(Editor’s Note: David Abel’s Los Angeles newsletter, The Planning Report, this week featured short pieces of advice consisting of a To-Do list for the next Los Angeles Mayor from civic leaders and interested observers, including County Supervisor Zev Yaroslavsky, SEIU leader Julie Butcher, business association executives Bill Allen and Billie Greer, conservationist Joe Edmiston, former state official and educator Bonnie Reiss and others. The commentaries can be found at the The Planning Report here. My contribution is reprinted below.)
The two Democrats vying to become Mayor of Los Angeles, a city in financial trouble, should consider the advice of a Democratic icon on smart government. Former New York governor Mario Cuomo once pointed out, “It is not government’s obligation to provide services, but to see that they’re provided.”
Establishing that goal to achieve success in governing the city means creating a government for the 21st century—a government that sees that certain jobs get done without having to do them the same old way.
And that thought leads to the cost of the public sector to perform services, particularly the burgeoning cost of pension obligations.
For Los Angeles, two immediate steps that must be taken to ease the financial crunch on the City are to reform the pension system and encourage business development through a less burdensome tax and regulatory policy.
The need for the pension fix to improve the City budget is obvious. In 2012-13, Los Angeles’ pension costs are expected to be about 18 percent of the City’s budget. In 2002-03, just 10 years ago, pension costs were only 3 percent of total expenditures. Over the last decade, pension costs have grown at an annual average rate of 25 percent, outpacing growth among all other major areas of the budget.
When the budget must cover pension expenses, other services will be cut back. Will the new City leader conceive of new ways of providing those services, or reduce current costs?
The hold pension costs have on the budget must be reduced. That can be achieved by requiring a higher retirement age, basing pensions on a base of three years, and requiring current employees to contribute more for both pension and health care costs.
The City must also make it easier to do business within its borders and become competitive with neighboring cities in battling for the business buck. An extensive overhaul of the gross receipts tax and regulatory reform is necessary for a flourishing business sector to help Los Angeles overcome its economic woes.