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When State Senator Bob Hertzberg announced his tax proposal, SB8, in late 2014, he made no secret of using it as a tool to raise taxes by a net $10 billion – that is, per year.

The senator tried to pass it off as “tax modernization.”

He even gave the bill a deceivingly benign name: the Upward Mobility Act. Loosely translated, that means the Up Your Wallet Robbery initiative. I would have been at least conciliatory towards it had he been straightforward and called it a tax increase, rather than obfuscating its purpose. Hertzberg has generally been a straight-shooter in his career, so this slight of hand attempt was out of character, making it all the more disappointing.

A year later, it effectively died. It received no traction in Sacramento. Governor Brown shrugged it off; the Senate Governance and Finance Committee, which Hertzberg chairs, did not deem it worthy to progress. It officially died January of this year.

He said he would reintroduce it.

He did in February – SB1445.

This time, Hertzberg made no fanfare, perhaps learning a lesson from the bad publicity he created with SB8. For that matter, the bill contains only intent language at this time. It appears he is playing it close to his chest.

Does he still want to raise $10B?

As I stated in an earlier article on the subject, Hertzberg needs to share how the bill would impact each segment of the state’s taxpayers.

He did not in 2015, although he must have had an idea. One does not arrive at a figure as large as $10B without having at least penciled it out in some detail.

Let’s see what he does this year.

I saw, first-hand, the reaction of a neighborhood group to the Neighborhood Integrity Initiative (NII).

Jill Stewart, former managing editor of the LA Weekly and now the campaign manager for the proposed measure, delivered a crisp presentation about the initiative to the Valley Village Homeowners Association on April 20th.

It was not a one-way affair; Stewart fielded at least twenty questions from the roughly fifty members in attendance for the Association’s quarterly general meeting. The questions reflected a strong interest in the subject. Her answers were frank and there appeared to be no reservations about them from the attendees. Thirty-six signed up to receive more information about the initiative.

As with any ordinance, whether initiated by the City Council or through a ballot measure, subsequent enforcement is critical.

For example, even though I am pleased with the proposed draft ordinance to deal with the problem of short-term rentals, will the city apply adequate resources to assure compliance if the proposal becomes law? God knows there is little or none in my neck of the woods. One such rental was cited by the City Housing Department last September. It was referred to the City Attorney’s office soon after, but continues to operate today.

Section 11 of the NII enables an aggrieved person to take legal action against any violation of its provisions. Therefore, it would behoove the city to adequately staff its Planning Department to ensure thorough and timely reviews of developer requests for amendments.

Stewart told the audience that developers are not going to pack up and leave the city rather than work within NII’s rules. The city will still be a good place to build, as it has always been.

I can tell you that builders still find Valley Village desirable even though the community has a formidable Specific Plan, especially with regards to multi-unit housing, the SB 1818 density bonus notwithstanding.

What about the additional planners the city should hire?

Stewart pointed out how large the mayoral and City Council staffs are – around 500 in total, a number higher than that of the entire White House staff (I confirmed 474 from a 2015 report provided to Congress). She suggested shifting some of the budget over to Planning. Checking the Planning department’s 2015-16 budget, it has 268 authorized positions of all types. It is not typical to have executive support staff outnumber employees of a department providing a critical service.

It will be interesting to learn of the feedback from various homeowner associations and neighborhood councils around town as the NII organizers make the rounds.

If they have the same success in reaching out to them as Stewart appears to have achieved with Valley Village, then they will develop a diverse network comprised of knowledgeable people with a passion for protecting their quality of life.

When voters get angry at a politician, some turn to the recall process.

There have been over 150 recall attempts in California; nine made it to the ballot, five succeeded in removing an official. The best known effort ran Governor Gray Davis out of office.

Five out of 150….a poor return by any measure.

The latest attempt is underway in my own backyard. A group of Valley Village residents want to start a recall process against City Council Member Paul Krekorian. He is accused of allowing the premature demolition of a 1930’s era structure, which briefly served as a residence for Marilyn Monroe before she rose to fame.

You can argue until the cows come home, or Marilyn, if the property was historically significant, as the group claims. Indeed, the developer pulled the trigger on razing it before approval was granted by the city.

