon. Mayoral staffers believe the false hope of bankruptcy sweeping away the city’s financial problems may have made San Diego residents even more reluctant than usual to think about paying higher taxes. Not so, say the critics.

“Bankruptcy hangs around as an issue because the mayor has failed to put forth any comprehensive  plan on how to solve the city’s financial problem,” said Andrew Donohue, editor of www.voiceofsandiego.com, an Internet news organization established in 2005 with the goal of riding herd on City Hall finances.

For a look at San Diego’s pension-go-round, and the national debate over pension reform, look here: http://www.latimes.com/news/local/la-me-pensions-20100719,0,898989.story

– Tony Perry in San Diego

ANTIOCH — For the first time, city leaders acknowledged the serious possibility that the city could be headed toward bankruptcy if it does not address its budget crisis.

“I don’t think it does any good to avoid the word or sugar coat it,” Mayor Jim Davis said during the third of several budget sessions directing the finance department on the 2010-11 budget.

At Tuesday’s study session, Antioch’s finance staff said $2.9 million still must be cut from the budget to maintain a 10 percent reserve fund. Officials project $34.1 million in general fund revenue for the 2010-11 fiscal year — about $10.5 million less than the city took in three years ago due to declining property and sales tax.

Antioch leaders whittled away at the deficit Tuesday, directing staff to implement a reduced budget for the city’s recreation department with the goal of making it self-sustaining by next year.

The council also asked staff to examine cost-savings measures for the Antioch animal shelter and to conduct a poll to see if the community would be willing to support a parcel tax.

Antioch leaders also gave the latitude to lower the city’s reserve level to between 8 to 10 percent to help make up the difference.

In 2009-10, the city laid off 28 employees, instituted weekly furloughs, and eliminated or reduced many services. Those measures must all stay in place for the foreseeable future, and more cuts are needed.

The 15-member Los Angeles City Council is well known for moving in lock step, approving large-scale development projects, lucrative labor agreements and even a boycott of Arizona with little or no dissent.

But this year’s protracted fight over City Hall layoffs has shone a spotlight on the divide that separates the council’s two ideological wings.

The council’s budget hawks have sought to erase a $485-million shortfall by relying on the revenues that are in hand, even if that means dramatically cutting the workforce. The budget doves want to shield jobs and services at a time of high unemployment by banking on money from initiatives that are still in the works.

On Monday, the hawks gained the upper hand, finding enough votes to press ahead with a plan to eliminate 761 city jobs starting July 1 unless the unions find a way to close the gap through financial concessions or other strategies.

Since then, workers with the influential Coalition of L.A. City Unions, which threw its weight behind the doves early on, have been dropping hints that the budget vote would be viewed as a litmus test by its 22,000 members. The next election, one that could feature as many as six incumbent council members, is less than 10 months away.

The council’s hawkish faction has four members, all of whom sit on the Budget and Finance Committee. The group has two council members from the more conservative west San Fernando Valley, Greig Smith and Dennis Zine, and two whose districts cover much of South Los Angeles, Jan Perry and Bernard C. Parks.

Smith and Zine are the council’s only Republicans. Parks, a former police chief, is known for his more conservative views on economic issues, such as rent control. Perry aligns herself with the city’s business leaders.

Wary after years of deficits, the group repeatedly warned their colleagues against relying on rosy economic projections, a view summed up by Smith during a passionate speech on the council floor.

“I don’t want to spend another year like we did last year, where we sat here every single month making corrections and adjustments to the budget because it was wrong, because it was based on concepts and assumptions that were wrong,” he said. “We did that last year and we paid for it dearly.”

At the other end of the spectrum are the council members most vigorously opposed to layoffs and reduced services: Paul Koretz, who hails from the affluent Westside; Jose Huizar, who represents much of the heavily Latino Eastside; Richard Alarcon, from the northeast San Fernando Valley; and Janice Hahn, whose district runs from Watts to San Pedro.

Hahn, Koretz and Alarcon have deep ties to labor unions. Huizar, a former school board member, said he saw himself as a centrist until he realized how much his working-class district would be affected by the proposed cuts to library hours and park programs.

“I’m not usually a dove,” he said. “I always considered myself middle of the road. But on this one, the Budget and Finance Committee left very little room for dialogue on saving city services.”

Alarcon said he still hopes to find other alternatives for cutting the budget, such as offering early retirement to 100 city employees. He argued that the hawks discredited themselves earlier this year by demanding 4,000 job cuts, only to retreat later when such a sizeable cut was deemed unnecessary.

“The budget committee for the last two years has been screaming ‘The sky is falling’,” he said. “They’ve always taken the most conservative approach, and their numbers have not been documented.”

In the final days before the vote, the remaining seven council members were forced to choose sides. Council President Eric Garcetti went with the hawks but attempted to soften their budget proposal.

Councilman Herb Wesson, long viewed as a challenger to Garcetti for the council presidency, sided with the doves and unveiled a plan for closing the gap without layoffs and furloughs. In a strange twist, Mayor Antonio Villaraigosa also cast his lot with the doves, asking the council at the last minute to delay a vote on the very job cuts he had proposed.

The council ignored his request.

The divide between the two factions was obvious as they debated Villaraigosa’s plan to save money by closing the Northeast Animal Shelter, a facility in Mission Hills.

With fewer cages, the Animal Services Department faced the prospect of euthanizing anywhere from 2,400 to 4,000 additional cats and dogs, a hot-button issue for many city residents. Koretz called for the facility to stay open for six months and promised to drum up private donations to cover the gap.

“I think there’s a lot more fundraising potential than people think out there,” he told his colleagues.

Wesson said his budget plan would keep the facility open by raising animal license fees to generate $2.4 million. But city officials said the higher fees would only provide $600,000 over the next 12 months, a figure based on previous fee hikes.

