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Archive for January, 2013

Next to “kick the can down the road” the most overused expression in the mayoral forums is “going to the table.”

I already expressed my frustration with the former; now it is time to take on the latter.

Just as Wendy Greuel was the primary utterer of “kick the can,” she apparently has a penchant for tables, too. Perhaps she serves beverages in cans to her guests at the dinner table. That’s OK. It is what she serves to the public unions at the bargaining table that’s the problem.

In a forum last week televised by KCET, Val Zavala of So Cal Connected asked Greuel about the support she is receiving from the DWP’s IBEW 18, the union that represents the most highly compensated employees in the city, Zavala acknowledged what critics were saying about Greuel: that she was “bought and paid for” by the union. Greuel denied the characterization. She attempted to defend herself by referring to how she has stood up to the DWP through her audits. However, none of her audits had anything to do with the IBEW and its manipulation of the City Council. The audits were directed at DWP management practices involving the use of P-cards and how the DWP Board attempted to hold back the transfer of the utility’s surplus to the city’s general fund. Neither issue had anything to do with the IBEW.

What the record does show is that Greuel supported the last round of DWP wage increases that have contributed to our rising utility rates. She supported Measure B, which would have guaranteed the IBEW jobs to install solar panels throughout the city – that is, with no competitive bidding, at the highest labor rate around. The IBEW contributed $250,000 to her campaign for City Controller. It is highly likely the union will contribute much more to her mayoral campaign with the latest pledge.

The IBEW knows what good table service is…and they tip handsomely. Greuel is serving them fine wine in crystal goblets, not Two-Buck Chuck in cans (soon to be $2.49 Chuck).

Zavala challenged both Garcetti and Greuel about relying on a growing economy to end the city’s fiscal woes, a position they have put forward time and again. She asked what they would cut if economic growth did not occur. Neither one answered the question. Greuel reiterated her unsubstantiated claim of identifying $160 million in savings and Garcetti emphasized his tax relief designed to win back automobile dealers to the city. No mention of cuts.

By contrast, Kevin James, Jan Perry and Emanuel Pleitez provided specific examples of the cuts they would make. All involved wage and benefit reform. That’s common sense given that 85% of the general fund is related to compensation. It is worth noting Garcetti acknowledged the 85% share, yet he dodged any mention of further reform beyond the negligible measures previously negotiated at the “table” (there it is again).

The most telling question of the evening was when the candidates were asked if they would renegotiate a scheduled 5.5% raise for city employees scheduled for January 2014. All but Greuel voiced an unqualified yes – even Garcetti. Greuel’s answer was that she would go to the “table” and “talk to them about it.” Not quite the stuff of hard-nosed negotiations. But what do you expect of someone vying for an endorsement from the SEIU?

KNBC TV sponsored a debate tonight. The positions did not change and, in the case of Wendy Greuel, her words were almost a verbatim replay from Thursday’s forum.

There were more references to the table.

To paraphrase a famous quote from Abraham Lincoln: a table without legs cannot stand.

Wendy Greuel and her colleagues in City Hall cut them off and sold them for scrap wood in a feeble attempt to balance the city’s budget. If she is elected, you can expect the table top to go next. It won’t be needed because even the semblance of labor negotiations will be a thing of the past.

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Mayoral candidate Wendy Greuel is also known as the Pothole Queen. I agree – except the reason should not be for her filling them, but by not addressing the mismanagement associated with creating them.

She has not done much to address the city’s infrastructure needs since her days of following street repair crews, slinging asphalt and tamping it down in a publicity stunt. These days, Greuel’s moniker should be Meter Maid.

I’m not referring to parking meters. I’m talking about the ones that track your electric and water usage; the ones that figure into the calculation of your ever-rsing DWP bills.

When she ran for City Controller, Greuel received $250,000 in support from IBEW 18, the union representing the most highly compensated employees in a city known for its generosity to public employees.

Apparently, that was the downpayment for her loyalty.

The stakes are higher in this year’s mayoral race. Garcetti has the dough to give her a run for the money. Jan Perry, has enough cash to make some noise. Kevin James is squeezing 150% out of his donations. His superior performance in various forums has earned him some positive publicity.

But fear not, IBEW local 18 will help fund a media blitz on Greuel’s behalf…..and a candidate doesn’t get something for nothing when backed by a powerful public union. One thing is for certain, ratepayers will continue to receive increases – all the more reason for City Hall to practice restraint and roll back utility employee wages and benefits.

It will not happen if Greuel is elected. She is owned and operated by the IBEW. There should be a line for her on your monthly statement.

That brings me to Jan Perry.