Regardless of what Krekorian’s role was, or was not, the math of this recall attempt runs overwhelmingly against success.

The recall group would be required to get signatures from 15% of the registered voters in CD2, or around 18,000+.

The largest turnout in CD2 in many years was back in 2009 in a hotly contested race between Krekorian and Chris Essel. It was a race I covered extensively in my blog, including a blow-by-blow account of almost every debate, and, boy, were there a bunch of them, held in every corner of CD2.

The campaign was ugly and generated much media coverage. Very large sums of money were in play, including union contributions from IBEW Local 18. You know, Brian D’Arcy’s boys and girls – the same ones who gave us those free-wheeling non-profit trusts who have used $40M of our money to pay for junkets and steak dinners. Allow me to digress, but I am still waiting for DWP General ManagerĀ Marcie “D’Arcy” Edwards’ reports dealing with reforming the trusts.

For all of that hoopla, rancor and treasure, the turnout was around 15.5%.

So, what are the odds of getting good signatures from 15% of the registered voters for a low profile, and likely little-publicized campaign?

You do the math.

I am sure there are quite a few residents in CD2, as in any district, who do not even know who their council members are.

“Sign what?”

“Who is Krekorian?”

There is a time and a place for recalls. When there is an adequate body of evidence strongly supporting the possibility of malfeasance, start circulating the petitions.

But it requires due diligence to build a case.

Aggrieved citizens would better serve themselves and the public by focusing on developing and funding alternative candidates for scheduled elections.

It takes work, but the sooner started, the better.

I’ve watched AMC’s hit show, The Walking Dead, since season one.

The characters grew on me, although only a few of the original cast have survived the zombie apocalypse to date.

But I am losing interest in the show. There was a time where I eagerly looked forward to the new season. I would plant myself in front of the TV at 6:00 PM on Sunday night – thank God for satellite TV, or it would have been 9:00 PM.

Since season three, the story lines have become repetitious: the group, led by Rick Grimes (played by Andrew Lincoln, a Brit who has mastered a pronounced southern accent for his role of former county sheriff in Georgia), would find solace in a relatively safe setting, only to encounter a psychopath heading up another band of survivors, in some ways more organized and efficient than Grimes’ people. A conflict ensues; as many of the living die as the zombies in the violence. In the end, the bad guys are killed and our heroes are forced to move on.

The process repeats with yet an even more perverse villain standing in the way of survival.

Plots are advanced through the stupidity of Grimes and his followers – inexplicably poor judgment considering their experience coping in the zombie-infested world. The main characters will often wander off alone on some misguided mission, only to be captured by the latest gang of heartless miscreants.

Recently concluded season six was built on hype – the meanest, baddest-ass villain would appear and killed a beloved member of our protagonists. Throughout the season, the finale was touted to depict the must violent end to the life of a major character on the show. It lived up to the billing, but it was so anticipated, the shock value was somewhat lost. The viewers did not see the actual death – only the villain bringing his baseball bat down on someone’s head. The crunching sound of the impact and the screaming was all that was necessary to convey the brutality….but it was expected. Fans of the show will not know the name of the victim until the next season.

Next season will undoubtedly be dominated by violent confrontations between the two groups until the bad guys lose again.

The Walking Dead needs an end game.

The first TV series I can recall with a definitive ending was The Fugitive. It wrapped with a two-part finale, which set a ratings record at the time.

Other popular series followed suit, but with longer wind-downs: MASH took almost an entire season to wrap, and Lost required three seasons to conclude its complex story.

I could put up with the regurgitation of plot devices if The Walking Dead was committed to an end game – three, four, five seasons from now, it wouldn’t matter, as long as one could sense progress.

But the producers are in it for the money. As long as they have a hit show, one where major characters can be slowly killed off and whose replacements have time to develop their own fan followings, it is an express train to the bank (something California HSR will never be).

I fear that the show caters to the fans of the graphic comic books that inspired the TV series, the millennials who still live in their parents’ basements and have yet to discover Bernie Sanders as their contemporaries have. Perhaps Hilary Clinton should buy some advertising on the show as a way to cut into Sanders’ lock on that generation. Trump could, but he would be more terrifying than the zombies.