The hawks on the council voiced dismay, warning that if the money failed to materialize, the city would have to close the Northeast shelter and a second animal shelter on Jan. 1.

“If you want to take a gamble today and roll the dice, by all means go ahead,” Smith said. “But know this: If you’re wrong, it’s not just an adjustment. It means closing two facilities in January.”

“Rolling the dice?” Alarcon shot back. “We’re politicians. All of us have rolled the dice at one point.”

The dispute was resolved when Councilman Tony Cardenas proposed that parking tickets go up by $5, not the $3 originally proposed, as a way of paying for the shelter. The council’s budget hawks gave their consent, saying that those were dollars they could count on.

david.zahniser@latimes.com

Times staff writer Phil Willon contributed to this report.

Copyright © 2010, The Los Angeles Times

With ambivalence toward a plan that cuts city workers and reduces services, the Los Angeles City Council approved a $6.7 billion city budget Monday.

The budget, proposed by Mayor Antonio Villaraigosa, could reduce the city work force by 761 employees – and possibly up to 1,761 – but calls on city unions to make concessions to reduce the impact on the city work force.

Council members also increased a number of fees and revenue sources, including a potential fee on billboards, an increase in dog license fees – from $10 to $15 for altered dogs – and increased parking citations by $5.

Councilman Bernard Parks, chairman of the Budget and Finance committee, said council needed to address its structural deficit and make the hard choices to eliminate jobs and services citywide.

“I think it’s important for us to place ourselves in as strong a position as possible,” Parks said when the deliberations began at 9 a.m. “We have to be realistic and make sure we have the money in hand before we spend it.”

Some of the fee increases were targeted at specific programs, such as keeping the Northeast Valley Animal Shelter in use to help store animals, though it is not open to the public.

Allowing the shelter to close “would be signing a death warrant” for at least 2,500 more animals per year, Councilman Richard Alarcón said.

“Here we have the most state-of-the-art facility and we are talking about closing it down,” he said.

Councilman Tony Cardenas suggested the parking fine increase so the money could be used by the shelter and he proposed restoring $1.4 million that was supposed to be cut from the Gang Reduction and Youth Development program in the Mayor’s Office.

Council members had also questioned the reliability of projections by the mayor that the city could earn $53 million in revenue by leasing out 10 parking garages. But ultimately they decided to budget for the funding, setting it aside in a special account within the unappropriated balance.

The tone of most of the budget discussion – which lasted all day until the 13-1 vote around 8 p.m. – was grim. Besides the likely layoffs, other cuts included closing city libraries one day a week, and reducing services at city parks.

Villaraigosa also sent a somber message to the council, praising them for their efforts, but saying more needs to be done.

“We can do better than the budget I originally proposed, but we cannot do it without significant structural cost-saving measures from our labor partners,” Villaraigosa said, adding he wanted to also move ahead with pension reform.

Union leaders said they were not prepared to make any further reductions in their pay, saying their workers had passed on pay raises last year and for this coming year.

City officials, however, said without concessions workers will face layoffs or 16 to 26 furlough days.

Rough projections show that if all city workers, including police and fire, take a 5 percent cut, the city could save $123 million. If only civilian workers take a 5 percent reduction, it would mean $63 million in savings.

The council did agree with the mayor’s proposal to keep the Los Angeles Police Department at a sworn force of 9,963 officers. However, while asking for more reports on the impact of the Fire Department, they agreed to continue the modified deployment plan reducing the number of firefighters on duty as well as eliminate one hazardous material team.

The LAFD is looking at possible revenue sources, including the Airport, Harbor and Department of Water and Power. Also, the department is looking at developing a program where people would pay into a fund to guarantee them free ambulance service.

Alarcón warned that some of the LAFD cuts, particularly on emergency medical care, could result in the city losing its certification.

Citing a letter from the county Fire Department, he warned it could result in higher costs for the city if it loses its certification.

City Administrative Officer Miguel Santana, who negotiated through the weekend with unions, said the city is working in a number of areas to reduce costs, including seeking a new medical supplier.

“We need to keep all our options open including a new medical supplier,” Santana said. “We are looking at a 27 percent increase, which would be a huge pill to swallow,” Santana said.

City Administrative Officer Miguel Santana, left, and Chief Legislative Analyst Gerry Miller listen as the L.A. City Council votes on budget motions. Lawmakers moved ahead with an array of cuts. (Anne Cusack / Los Angeles Times / May 17, 2010)

Los Angeles Times, by David Zahniser and Phil Willon, May 17, 2010

The lawmakers, on an 11-4 vote, eliminate dozens of child-care positions, reduce library hours and scale back the number of trees that will be trimmed.

A divided Los Angeles City Council voted Monday to move ahead with plans to eliminate 761 positions while continuing to seek concessions from the unions that represent thousands of city employees.

On an 11-4 vote, the council pressed forward with an array of cuts, eliminating dozens of child-care positions, reducing library hours and drastically scaling back the number of trees that will be trimmed.

The job cuts are scheduled to go into effect in the fiscal year that starts July 1. The council also approved between 16 and 26 furlough days over the next year for certain civilian employees.

The four who opposed the cuts were council members Richard Alarcon, Jose Huizar, Janice Hahn and Herb Wesson. Alarcon said he would continue pushing to avoid layoffs by searching for other money, such as $20 million from the Department of Water and Power.
Over the course of a 10-hour meeting, the council rejected a last-minute request from Mayor Antonio Villaraigosa to delay a vote while the city’s budget team continues to negotiate with the Coalition of L.A. City Unions, which represents 22,000 public employees. That request baffled some council members, who thought that the mayor had been seeking to trim the workforce.

