The mayor knows all too well that most Angelenos don’t look beyond the gross numbers.
When they hear of $400 million in savings from the pension and benefit deal tentatively approved last Thursday, many will conclude that the city’s deficit, with estimates ranging from $400 million to $500 million through the next fiscal year, has been largely resolved.
He called it a watershed moment.
The reality is that $400 million is spread out over three to four years, but the deficit will still continue to grow by $300 million and up for at least the next four years net of the savings. Even if concessions are won from Police and Fire, the gap will still be at least $200 million per year.
What’s more, the safety valve provided by furloughs has been turned off as a result of the deal, leaving only layoffs as the remaining firewall between insolvency and survival.
The proposed agreement does not even address the unfunded pension liability estimated to be at least $1 billion. At some point, that needs to be amortized through even higher contributions. Doing that will become more difficult with retirees nearly equal in number to active employees as of today – there will be an increasingly smaller base available to cover overcommitments made to those already receiving pension and retiree healthcare benefits.
The mayor and the unions were obviously more concerned in presenting the appearance of progress by not informing the public of the still bleak forecast of the city’s financial condition.
Taking the projected savings out of the context of the overall long-term picture is plainly deceitful.
It will be interesting to see how each Council Member weighs in on the tentative package.
We already know Garcetti supports it unconditionally. I would assume that Koretz and Huizar will go along with him. You can count on Controller Greuel to buy into it – she probably hasn’t even considered the city’s financial condition beyond the next month, so what’s it to her?
The issue here goes beyond the inadequacy of the proposal. The agreement must be framed within the long-term strategy needed to save the city in terms the general public can appreciate. The mayor avoided doing that. Full disclosure is not his thing.
We need the media more than ever to put this story in perspective and keep the mayor honest – excuse me, I meant to say to keep him less deceptive.