The comic book fans do not like story lines that veer from the written genre.

Too bad.

One of the few departures from the comics could set the stage for a path to an end. In season one, Grimes and company enter the CDC in Atlanta and find a lone, surviving scientist who informs them that the French were making progress on a cure for the zombie virus. He chooses death by an explosion set off by the CDC’s fail-safe destruction system.

The series could cut away from our survivors and depict a resolute effort conducted by a handful of French scientists to develop a vaccine.

Something like this won’t happen until the ratings start to slip, because as long as the cash flows, the zombies will continue to shamble along.

What does this have to do with Los Angeles?

Our city was afflicted by the zombie apocalypse years ago.

80% of the registered voters stay home for local elections. They are effectively the undead. As a result, we are governed by officials who take advantage of the apathy and allow their followers to live off the sweat and blood of the rest of us.

And like Rick Grimes and his band of survivors, too many of us break off on their own to no positive effect, rather than uniting and consolidating with the objective of reviving the walking dead, possibly enough to run the bad guys out of town.

What end game would you prefer?

Runaway Train

California has got its own version of a Runaway Train, a 1985 Oscar-nominated movie about escaped convicts who steal a train. It does not end well, as the out-of-control consist hurdles towards a violent end, with the lives of the convicts and their hostages at stake.

The California High Speed Rail Commission is run by the equivalent of convicts who are taking the state’s taxpayers on a ride to a disaster of the financial kind.

Proposition 1A, passed in 2008 by a margin of 5 percentage points, stipulated the following:
the train system would have to be financially viable, enable trains to maintain headways of five minutes in each direction, operate without a subsidy, have all construction funds identified for an operating segment before breaking ground and travel between Los Angeles and San Francisco in two hours and 40 minutes.

It has failed on most of these requirements and the others are in doubt.

A blended system, that is HSR would have to share tracks with slower freight and current passenger service, would make it very difficult to reach the promised speeds, times and headways, not to mention that freight traffic is harder on the rails, which translates to higher maintenance. If you have ever ridden on shared tracks used by heavy freight, smooth is not the word to describe the ride; delays are a certainty.

Only half the construction costs for the proposed first segment from San Jose to the Central Valley are available. Funding is also challenged by the reliability of cap and trade funds, an important piece of the already anemic available capital.

Also in doubt is the avoidance of an operating subsidy from the government. Technically, that would be enough to kill the project as it would be in clear violation of the bond covenants. It was hinted by a peer review committee that the state might have to make financial guarantees to investors in order to entice them into buying bonds backed by revenue, but that would amount to a commitment to subsidize an operating deficit.

Although Sacramento Superior Court Judge Michael Kenny dismissed a lawsuit aimed at stopping construction, the reason was because there are “too many unknown variables.” In other words, he is not convinced that the project is viable at this stage. His decision appears to err on the side of due process, giving CAHSR time to back up its optimism.

But time is running short for CAHSR to put its money where its mouth is. The lawsuits will continue, cost overruns will pile up and public pressure to kill the project will grow, especially in Southern California and the Central Valley.

If not stopped soon, the people of California will be left with only part of a system, serving only a minority of the population, at a cost much higher than promised for the entire system, as promised in Proposition 1A. According to CAHASR Chair Dan Richard,this is what passes as “delivering what the public voted for.”

There is much to chew on concerning the MTA’s proposed ballot measure to add a half-cent sales tax and extend the current Measure R tax.

I’ll focus on the Valley.

Tunneling through the Sepulveda Pass to allow a rail line is apparently one of the top priority tasks, but it would not be complete until mid-century.

The Orange Line would eventually be converted into light-rail, but that is even further down the timeline. However, in the interim, a reduction in at-grade crossings will allow faster transit times. A light rail route down Van Nuys Blvd to connect the Northeast and Southeast Valley neighborhoods to the Orange Line is another piece of the plan.

As we all know too well, commuting through the pass is a nightmare during drive time (no one says rush hour anymore). But is there an effective alternative to the tunnel? A great opportunity was lost when the car pool lanes were added. They could have been busways. Perhaps they still can, with stations at both ends. No doubt a far less expensive option, but buses can’t carry the volume rail can.

