L. A. City Employee Unions Must Share Sacrifice
As all of us in the private sector know, there are no protected classes in this economic downturn. In L.A. County, we have lost 250,000 private sector jobs during the past year and our unemployment now totals 565,000. Every business and the families of their employees have felt the financial burden of this recession.
In contrast, there are more public sector jobs in L.A. County than one year ago, but the economic downturn is now staring them in the face as well. The loss of business in Los Angeles has resulted in decreased tax revenue for the City of Los Angeles and elected officials are now struggling with unavoidable budget cuts.
Mayor Villaraigosa and the L.A. City Council are finalizing a city budget that reflects this new municipal reality. However, the last holdouts appear to be the city employee unions who have yet to step up and join the rest of us in this time of "shared sacrifice."
Recover, Reform and Rebuild California
Like an alcoholic facedown in the gutter, California’s fiscal system may have finally hit rock bottom after last week’s special election defeat. Lawmakers now face two choices — confront our broken system once and for all or continue politics as usual until there is forced intervention in the form of statewide default or bankruptcy.
As a leading political strategist and Director of the Jesse M. Unruh Institute of Politics at the University of Southern California, Dan Schnur perfectly summarized in a recent op-ed in the Los Angeles Times, conservatives and liberals began to “construct lessons that precisely fit their ideology and worldview” as soon as the polls closed. The right declared a victory for anti-tax crusaders and the left called the election a backlash against budget cuts. Both sides continued to cling to the same arguments that delayed the enactment of a state budget last year.
Show Your Anger by Voting Yes on May 19
California’s dysfunctional state government and our chronic budget crisis are beyond inexcusable. The majority of voters are justifiably angry about taxes and elected officials seem to be unable to effectively plan for the state’s fiscal future. That sentiment is reflected in the latest polls showing Propositions 1A-1E headed for defeat. But taking out our frustrations on these initiatives is the kind of self-flagellation that will deepen the crisis and prevent the reform we dramatically need.
As I wrote last month, the Los Angeles Area Chamber of Commerce — together with nearly every business organization in the state — is urging support for the package of state budget initiatives on the May 19 special election ballot. There are no perfect short-term fixes for the disastrous financial condition that California is in, but these ballot propositions go a long way toward avoiding a fiscal catastrophe and putting in place the kind of reforms that will avert a similar crisis in the future. Most notably, Proposition 1A will significantly reduce spending by establishing a long-sought spending cap and requiring the stockpiling of revenues from good years in a substantial “rainy day” fund to mitigate future economic downturns.
Saving Our Lifeblood Before It’s Too Late
The Sacramento-San Joaquin Delta conveys water to more than 25 million Californians, supports a $400 billion economy and is home to 700 native plants and species. This lifeblood for our state is threatened by unsustainable governance practices and a crumbling physical infrastructure. Without implementing a new strategy, we will continue to be a moderate earthquake away from a Katrina-like disaster that will immediately cut off one of our most critical water sources and decimate the Delta’s natural environment.
Fortunately, a group of civic leaders is working to ensure that our state has a safe, reliable supply of water for years to come – The Delta Vision Foundation. The group, which started as a blue ribbon task force appointed by Gov. Arnold Schwarzenegger, is a true bipartisan effort including business, labor and the environmental community. As our state heads into its worst drought in modern history and water reliability remains at the forefront of the Sacramento political agenda , the Delta Vision Foundation is our state’s best bet for developing solutions that balance the economic and environmental functions of the Delta.
A Municipal Atomic Bomb
By 2015, the City of Los Angeles will need $2 billion every year to fund its public employee pension plan, four times as much as the current $530 million budget deficit. To put that number in perspective, $2 billion equals the combined budgets of the city fire department, police department and sanitation bureau. The message to city residents and taxpayers is clear – Los Angeles will likely go bankrupt within five years unless significant structural changes are made to the pension system.
All pension funds suffered horrible market losses over the past two years, but the economic downturn simply accelerated an inevitable crisis. Six years ago, pension fund contributions as a percentage of total city revenue were less than 4 percent. It is 8 percent this year, and the percentage is projected to exceed 20 percent by 2015. That means 20 cents of every taxpayer dollar will fund retiree pensions instead of actual city services.