“I can’t understand what mayor we’re talking to sometimes,” said Councilman Greig Smith. “One day he says, ‘Let’s do it.’ The next day he says, ‘Let’s not do it.’ ”

Garcetti said the vote would help Villaraigosa with his negotiations. “We saw last year that when we all delayed, we paid the price,” he added.

Although the council brushed aside the mayor’s request, Villaraigosa’s deputy chief of staff, Matt Szabo, predicted that the mayor and the council would “end up at the same place.”

“He is going to work as hard as he can between now and July with our partners in labor to try to achieve those concessions to reduce the number of layoffs,” he said. “That is still his goal, and he’s completely committed to that.”

Opponents of the cuts tried to circumvent the vote by adjourning the meeting ahead of schedule. That proposal failed on a 9-6 vote. Alarcon, Huizar, Hahn, Wesson and council members Paul Koretz and Paul Krekorian voted in favor of adjournment.

The city’s employee unions tried unsuccessfully to secure passage of an alternative budget backed by Wesson, which called for zero layoffs and furloughs.

“We always knew it would be difficult” to obtain the votes, said Bob Schoonover, president of Service Employees International Union Local 721.

Although Wesson’s proposal went down to defeat, the council backed his suggestion that a tax on billboards be placed on the November ballot. That initiative passed unanimously.

The $6.7-billion budget was approved on a 13-1 vote, with Alarcon opposed. As part of that fiscal plan, the council backed away from some of the planned reductions.

The council rejected closing an animal shelter in the San Fernando Valley. And it preserved $1.3 million that was scheduled for elimination from the mayor’s anti-gang program.

Councilman Tony Cardenas found money to pay for those two programs by submitting a plan to increase the cost of parking tickets by $5. Parking tickets currently range from $45 to $80, depending on the violation.

The Coalition of L.A. City Unions had spent the past month lobbying against job cuts, warning that such a move would prove costly because it would trigger a package of raises for those workers who remain. In exchange for getting the union to put off pay hikes last year, city negotiators agreed to grant $32.3 million in raises if any of its members were laid off next year.

The plan for balancing the budget produced deep divisions among the council’s 15 members. The budget hawks who have pushed most aggressively for cuts were council members Bernard C. Parks, Smith, Jan Perry and Dennis Zine. At the other end of the fiscal spectrum were Koretz, Alarcon, Hahn and Huizar.

Villaraigosa and the council have already agreed to reduce the size of the city’s payroll by giving early retirement to 2,400 workers, laying off 100 employees and transferring more than 300 workers to agencies unaffected by the budget crisis.

The council also backed a series of fee hikes, including an additional $5 for animal licenses and $15 for late parking fines.

Monday’s budget votes left the vast majority of Villaraigoa’s budget intact. Untouched was his plan to continue hiring enough officers at the Los Angeles Police Department to replace those who resign or retire.

The council decided to rely, at least tentatively, on his plan for deriving tens of millions from a plan to lease 10 public parking garages. Although Villaraigosa pinned his hopes on generating $53 million for the budget from that initiative, the money would not arrive until Oct. 1 at the earliest.

If that money does not materialize, the council would need to reduce the payroll by another 1,000 positions, officials said.

david.zahniser@latimes.com

phil.willon@latimes.com

Copyright © 2010, The Los Angeles Times

A divided Los Angeles City Council voted Monday to move ahead with plans to eliminate 761 positions while continuing to seek concessions from the unions that represent city employees.

On an 11-4 vote, the council pressed forward with an array of cuts, eliminating dozens of child-care workers, shortening library hours and drastically reducing the number of trees that will be trimmed.

The cuts, which also include up to 26 furlough days for each worker, are slated to go into effect July 1, the start of the new fiscal year.

“Hopefully, we have stopped wasting people’s time,” said Councilwoman Jan Perry, who pushed for the cuts. “We have demonstrated that we are serious.”

Council members Richard Alarcon, Jose Huizar, Janice Hahn and Herb Wesson voted against the cuts.

The council rejected a last-minute request from Mayor Antonio Villaraigosa to delay a vote while the city’s budget team continues negotiating with the Coalition of L.A. City Unions, which represents about 22,000 city workers. Perry countered that the negotiations will go forward either way.

MyFoxLA, by Susan Hirasuna, May 17, 2010

Los Angeles – The Los Angeles City Council on Monday night approved a $6.7 billion budget for 2010-2011 fiscal year that called for laying off up to 761 employees and furloughing thousands of others by July 1 unless unions make concessions.

City Council President Eric Garcetti estimated that the unions representing city workers would have to come up with “probably about $100 million” in concessions such as pay cuts, increases in their medical and pension contributions and elimination of bonuses within the next month and a half to save jobs and prevent drastic service reductions.

Further layoffs — up to 1,000 — could come on Oct. 1 if the city fails to realize projected revenue from the lease of its parking garages, fines for banks that do not maintain foreclosed homes, and increased documentary transfer taxes.

By giving up some of its discretionary funds and supporting a $5 increase in parking citation fines, the council averted the closure of an animal shelter and restored funding for gang intervention programs as well as parks in troubled neighborhoods.

Hours before the vote, Mayor Antonio Villaraigosa sent a letter urging the council to wait until Friday before approving a budget, in hopes that a deal could be reached with unions before then, but the council ignored the request.

“What we said loud and clear to our city administrative officer (the city’s chief labor negotiator) is that the best way that we can help him negotiate is to be clear with the numbers (the value of the concessions being sought),” Garcetti said.

“The sooner we arrive at those decisions, the sooner he (the city administrative officer) can sit down, look eye-to-eye with our union partners and say, ‘This is the amount — how can we solve this together?”

Los Angeles Mayor Antonio Villaraigosa threw a curve ball into the City Council’s budget deliberations Monday afternoon, siding with a faction that opposes many of his proposals for cutting libraries, child-care centers and other municipal services.