The interim plan for the Orange Line might be the most cost-effective strategy on the menu. Light rail might cause over-crowding at the NoHo Red Line station. It is already a busy place; I can only imagine the mob scene on the platform as light rail discharges throngs of commuters. Ever been on an over-crowded subway platform? I have twice…… and it’s pretty scary as people get antsy waiting for a train to arrive. Several years ago, MTA acted on a recommendation of mine, when circumstances dictated, to stage people at the upper levels until the train-level crowd could be absorbed. That strategy may not be as effective with light-rail feeding the station.

A busway down Van Nuys Blvd would offer most of the benefits of rail without the heavy costs.

Could we trade cost savings from alternatives to expand or improve other transportation modes in the Valley?

All of us need to seriously consider the options and express our opinions to the MTA.

Even if the measure passes, there will still be time to reconsider the plan’s components and insist on the best value for the money.

We don’t want to suffer the fate of poor old Charlie.

As I pointed out in Monday’s edition of Citywatch, the City of Los Angeles booked a $7.6 billion adjustment to recognize the unfunded pension liability owed to the beneficiaries of its public pension programs. It is an admission that the residents and stakeholders of the city are on the hook for very generous retirement benefits offered to municipal employees. For the record, the adjustment does not cover exposure to virtually free health benefits.

Anyone who follows the city’s finances expected this. All of our elected officials have been expecting this.

I got around to reading the Comprehensive Annual Financial Report, which was issued on February 5th, on last Saturday, February 27th. I wrote and published my article about the very significant adjustment on February 28th. Citywatch picked it up on the 29th….and still beat the city’s press release by a day! I thought I was slow.

It is common- in the interest of transparency – to disclose material adjustments to an entity’s financial position in sufficient detail to stakeholders, whether they are shareholders, investors or, in the case of a governmental unit, taxpayers and others who pays fees for public services. Such disclosures should be timely, too. Almost a full month after the financial statements were released is not timely.

However, worse than the poor timeliness, was the lack of sufficient detail.

The nature of the disclosure was simply that it was mandatory. The Governmental Accounting Standards Board (GASB) issued pronouncement 68 requiring that unfunded pension liabilities be included in the face of the financial statements, identified as Net Pension Liability. The statements, cover letter and subsequent, but late, press release did not offer any explanation as to why GASB issued the new reporting requirement, that it was necessary to emphasize the impact defined benefit plans had on governments’ long-term resources.

Furthermore, the treatment on the financial statements is still not as transparent as it should. According to a white paper issued by California Committee on Municipal Accounting (a joint committee comprised of representatives of the League of California Cities and the California Society of Certified Public Accountants) the Unfunded Pension Liabilities will become a new liability on the Statement of Net Position, appropriately named “Net Pension Liability.”

I challenge anyone to find a line in the CAFR’s Statement of Financial Position that states “Net Pension Liability.”

Instead, you will find “Non-Current Liabilities due in more than one year.”

Only if you compared that line with last year’s CAFR could you determine the impact on the liabilities. So, the most significant, long-term liability is buried. You must dig much further by diving into the notes to get a sense of what occurred – that is simply what GASB 68 was trying to avoid.

As I mentioned, the press release is short on details.

But it also obfuscates the result by aggregating the impact on a city-wide basis instead of the operating segments.

If you break it out by segments, the Government Activities segment took the brunt of the adjustment, putting its equity in negative territory. This is the segment responsible for core services residents depend on for quality of life. It includes public safety, recreation and transportation, among others.

No where is there a discussion of how the Net Pension Liability is likely to grow. City contributions to retirement plans as a percentage of payroll has been growing steadily (see my previous article). That is a reflection of the increasing burden the retirement plans are having on the budget.

Ron Galperin is the best controller Los Angeles as ever had – by far.

If the city elections were held tomorrow, he would have my vote.

However, this all demonstrates how strong the influence politics has on the Office of Controller. No one wants to risk raising awareness over this controversial and costly problem, because doing so could create tensions with the powerful public unions many of our elected officials depend on for their re-election campaigns.

Galperin may not be a beneficiary of such support, but he must work with city officials who are.

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