Perry has promoted herself as the ratepayers’ friend, suspicious of the DWP and its union. She does have a history of pushing back against rate increases and for insisting on greater transparency. Nevertheless, she has been anything but vocal on the subject during the campaign. If anything, Kevin James has claimed the spotlight on reform in general.

Perry now has a great opening to hit Greuel hard and perhaps earn some credibility in the Valley. She needs to expose Greuel as the champion for the DWP.

Garcetti took a swipe at Greuel at the Sherman Oaks HOA candidates forum the other night. As reported by Dakota Smith of the Los Angeles Daily News: “I do believe that if people spend a lot of money on you in an election, they aren’t doing it just because they love you. They want something from you.”

Garcetti’s remark was prompted by a question from James. It was the equivalent of a volleyball set and spike, reminiscent of Misty May and Kerri Walsh.

Apparently not much noise from Perry.

What the IBEW wants is continued support for lucrative compensation deals, which will add to an already challenged cost structure for the DWP.

There is still a large undecided slice of the voter pie in this election. It will take some trench warfare to earn a piece of it. That means seizing opportunities. Greuel has left herself open on a subject that impacts the wallets of the ratepayers.

Time is running out for Perry. She is in a virtual tie with James…and he just might pull away from her despite having much less cash. She has to go to the mat to stay relevant in the race, if not her political career.

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Snowpack looking good

Sand Harbor, Nevada State Park

Sand Harbor, Nevada State Park

The snow pack is excellent for this time of year, ranging from 150% to 200% of normal.

As always, February and March are the critical months, but if they are anywhere close to normal, we will be in pretty good shape.

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Family, friends and business associates are often shocked when I admit I occasionally watch Here Comes Honey Boo Boo.

It is as compelling as watching a trainwreck…more like a redneck trainwreck…or maybe I should say a redneck RV wreck – one that would make National Lampoon’s Christmas Vacation’s cousin Eddie proud.

So what’s the point of comparing the IQ of the City Council (and I may as well add the City Controller and mayor) to Toddlers and Tiaras’ star Alana Thompson’s mom June Shannon?

Do I really have to explain?

OK – here goes.

It was recently reported that June Shannon established a trust fund for her daughters, including Alana, that will invest the earnings the family receives from the show. That’s right, as much as they may “holla for a dolla,” they will have to wait until they are 21 before they touch the money.

“Hot damn” – as they say in the deep south – she gets it!

She should have been the mayor of Los Angeles for the past eight years. You see, Ms. Shannon understands the concept of matching revenues with future needs. In the case of the Thompson family, she does not want to spend current cash receipts on pleasing her children today at the expense of their future.

On the other hand, our current elected officials have spent lavishly on compensation at the expense of infrastructure and other long-term needs of the city family.  That family happens to be the residents who live and work here – not just the ones on the city payroll – many of whom do not even live in the city.

It is no surprise, then, that Council Members Englander and Buscaino have proposed a $3 billion bond to cover many years of neglected maintenance of the city’s streets, the debt service to be covered by property owners.

Before I simply dismiss Englander and Buscaino as a pair of white shoes matched with a pastel leisure suit, they are simply doing the bidding of the mayor, City Controller and their colleagues on the City Council. I am sure Council President Wesson selected them to carry the water since they might otherwise pass as fiscally concerned. Certainly, none of the other signers of measure – Tom LaBonge, Jose Huizar, Paul Krekorian and Paul Koretz – have anything resembling financially responsible credentials. They are the pastel leisure suits.

Mama June apparently knows the true meaning of a balanced budget. By contrast, we have been told year after year that the city has approved balanced budgets.  The bond proposal is proof positive that those assertions have been lies. It is an admission that there has been an unfunded liability of at least $3 billion, and that’s without the sidewalks.

Who will be the members of the Council introducing a bond measure to pay for the unfunded pension liability?

There is no end in sight to this game. We have been taken by a bunch of fast-talking rednecks.

While I cringe at some of June Shannon’s other parenting skills, thank God for Honey Boo Boo that her mom has some financial common sense.

When we vote in March, we have choices.

Let’s not elect a Wendy Greuel Greuel for mayor or a Denny Boo Boo for controller.

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I am not going to weigh in on whether City Controller Wendy Greuel misused her and her staff’s office time to engage in election activities.  The calendar is way too extensive for me to wade through.  I’ll rely on others to dissect it.

But I will consider the source.

Reporter Randy Economy (with a name like that he should have a TV business news show), earned credibility for his investigative reporting of County Assessor John Noguez that broke the story about the official’s alleged criminal activities.  It earned him praise from DA Steve Cooley.

Maybe he should change his name to Tenacious Economy – his investigation leading up to the story’s publication took two years. He did not back down on his records requests for Greuel’s calendars (under the State’s Public Records Act) despite being stonewalled by her office.

He is not someone to be dismissed.