Six hours into the session, Villaraigosa issued a letter saying he backed efforts by council members Herb Wesson, Paul Koretz and Jose Huizar to avoid many of the cuts that he had proposed -– at least for now. Instead, the city should continue negotiating with its public employee unions to find concessions, he said.

“As I said in the State of the City address, we can do better than the budget I originally proposed -– but we cannot do it without significant, structural cost-saving measures from our labor partners,” Villaraigosa said in a statement handed out in the council chamber by his spokeswoman, Sarah Hamilton.

The letter arrived hours before the council was expected to vote on a plan to eliminate 761 jobs -– the figure contained in Villaraigosa’s financial plan.

The mayor’s request to hold off on those cuts baffled Councilman Greig Smith, who voted last week to eliminate the positions. Smith warned that Wesson’s budget proposal relies on unrealistic estimates and said the council should move ahead with the job cuts.

“The mayor said just a month ago, ‘If you folks don’t lay off all these people, I’m going to close the city down two days a week,’ ” he said. “So I can’t understand what mayor we’re talking to sometimes. One day he says, ‘Let’s do it.’ The next day he says, ‘Let’s not do it.’”

Added Councilwoman Jan Perry: “Why would you reverse yourself on your own budget?”

Wesson called last week for a budget that includes no layoffs or furloughs. As part of his alternative budget plan, Wesson is seeking $63 million in employee concessions, more early retirement for workers and increased fees for dog licenses, ambulances and other services.

Some figures in Wesson’s budget have been criticized as overly optimistic, such as a plan to get $2.4 million by increasing the amount charged for dog and cat licenses.

By comparison, a proposal from Council President Eric Garcetti would move ahead with Villaraigosa’s plan for cutting jobs starting July 1. Those reductions could be abandoned, however, if the unions offer ways of closing the budget gap.

Union leaders, who have been trying to find eight votes for Wesson’s plan, greeted the mayor’s letter warmly.

“The mayor’s letter allows us to continue to talk,” said Victor Gordo, an attorney for the Coalition of L.A. City Unions.

– David Zahniser at Los Angeles City Hall

Council members searching for ways to save jobs suggest fees on ambulance service and dog licenses, more concessions from public employees and other measures.

Three days before they are scheduled to vote on Mayor Antonio Villaraigosa’s proposed budget, council members jockeyed Friday to find ways to avoid hundreds of layoffs, by proposing fees, reworking the numbers and demanding concessions from public employees.

Council President Eric Garcetti offered a plan to preserve as many as 1,000 jobs by counting, at least tentatively, on revenue from the mayor’s plan to lease 10 public parking garages.

Councilman Herb Wesson went even further, proposing no layoffs at all.

The council’s Budget and Finance Committee recommended the elimination of 1,761 positions last week. Wesson said he would push an array of new budget proposals, including fees on ambulance service and dog licenses and demand $63 million in concessions from the workforce.

“We’re optimistic that if labor sees that this is the mountain they have to climb, they will, in fact, deliver,” Wesson said.

While Wesson and Garcetti talked up their budget proposals, Villaraigosa held a separate news conference where he urged the council to spare his own antigang program from $1.3 million in cuts.

The mayor’s budget, which takes effect July 1, calls for fewer library hours, the closure of an animal shelter and the elimination of 24 child-care centers. Branch libraries would lose one day per week. Regional libraries would fall from 60 to 40 hours a week starting July 1, according to budget officials.

The mayor described his antigang program, which sends intervention workers into high-crime neighborhoods, as an essential public safety initiative. “Keeping those programs whole, particularly in these times, is absolutely critical,” he said.

While Villaraigosa advocated on behalf of his gang-prevention efforts, Garcetti pushed his colleagues to count on $53 million that the mayor expects from his plan to lease parking garages to private companies.

The council’s budget committee said last week that the city should not depend on that money, since the bidding process has not been completed. Garcetti persuaded six of his fellow council members to support a plan that would place the parking money in the city’s “unappropriated balance” — a fund for money that may or may not materialize.

If the parking money fails to come in by Oct. 1, the council would need to move ahead with plans for eliminating the 1,000 jobs, aides to Garcetti said. Villaraigosa and the council have eliminated 2,500 positions so far, mostly through early retirement or by transferring workers to city agencies that are unaffected by the budget crisis.

Even if the parking money arrives on time, the council would still need to vote Monday on an estimated 761 job cuts and up to 26 furlough days for each worker over a 12-month period. Garcetti said those reductions could be avoided if the city’s labor unions come up with $57 million in permanent concessions.

Bob Schoonover, president of Service Employees International Union Local 721, voiced doubts about more givebacks from his members. “We already did that,” he said.

david.zahniser@latimes.com

phil.willon@latimes.com

Copyright © 2010, The Los Angeles Times

The committee’s budget plan, which goes to the full council Friday, omits revenue the mayor expects from privatizing city parking. One councilman called it ‘fake money’ because the deals aren’t final.

The budget roller coaster at Los Angeles City Hall took another sharp turn Tuesday with the City Council’s Budget and Finance Committee calling for the elimination of 1,000 jobs on top of the 761 targeted by Mayor Antonio Villaraigosa in his proposed annual budget.

After a series of 5-2 votes, the committee sent the council a budget that imposes an array of cuts to parks, libraries, animal shelters and anti-gang programs, among other services.

The panel also removed $53 million in revenue that Villaraigosa expects to receive from plans to privatize the city’s parking assets — a move that increased the number of job cuts by 1,000 positions.

Councilman Jose Huizar voted against some of the reductions, including plans for closing 24 child-care centers and reducing library services by eight hours per week.

