Living on Borrowed Time

Up until about two weeks ago, there were two candidates for the mayor of Los Angeles willing to talk frankly about the sorry state of our city.

After Austin Beutner dropped out of the race, that left Kevin James as the only voice with the backbone to discuss the serious challenges facing Los Angeles.

But what about Jan Perry?

On occasion, she has been openly critical of the city’s direction, especially on DWP matters.  I was pleased when she challenged the shabby treatment she received at the hands of the Villaraigosa faction in charge of the redistricting committee.

So, I was anxious to hear what she had to say when she appeared at a candidate forum held at CSUN.  I listened to it in entirety, courtesy of a video posted at the Studio City Patch web site.

The event was moderated by none other than Chris Essel, former candidate for the CD2, and most recently the head of the Community Redevelopment Agency.

To be clear, it was a forum and not a debate. The questions were screened in advance.

To my great disappointment, it was more like watching Kathy Lee and Hoda (watch the SNL version.   It isn’t much different from the actual program).

Essel and Perry did not hesitate to pat each other on the back. At least they acknowledged their long-time friendship early in the program.  To that extent, credit them for full disclosure.  The content that followed wasn’t much of an improvement.

The closest Perry came to talking straight was when she described the city as being in a “fragile” state. 

If that’s the strongest term she could muster, then  the Council Member either does not fully understand the seriousness of the financial debacle facing us, or she is in denial.

Water mains will be replaced by the DWP on average every 200 years (the average age of existing mains is close to 100 years).  Fragile?

The current general fund deficit is $200 million, even after several years of cuts, with more of the same in the years to come.  Fragile?

Emergency response times increasing – fragile?

Fragile might be a more appropriate term for goods sold in a china shop.  I have news for Perry – the bull has already visited LA’s china shop. There’s nothing left but to sweep up the broken pieces.

She said she would support a less generous benefit tier for new employees to help rein in retirement and health costs.

That’s the absolute minimum needed to restore financial health.  The current plans will continue to absorb an increasing share of the general fund – no signal from Perry to deal with them.

She did spend about fifteen minutes (roughly one-fourth of the forum’s time) on the demise of the south central community garden, including a ten-minute video on the subject.  I realize the garden was important to some, but hardly a key issue in relation to all the others facing the city.

Los Angeles is a city living on borrowed time.  Perry, Garcetti and Greuel are not addressing the structural nature of the deficit.  No one expects anyone to offer perfect solutions, but all of the candidates have an obligation to educate the public about the dangers of not dealing with it.

Perry will appear at Valley Vote on May 21.  Let’s hope she has more to offer.

Total eclipse

Sometimes I’m in the wrong place at the wrong time, as I was in Virginia last August when the earthquake struck just ten miles from my client’s office.

Sometimes I am in the right place at the right time.  That was the case today.

Lake Tahoe was in the direct path of the total eclipse that traversed the southwestern states.

This was my second total eclipse, the last one was back in 1970. I was visiting Virginia Beach at the time.  That one was more pronounced because the moon was closer to the earth, blotting out more of the sun.  It grew dark enough for the crickets to chirp at noon.

This picture was taken with my camera phone using a piece of undeveloped 35mm film over the lens, which accounts for the orange tint.

What happened to the daylight?

Every career politician currently serving in City Hall will deny that bankruptcy is an option.

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 expect to not 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.  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?

Aaron Corp signs with Bills

Despite a college career limited by injuries at both USC and the University of Richmond, quarterback Aaron Corp will get a shot at the NFL.

The Buffalo Bills signed the Richmond Spider senior, who performed very well in the NFL Scouting Combine.

I had the pleasure of watching Corp play three times last season.  He was exciting to watch and overcame opponents’ tendencies to concentrate on pass defense and pressuring the quarterback.  Without a viable ground game at his disposal, Corp would have to throw on third and short often.  The other teams were expecting just that and adjusted accordingly, but it did not stop him from picking up critical first downs time and again.

He made good decisions and was cool under pressure.

The Bills are not deep at quarterback, so Corp should have a decent shot at playing time this spring and summer.

Can you be fooled by a Nigerian e-mail scam?

Chances are, most of you have received e-mails similar to the following (this is my compilation of various themes I have seen in the ones that have arrived in my inbox):

Greetings.  I hope this message finds you in goood helth. May God’s blessings fall upon you!

I am a barrister representing the eztate of the late Iwantu Monet, the basteard son of the Nigerian Oil Minister, who was killed by his father in a jellice rage when caught in bed with the elder’s mistress.

Before Mr. Monet was murdered, he had accumulated a sum of $10.000.000 USD in a Swiss bank account.  The money was from kickbacks receeved from hi government officials.

My research shows you are someone I can trust.  I need to transfer this fortune to a Safe bank account in your Country.  If you agree to this 100% risk free transaction, I will split the sum with you. Utmost secretivenessish is a most concern

Pleese send me your informations including your social security number, bank account number and a copy of your passport so I can instruct the Swiss bink manager to expedite this transfer.

Your trusted servant,

Ineda Cash

I used to believe it would be impossible for anyone to fall for these offers.

No longer.

I know there are 5.2 million individuals in California who would send their “informations” faster than these e-mails can be distributed. They represent the voters who approved Proposition 25 last year.  I am proud to say I was not one of them.  I publicly opposed the measure at meetings of Neighborhood Council Valley Village, my blog and in Citywatch.

