LA’s Pending Insolvency and Prop 32

Jack Humphreville
LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

Crossposted on City Watch

The inability and unwillingness of the political hierarchy of the City of Los Angeles to cope with its continuing Structural Deficit, its failing streets, its $10 billion unfunded pension liability, and its impending insolvency is proof positive why Angelenos (and Californians) must vote Yes on Proposition 32 (better known as “Stop Special Interest Money Now” or “Paycheck Protection”) on Election Day, Tuesday, November 6, 2012.

The Stop Special Interest Money Act bans corporations, labor unions, public employee labor unions, and active government contractors from making campaign contributions, directly and indirectly, to any political candidate.

And while Paycheck Protection prohibits any of these entities from deducting money for political purposes from an employee’s wages, it allows an employee to make voluntary contributions to any committee sponsored by his or her employer, labor union, or public labor union as long as the contributions are authorized in writing for a period not to exceed one year.

But the unions that represent our City, County, and State employees and their allies are going absolutely ballistic over Paycheck Protection because these unions will not have the unilateral right to assess their individual members.  And as a result, the leadership of the public labor unions believe that their righteous voices will be “silenced,” allowing corporate special interests and those big bad Super PACs to prey upon the unsuspecting and clueless public.

But our public labor unions will hardly be marginalized.

In the City of Los Angeles, our public labor unions represent over 30,000 employees, and this does not include the 14,000 unionized employees at the three proprietary departments, the Department of Water of Power, the Port of Los Angeles, and Los Angeles World Airports.

This membership base of over 44,000 workers and their extended families represents a huge voting block as well as an organized source of manpower to work on political campaigns.

And these dues paying members are also a receptive and readily accessible audience from which to raise substantial funds for political purposes.

But we could use a little less self serving union swat at City Hall and a lot more focus on the City’s fiscal sustainability and its very solvency.

Over the next four years, the City is projecting a cumulative deficit of $1.1 billion – an average of $275 million a year – as the $800 million increase in salaries, benefit, and pension expenditures dwarfs the $500 million increase in General Fund revenues.

And this deficit is significantly understated as the growth in revenues relies on overly optimistic assumptions and the rise in expenditures is definitely understated, not reflecting adequate funds to repair and maintain our streets, sidewalks, parks and the rest of our vast infrastructure.  Nor is the City properly funding its two pension plans as it continues to finagle with the actuarial assumptions to lower the City’s Annual Required Contribution.

But this Structural Deficit caused by ballooning personnel expenditures is just a continuation of past practices.  During the Villaraigosa era, salary increases alone will total about 35% through the expiration of the existing union contract, more than enough to fund the 2% to 4% increase in pension contributions by the City’s employees.

Our campaign funding unions have also scuttled the Mayor’s exceptionally modest civilian pension reform plan as its leadership has pressured the Executive Employee Relations Committee (consisting of Mayor Villaraigosa and Council Members Wesson, Reyes, Koretz, and Budget Chair Krekorian) to delay any meaningful consideration and analysis or public dialogue.

And this is in spite of the fact that over two-thirds of the voters in left leaning San Jose and right leaning San Diego endorsed more comprehensive pension reform than proposed by our Mayor.

These same union leaders have also refused to endorse any measures that would require the City to “Live Within Its Means.” This would mandate that the City develop and adhere to a Five Year Financial Plan and prepare multiyear balanced budgets based on Generally Accepted Accounting Principles that address the repair and maintenance of our streets and infrastructure and the funding of the City’s $10 billion pension shortfall.

Nor have our unions or their vocal allies put forth any workable plan that would allow the City to achieve fiscal sustainability.

There have been mutterings about increases in taxes and fees. However, our Elected Elite have not dared to place any such measures on the ballot because they know that Angelenos would reject these initiatives given our complete lack of trust and confidence in the fiscally irresponsible occupiers of City Hall.

And the Ratepayers of our Department of Water and Power are certainly aware of the power of campaign contributions as we are forced to pay for the $250 million IBEW Labor Premium, courtesy of Mayor Villaraigosa and Wendy Greuel, recipients of $650,000 in campaign contributions by IBEW Union Boss Brian d’Arcy.

With the passage of Proposition 32, our public labor unions will still be City Hall’s 800 pound gorilla with the continued ability to buy elections and intimidate elected officials.  They represent a huge voting block, are very well organized, and, despite all the howling and protests, very well financed, as will be clearly demonstrated by an estimated $50 million advertising blitz financed almost entirely by public labor unions.

By approving Proposition 32, Angelenos can send a strong message to the occupiers of City Hall that we do not support business as usual, but want City Hall to be responsive the Structural Deficit, our failing streets and infrastructure, our $10 billion unfunded pension liability, and the impending insolvency of our great City.

It is time for the City of Los Angeles to Live within Its Means.

Note: Another excellent example of why to vote Yes on Proposition 32:  In late June, in an especially egregious action that reflects the unbridled power of our public labor unions, the State Assembly Education Committee defeated by a single vote a bill proposed by our State Senator Alex Padilla and supported by LAUSD that would have streamlined the process to terminate teachers in cases involving sex, drugs, or violence against children.  Underlying this defeat was the strong opposition of the well healed, politically active, 325,000 member California Teachers Association.

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