“We’re not investing in the future,” he said after the vote. “There’s no creative thinking.”

Councilman Greig Smith said the committee had to make “extremely tough and undesirable” choices to eradicate a $485-million shortfall. “It’s been a difficult budget. We knew there was nothing good to cheer about, quite frankly,” he said. “But we did what we had to do to present a legally balanced budget.”

Councilmembers Bernard C. Parks, Jan Perry, Bill Rosendahl and Smith voted in favor of the budget proposal, which heads to the full council Friday. Councilmen Huizar and Paul Koretz were opposed to many of the cuts.

Villaraigosa’s budget plan called for the city to lease 10 parking garages and borrow against future parking meter money. Under the plan, proceeds from those initiatives would replenish the city’s emergency reserve and send $53 million into the city’s general fund, which pays for basic services.

The committee, over the objections of Huizar and Koretz, decided not to include that money in the budget because parking garage agreements won’t be obtained until later this year.

Parks called the parking revenue “fake money.” But Villaraigosa’s deputy chief of staff, Matt Szabo, defended the decision to rely on the parking funds and criticized the committee’s decision.

“The mayor stands behind his revenue projections and is concerned that 1,000 unidentified layoffs could trigger severe and unintended service cuts,” Szabo said.

Over the last five months, the city’s elected officials have thrown out a wide array of numbers when discussing layoffs and job cuts — prompting some to question their credibility on fiscal matters. The council in February called for the elimination of 4,000 positions “by any means necessary.” But last month, Villaraigosa proposed 761 job cuts.

Because of labor contracts renegotiated last year, if any member of the Coalition of L.A. City Unions is laid off, the city would need to provide $32.3 million worth of raises to the union’s remaining members next year. Nevertheless, coalition leaders have been lobbying against layoffs.

After the vote, union leaders said the council should restore the parking money and tap $11 million that was diverted by the committee into a “budget stabilization” fund.

“The city should not slash services to set aside money into a ‘rainy day’ fund when it is pouring outside,” said coalition spokeswoman Barbara Maynard.

david.zahniser@latimes.com

Copyright © 2010, The Los Angeles Times

Cities may lose funding for local projects

San Fernando Valley Business Journal, by Mark Madler, May 6, 2010

The California Redevelopment Association will appeal a state court ruling that allows the state government to take $2 billion in redevelopment funds for use to reduce the budget deficit.

The loss of the money means cities throughout the state will cancel or postpone redevelopment projects.

In his ruling, Sacramento County Superior Court Judge Lloyd Connelly said it served a public interest that the state use the money for schools located within redevelopment agency boundaries.

The first payment to the state is due May 10 but the CRA is seeking a stay while the appeal is being considered. A second payment by municipalities would be due in May 2011.

In the San Fernando, Conejo, Santa Clarita and Antelope valleys, cities will lose in the range of less than $2 million to more than $17 million.

What bristles city officials from all municipalities is that they have made tough decisions when it came to their own spending and now must face even further cuts to their general funds.

The $6.3 million payment this month from the City of Simi Valley represents 60 percent of the Simi Valley Community Development Agency’s operating budget, said Brian Gabler, assistant city manager and economic development director.

The city is still analyzing what it’s next step will be and hope the appellate court sees the situation different from the state court, Gabler said.

“If the ruling stands it opens the door for the state to further raid city coffers and balance their budget on the backs of municipalities,” Gabler said.

The state is projecting a $20 billion deficit for the fiscal year starting July 1.

The CRA called the loss of the money an elaborate shell game with public funds.

“This type of state budget gimmickry only deepens the public’s cynical view of state officials and destroys local efforts to create jobs and stimulate California’s weakened economy,” said Chris McKenzie, executive director of the League of California Cities, in a release.

Photo by cravethemind

LA Times by By David Zahniser, May 11, 2010

Under contracts negotiated last year, layoffs would trigger two raises in the coming fiscal year for union coalition workers.

Los Angeles Mayor Antonio Villaraigosa’s financial rescue plan for the coming year may soon boil down to the following question: When does it become too expensive to lay people off?

The mayor’s plan for erasing a $485-million budget gap calls for, among other things, the elimination of 761 city jobs in the fiscal year that starts July 1, through layoffs if necessary.

But because of labor contracts renegotiated last year by Villaraigosa and the City Council, the city would be unable to accomplish that goal without first providing a 3% raise to more than 15,000 full-time members of the Coalition of L.A. City Unions. Six months later, those same workers would get a 2.75% pay increase.

As they lobby council members to kill the layoff plan, labor leaders are now highlighting that $32.3-million price tag and noting that the city also would have to shell out for unemployment benefits — $10,700 per worker, according to the city’s Personnel Department.

“This is the first time that I’ve ever heard of a union fighting against a pay raise,” said coalition spokeswoman Barbara Maynard. “But city employees are willing to forgo a pay raise that they negotiated if the city will work with us to keep critical services going and people employed.”

Budget analysts have responded to the union campaign by saying that the plan to scale back the coalition’s members would save nearly $16 million next year, even after raises are handed out. That figure would grow to nearly $63 million by 2013, said City Administrative Officer Miguel Santana, the top budget analyst.

Of the 761 jobs being targeted by the mayor, 210 could be eliminated without any need for pay increases. Workers in those positions either have no union representation or belong to the Engineers and Architects Assn.

The remaining civilian workers are represented by the coalition, which renegotiated its contract just last year to avert layoffs for its members even in a dire budget crisis.

As part of those talks, the coalition agreed to postpone a previously approved package of raises for two years, or until July 2011. In exchange, city leaders agreed to allow 2,400 city employees to retire up to five years early with full benefits.

Villaraigosa and the council also agreed to the provision that now serves as something of a poison pill: If layoffs are approved, the package of raises goes into effect immediately.