Prop 25 allowed the California State Legislature to pass a budget by a simple majority vote, but stipulated that the legislators would forfeit their pay for every day the budget was past the mandated deadline. We were told passage would break the chronic logjams that have resulted from partisan struggles over spending and taxes.

The forty-five percent of the turnout who cast a “No” vote were not hoodwinked by the promise of docking legislators. They were aware of the legislature’s penchant for fabricating unrealistic revenue forecasts, which meant that a “balanced” budget could be passed even though it was based on whims.  That virtually assured no one would ever forego a payday.

A recent tentative ruling by a Sacramento superior court judge just knocked the legs out from under Prop 25′s no-pay provision.  Judge David Brown believes the legislators have the power to define what balanced is. 

When will voters learn that ballot measures cannot fix bad government; especially when they contain subjective provisions easily overturned by the courts?

State Controller John Chiang is challenging the judicial ruling.  He appears to be one of the few in Sacramento who takes his responsibilities seriously.

Perhaps the legislators can raise revenue and close the budget gap by e-mailing registered voters the equivalent of a Nigerian scam.  It appears there are more than enough takers who would unwittingly allow their bank accounts to be drained by the very people they elect.

PS: For a good laugh about Nigerian e-mail scams , follow this link.

The Subway to DC

Someone should inform Mayor Villaraigosa that the chairmanship of the DNC Convention in Charlotte, NC does not expand his executive power beyond the City of Los Angeles. He wants to ram a project down the throats of many who will never benefit from the subway to the sea – or any other subway project.  Los Angeles County is not the City of Los Angeles.

For that matter, what about residents of the San Fernando Valley who would still be stuck with the 405 and canyon roads as their main routes across the Hollywood Hills?  Heck, the MTA has not even added much-needed parking to the North Hollywood Red Line station!

The mayor’s proposal to expand the Measure R sales tax beyond the lifetimes of generations yet to be born is a publicity campaign to win a seat on President Obama’s cabinet.  The chances are fairly good, although by no means guaranteed, that the President will win reelection.

Villaraigosa would love to occupy a spacious office within sight of the United States Capitol.  That’s where he would be if named the Secretary of Transportation.  It would be a non stop ride from LA to DC on a virtual subway stretching 2,669 miles.

What irony that would represent.  As the driving force behind national transportation policies, he would graduate from serving as the architect  of a local train wreck to one on a coast to coast scale.

But how could he leverage an extension of Measure R to a cabinet post if it is uncertain that the measure would win support of two-thirds of the voters? Current polling suggests about 54% might support it, a far cry from two-thirds.

The extension does not have to win for the mayor to benefit.  Even if the measure fails, the White House will hail him as a public transportation visionary. He will rally support from labor unions who have their own visions – inflated contracts. Couple that with his popularity among much of the Latino population and you have the political equivalent of owning all four railroads on the Monopoly game board. We’ll pay the price for landing on them while Antonio Villaraigosa will reap career benefits.

Who was “asleep at the switch?”

In announcing her department’s latest audit report, City Controller Wendy Greuel accused the mayor and City Council of being “asleep at the switch” when it came to managing fuel usage for city vehicles.

That is a true statement, but incomplete.  First of all, the mayor has never been close to any switch in the city, in a state of sleep or otherwise.  Management is not a term in his vocabulary. 

Greuel, herself, was also snoozing.

The problem was first reported by former City Controller Laura Chick in 2009. Greuel was still on the City Council, serving on the Budget and Finance Committee. Chick reported problems with the system and was highly critical of management’s lack of involvement and scrutiny:

“Beginning in 1999, the city paid a vendor in excess of $12 million to implement and maintain a fuel automation system. However, departments are not using the system’s capabilities to monitor fuel usage. If they had, they could have identified the extent of high risk transactions, as well as data inaccuracies being generated by the system.”

After the city invested in the system, the mayor, department managers and members of the City Council should have followed up to see if the system was working as expected, even without an audit.  After all,we are talking about 14 million gallons of annual gasoline usage.  Even at 2009 prices, that came to $28 million for the year - and prices were heading higher.

Chick’s audit was released March 29, 2009.  There was still time to modify the Fiscal Year 2009/2010 budget, which was not approved until June 2, 2009.  Slapping a 20% cut to the fuel budget, or about $5 million, until adequate controls were in place would have been a reasonable measure given the history of lax management oversight. Beats the hell out of layoffs or transferring staff to the DWP.

Greuel and Budget Chair Bernard Parks should have insisted that a cut be allocated among the departments.  Too much work, I guess.  Maybe they had to top off their tanks.

It gets worse.

Greuel had Chick’s roadmap.  She knew the city was bleeding gas when she stepped into the role of City Controller in July 2009, but waited three years to follow-up.  Pursuing an important issue already raised by your predecessor just doesn’t generate the same publicity as something developed under your own watch, so I’m not surprised she let it ride .

An audit is only as effective as subsequent actions to correct deficiencies.  Greuel is only interested in pumping out reports claiming largely unsubstantiated savings. She does not apply pressure on the mayor, his department managers, and council members to implement timely changes.

Greuel has turned the Office of the Controller into a personal stage for her mayoral campaign. She knows all to well that people react to juicy findings rather than actual results.

That’s our fault for letting her get away with it.

I hope her opponents in the mayoral field don’t.