Mayoral candidate Kevin James made Calendar-gate an issue and cited red flags.

Greuel’s response was predictable. Through her spokesman Dave Jacobson, she dismissed it as a “political smear.”

Greuel has some credibility, too – she is an expert on political smears.

Turn back the clock to 2009 when she was running for City Controller. She accused her opponent of being a tax scofflaw in a series of TV commercials late in the campaign.  Her foe could not come close to matching Greuel’s money, of which $200,000 came from her benefactors at the IBEW, making a comparable media rebuttal impossible (this article refers to the ad in the context of a story about the Kinde Durkee scandal).

I was familiar with the issue. Greuel’s campaign had no information even remotely connecting him to any personal income tax irregularity. Nor was there any irregularity in fact.

It did not stop her from making the allegations.

So to hear her complain about alleged political smears is laughable.

By the way, while Greuel dragged her feet releasing her calendars, Garcetti and Perry have offered their’s without reservation.

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“We’ve had four years of a press release Controller, and L.A. cannot afford a press release Mayor.”

So said City Council member and mayoral candidate Eric Garcetti, according to a report by KPCC. He was referring to lack of timely follow-through by Greuel on a May 2011 audit of city cell phone bills.

Garcetti said it shouldn’t take an election for Greuel to finally take some action on an old issue, but that’s her management style, in my opinion – a press release today; possible action sometime this century – when it is convenient for her benefit, not for the city’s.

However, they both missed a more important point: it was the failure of city department staff to ensure the cell plans were optimized, according to the audit.

Most operational audit findings can usually be traced to weak management or lax supervision. City Controller Greuel claims there is $160 million in waste or lost revenue opportunities, but those are estimates; not confirmed.  Through her press releases, Greuel likes to suggest they are the real deal, but governments are notorious for gross optimism, so I would not put too much stock in what she says.

Let’s just say, for sake of argument, that there is some substance to the audit findings – maybe 50% of the estimate is within reason. $80 million is still a chunk of change. Then why aren’t general managers and decision makers being demoted or fired upon discovery of serious shortcomings?  Why aren’t there outcries from Greuel and her allies on the City Council to replace failing or underperforming staff?

Maybe they don’t take their responsibilities seriously as long as they get elected.

Ask yourselves – if you owned a business and an audit uncovered significant waste, would you be motivated to make changes in your management staff?

It makes you wonder if all of City Hall is just one big empty press release.

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Politicians are always promising new jobs or improved revenues.

All of the candidates for mayor of Los Angeles are in favor of eliminating the business tax on gross receipts as a means of promoting economic development.  The tax has already been eliminated for all new-car sales in the city.

The mayor and City Council believe new-car dealers will be attracted to establish themselves in Los Angeles, leading to an increase in sales tax revenue which will far surpass the lost business tax revenue.

The same outlook holds for a complete elimination of the gross receipts tax for all businesses.

There is no doubt businesses will benefit, but will the city’s revenue from other sources improve enough to offset the loss of 10% of the general fund attributable to the business tax, or about $440 million per year? 

Eric Garcetti said the city has lost up to $60 million per year in potential sales tax revenue due to the exodus of almost 100 dealers over the last 25 years. I saw another projection of $43 million.

It’s tough to estimate. Garcetti is presenting a theoretical number.

How many of the sales from new or returning dealerships will come at the expense of existing ones located within the city limits?  Most consumers have no dealer loyalty.  They will buy from whichever one offers the best deal. 

Although it is reasonable to assume purchases from new local dealers will detract somewhat from neighboring cities, the auto industry is highly competitive – there are many factors that figure into pricing other than the impact of the gross receipts tax (equal to 0.127% of sales – a fraction of 1%)….and buyers do their homework. There is no telling how other cities will respond to LA’s move, much less how dealers outside our borders will alter marketing and sales strategies.

The estimate is further complicated by where the purchaser lives, because that determines the overall sales tax rate. Also, how quickly can we expect dealers to set up shop in the city, to the extent they do?

One can only imagine how much more complex calculating the benefits of eliminating the business tax across the entire spectrum of products is.

I am glad our city leaders and candidates are considering revamping the tax structure; I am not pleased by how Garcetti, in particular, is presenting it.

The impact is far from a sure thing.  The timing  of the business tax elimination could crater the general fund if the loss in gross receipts revenue and the additional sales tax are not in sync. Garcetti makes it sound as if the benefits are immediate and certain. Our city has a history of being too optimistic in its projections.  Garcetti is part of that history.

Garcetti, like Greuel, would rather bank on unsubstantiated revenue claims rather than face the reality of restructuring the employee compensation programs absorbing 85%-90% of the general fund. But that would mean jeopardizing their public union support.

I hope this issue is a major talking point in the controller’s race, too.

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