Santana said the council should press ahead with layoffs rather than risk having to carry them out next year, when the budget shortfall is still expected to exceed $200 million. “If there’s one lesson we learned this fiscal year, it’s that the sooner we act, the less painful it is for both our workers and our constituents,” he said.

Villaraigosa is also looking to save tens of millions of dollars by imposing furloughs on coalition members, a move that also would trigger raises, according to Santana. Coalition leaders contend that the city cannot impose layoffs without their permission and would be willing to go to court to stop the layoffs.

Santana has not managed to persuade Councilman Paul Koretz, a coalition ally who opposes the layoff plan. Koretz said the $32-million price tag made more sense a few months ago, when the council was looking at as many as 4,000 layoffs.

“Rather than pay the $32 million for the privilege of canning a bunch of people, I think it makes sense to keep them and the services they provide,” Koretz added.

At the other end of the spectrum is Councilman Bernard C. Parks, who contends that Villaraigosa’s budget has too few layoffs, not too many. Parks, who heads the council’s Budget and Finance Committee, said Villaraigosa has been overly optimistic about the amount of money the city expects to receive from a plan to lease 10 public parking garages and borrow against future parking meter revenue.

Parks’ committee could vote as early as Tuesday to subtract $53 million in projected parking revenue from the budget, a move that would increase the size of the gap.

While labor leaders have been seeking eight votes on the council to block layoffs, Villaraigosa’s budget team is searching for enough votes to keep its parking deal intact. Without that parking revenue, the city will have to scale back the workforce even more, Villaraigosa said.

“If the council affirms the budget committee’s revenue numbers, then we’ll have to . . . lay off, furlough and of course, cut even more services,” he said.

david.zahniser@latimes.com

Times staff writer Phil Willon contributed to this report.

Countering assertions by former Mayor Richard Riordan that Los Angeles should consider declaring bankruptcy, a top City Hall official said Thursday that the city is working to resolve its financial crisis without resorting to Chapter 9 protection.

City Administrative Officer Miguel Santana issued a point-by-point rebuttal to the op-ed article written by Riordan and investment adviser Alex Rubalcava, saying the city is moving aggressively to reduce its payroll, cut costs and avert financial disaster.

The City Council had asked for the response to Riordan’s article, which was published Wednesday in The Wall Street Journal, and is scheduled to discuss the issue during its regularly scheduled meeting today. Riordan has said he doesn’t plan to attend.

In predicting that Los Angeles will likely be forced to declare bankruptcy by 2014, Riordan focuses on the costs of the city’s pension system.

“According to the city’s own forecasts,” he writes, “in the next four years annual pension and post-retirement health-care costs will increase by about $2.5 billion if no action is taken by the city government.”

But Santana disputed that figure, saying the pension and health care tally will increase only $556 million by 2014.

And he took issue with assertions that the council and Mayor Antonio Villaraigosa failed to be aggressive enough in reducing the size of the city work force.

“The total authorized city staffing when Mayor Villaraigosa took office on July 1, 2005, was 35,394,” Santana said. “The 2010-11 proposed budget has an authorized staffing level of 32,802.

“During Mayor Riordan’s administration, city-authorized staffing increased by nearly 8.5 percent from 32,690 to 35,459 positions.”

The city’s action this year authorizing an early retirement program for 2,400 workers is expected to save $60 million next year and $100 million in future years, he said.

Also during his years as mayor, Riordan campaigned for a measure that allowed police officers and firefighters to retire at age 50 – which has contributed to the city’s financial problems, Santana noted.

“We’re having to clean up after the lack of pension reform from the (Riordan) administration,” Santana said in his report.

Riordan is a millionaire business owner who served as mayor from 1993-2001. He had acted as an unofficial adviser to Villaraigosa and had recommended the appointment of Austin Beutner as deputy mayor for business development.

Although he supported each of Villaraigosa’s mayoral campaigns, Riordan’s op-ed was sharply critical of the mayor.

“As a result of his delays in responding to the city’s fiscal emergency, Mr. Villaraigosa has squandered not just his career, but his relevancy,” Riordan wrote. “He continues to insist that bankruptcy is not an option for Los Angeles even as anyone who can count understands there is no other option.”

Villaraigosa, asked about Riordan’s column during a recent news conference, insisted the city does not need and will not seek bankruptcy.

“Those representations are not based on fact,” Villaraigosa said. “The fact of the matter is this city will never go bankrupt. It will not go bankrupt under my watch.”

The former mayor has been saying the city is near bankruptcy. But current leaders contend that some of today’s fiscal problems stem from Riordan’s expansion of employee retirement benefits.

A decade has passed since lawyer, philanthropist and business executive Richard Riordan held the title of mayor.

Yet just days after he turned 80, the Brentwood resident has transformed himself into the No. 1 doomsayer of city government, telling politicians, business leaders and even the Wall Street Journal that the city he once led is on the verge of bankruptcy.

That message has begun to grate on city leaders, who contend that some budget problems now being faced were created under Riordan’s watch.

“We’re having to clean up after the lack of reform in our pension system from that administration,” said City Administrative Officer Miguel Santana, the top budget analyst working to close a projected $485-million shortfall next year.

Riordan has been discussing the bankruptcy option for weeks, urging city officials to roll back an array of public employee benefits. He has called for new employees to receive a 401(k) investment account, not a public pension, and said city workers should not be eligible for retirement until 65.

During those comments, Riordan has offered an increasingly acid assessment of the city’s leadership. He criticized the City Council’s effort to avoid layoffs by moving workers to the Department of Water and Power, which is not financed by the city’s strained general fund. And he blasted the decision to slash payroll by allowing 2,400 employees to retire early with full benefits up to five years early.

“As a result of his delays in responding to the city’s fiscal emergency, Mr. Villaraigosa has squandered not just his career, but his relevancy,” Riordan wrote in a Wall Street Journal commentary co-authored by former city animal services Commissioner Alex Rubalcava, president of an investment advisory firm.

The message has piqued the city’s leaders enough to put the B-word — and Riordan’s Op-Ed — on Friday’s council agenda. Villaraigosa, who has largely ducked the debate, said in a statement that he is “making the tough choices to restore the fiscal stability and long-term financial health of the city.”

Santana, on the other hand, issued his own rebuttal memo, pointing out that Villaraigosa’s budget, if approved, would reduce the workforce to a size not seen since 1997. In an interview, he also discussed Riordan’s hand in expanding the city’s employee benefits.

Weeks before he left office in 2001, Riordan campaigned for Charter Amendment A, a ballot measure that allowed police officers and firefighters to retire with up to 90% of their salaries, up from the 70% that had been in place previously.

That beefed-up pension benefit allowed police and firefighters to retire at 50. And it played a key role in expanding the city’s retirement costs, said Santana, who has spent the last few months trying to persuade elected officials to roll back the benefits pushed by Riordan.

Riordan said Thursday that he could not remember the details of Charter Amendment A, even though his name was first on the ballot argument sent to voters. He argued that the ongoing budget crisis, not his own track record, is what’s relevant.

“To me, it’s child’s play to look at every sin I’ve done in my life, because you could spend 100 years doing that,” he said.

Since Charter Amendment A went into effect, the city’s contribution to the retirement plans of public safety workers has increased from $98 million in 2002 to $394 million this year. That increase was driven not just by expanded retirement benefits, but also by recent investment losses in the public safety pension fund and the cost of Villaraigosa’s effort to hire 1,000 new police officers.

Employee benefits were enhanced in other ways during Riordan’s watch. In 1998, the city decided to allow retired public safety employees to receive health subsidies at age 55 – down from 60. And some union leaders still praise the pay package negotiated by his administration during those boom years.

In his memo, Santana questioned many of the figures offered by Riordan. For example, Riordan said retirement benefits would grow by $2.5 billion over four years. Santana put that estimate at $556 million.

Riordan questioned the accuracy of Santana’s number, saying it did not include retiree health costs and the pension burden of the DWP.

“He had to do this under a lot of pressure, so I can’t blame him for being wrong on some small things,” Riordan said.

david.zahniser@latimes.com

Copyright © 2010, The Los Angeles Times

What Mayor Villaraigosa must do to save the city.

Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy. Yet Mayor Antonio Villaraigosa and the City Council have been either unable or unwilling to face this fact.

According to the city’s own forecasts, in the next four years annual pension and post-retirement health-care costs will increase by about $2.5 billion if no action is taken by the city government.

Even if Mr. Villaraigosa were to enact drastic pension reform today, which he shows no signs of doing, the city would only save a few hundred million per year.

Los Angeles’s fiscal woes can be traced to two numbers: 8% and 5,000. Eight percent has been the projected annual rate of return on the assets in Los Angeles pension funds. Four years ago, we strenuously warned Mr. Villaraigosa of the dangers behind the myth of that 8%, only to be told by the city controller’s office that our warnings were “based on faulty assumptions which are largely disputed.”

How faulty were our assumptions? Over the last decade, the two main pension funds in Los Angeles have seen their assets grow at just 3.5% and 2.8% annually.

Five thousand is the number of employees added to the city’s payroll during Mr. Villaraigosa’s first term as mayor. According to California’s Economic Development Department, when Mr. Villaraigosa took office there were 4.73 million jobs in Los Angeles and 252,000 unemployed people. Today, there are just 4.19 million jobs in Los Angeles and over 632,000 unemployed people.

The mayor can’t control the economy, but he could have chosen to control spending to keep the size of government proportional to the size of the local economy. Instead he’s done the opposite: squeezing the city’s productive workers to fund the salaries, pensions and other benefits of government workers.

How have city leaders responded to the crisis? Pension officials have played accounting games, like smoothing the investment return over seven years rather than five years. This is designed to dilute the near-term effect of the financial meltdown at the expense of much higher payments later.

The City Council, wincing at the mere thought of layoffs, chose to shrink the work force through an early retirement program for city workers. This costly program, suggested by union leaders, will not be paid off for 15 years. And most egregiously, rather than laying off employees, city officials have shifted certain workers to agencies like the Department of Water and Power and the airport, which have their own funding.

In order to pull the city back from the brink and put Los Angeles on the road to recovery, the following steps must be taken:

• Defined benefit pensions must be replaced with 401(k) accounts for new employees.
• Current employees must pay much more than 6% (or 9% in the case of public safety employees) of their salaries for their pension benefits. At a time when the city is contributing over 25% of payroll to the pension funds, this is only fair.
• Increase the retirement age to 65.
• Reduce city staff back to 2005 levels. Since the police and fire departments represent more than 80% of the city budget, they must also be forced to run more efficiently.
• Eliminate the $300 million spent on costly retiree health-care benefits. City workers who retire before they are eligible for Medicare enjoy health insurance subsidies up to $1,200 a month, courtesy of Los Angeles. We can no longer afford to subsidize these Cadillac plans.

As a result of his delays in responding to the city’s fiscal emergency, Mr. Villaraigosa has squandered not just his career, but his relevancy. He continues to insist that bankruptcy is not an option for Los Angeles even as anyone who can count understands there is no other option.

Meanwhile, Los Angeles is still the best place to live—ask anyone who enjoys its beaches, mountains and climate. If the mayor wants to keep it this way, he’d better act now.

Mr. Riordan is a former mayor of Los Angeles. Mr. Rubalcava is the president of Rubalcava Capital Management, an investment advisory firm.

Image from http://www.jetsettinthewest.com/charter_helicopter_tour.html

LA Times Blog, May 2, 2010 |  8:32 pm

City Controller Wendy Greuel fielded questions from neighborhood council members about the city budget and the council system as they face severe budget cuts. (Natalie Jarvey)

Daily News, April 27, 2010

THE sad reality of lean times is that luxury items must go. Until the financial picture improves, no more nights out on the town. No more twice-a-week yard service. No more designer clothes. No more HBO.

The same holds true for businesses and governments, which must save their diminished cash reserves for the basics to get them through until the economy picks up. The trick, though, is distinguishing between a basic necessity and a luxury – a feat made all the more difficult by politics.

This is the predicament in which the Los Angeles city government – like many others – finds itself in at the moment as it works to scale back its costs to deal with a smaller revenue stream in this fiscal year and the next.

But one thing that the City Council and the mayor must understand is that the young neighborhood council movement is not a luxury.

As part of a new budget proposed by Mayor Antonio Villaraigosa earlier this month, the city department created to assist the development of the neighborhood council system, the Department of Neighborhood Empowerment, will be axed. DONE’s functions will be folded into the larger Community Development Department and the staff and money for overseeing neighborhood councils will be considerably smaller.

While the move has justifiably raised concerns among members of the city’s 90 neighborhood councils, it is not a death knell for the grass-roots democracy movement. Or, at least, it doesn’t have to be.

The bureaucracy of DONE wasn’t always a friend to the neighborhood groups of this city over the past decade. Without the interference of an agency solely concerned with policing it and under the control of the City Council and Mayor’s Office, the grass-roots movement might actually find it easier to flourish.

Voters created the voluntary neighborhood council system in 1999 after a politically disaffected citizenry started using words like “cityhood,” “independence” and “secession.”

City Hall was not welcoming to the NCs in the first years of their growth, finding ways to stymie their voice or limit their involvement in government affairs. But eventually, with the help of a few champions in the City Council, the neighborhood councils found their role in city government as the champions of nearly 4 million Angelenos who don’t have the time or inclination to negotiate with City Hall. On their behalf, the elected members of the councils brought the voices of their neighborhoods to City Hall – and raised those voices when they perceived an abuse of government.

This kind of democracy is not a luxury item. It is as essential to a functioning Los Angeles as sidewalks and police patrols. And though the municipal apparatus for the system might shrink, the city’s commitment to the neighborhood councils must not. Both the NC members themselves and the elected officials must continue to keep the movement alive and growing.

Los Angeles Mayor Antonio Villaraigosa’s proposed 2010-2011 budget took a pummeling Tuesday, with members of a City Council committee complaining that it relied on overly optimistic financial projections.

Councilman Bernard C. Parks, who heads the Budget and Finance Committee, called on the city’s budget analysts to stop assuming that the city will secure $53 million from a plan to lease parking structures and borrow against future parking meter proceeds. If that money did not materialize, the council would have to impose deeper cuts in January, Parks said.

Councilman Dennis Zine offered a similar message, describing the mayor’s budget as unrealistic and full of holes. “I know that medical marijuana is permissible with a prescription . . . but hopefully no one was doing that” when the budget was being compiled, he said.

Deputy Mayor Ben Ceja and City Administrative Officer Miguel Santana, the top budget adviser to Villaraigsoa and the council, defended the budget and their financial projections. While Santana agreed that council members have the power to change the budget, he warned that removal of the parking revenue would force the city to make deeper cuts to its workforce.

“It would be hard to find $53 million without coming up with additional [job] positions that would have to be eliminated,” he said.

– David Zahniser at Los Angeles City Hall

The Los Angeles City Council’s Budget and Finance committee sent back Mayor Antonio Villaraigosa’s proposed budget for the 2010-2011 fiscal year, after members challenged its revenue estimates as being unrealistic.

“It’s a budget with pretend numbers,” said Councilman Bernard Parks, who chairs the committee.

Parks directed City Administrative Officer Miguel Santana to take out an estimated $150 million in projected revenue from parking assets, and a $73.5 million expected remittance from the Department of Water and Power, among other things.

Parks pointed out the proposal to lease the city’s parking garages and upgrade the city’s parking meters has not been vetted, and the DWP is withholding the money because of the debacle over a July 1 electricity rate hike.

“If money isn’t there, we shouldn’t count it,” Parks said.

Councilman Dennis Zine said Villaraigosa’s proposed budget “has so many holes in it, we’re going to have to patch this from the bottom up.”

“Somehow, whoever put this together, (did so) with fantasy,” Zine said. “I know that medical marijuana is permissible with a prescription. Hopefully no one was doing that (while drafting the proposed budget) because I find this really offensive that there’s no substance.”

Santana stood by the revenue estimates, saying it reflected only a 1 percent increase from the current fiscal year.

Santana agreed to lower the numbers in accordance with the committee’s wishes, but it would increase layoff projections.

Already, the proposed budget calls for laying off up to 750 employees, and forcing thousands more to take as many as 26 days of unpaid leave.

“There would have to be more cuts in city departments,” Santana said. “It would be hard to find $53 million (which represents a portion of the projected revenue from parking assets) without adding to the number of positions being eliminated.”

Ben Ceja, deputy mayor for budget and finance, disputed Parks and Zine’s contention that the spending plan relied on “soft money” and “fuzzy estimates,” noting the city has received 15 bids to lease the parking garages, and expected to have a contract within months.

Overall, Villaraigosa’s proposed budget listed $6.7 billion in expenses, of which $2.4 billion would be paid with so-called “special funds” like federal grants.

The remaining $4.34 billion would come out of the city’s general fund, which is used for basic services like public safety, public works, parks and libraries.