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Archive for October, 2014

Covering the campaign to replace LA County Supervisor Zev Yaroslavsky should have been near the top of my agenda.

Alas, my schedule has kept me away from home for several weeks during which time the candidates have ratcheted up the intensity.

The last thoughts I shared about Sheila Kuehl and Bobby Shriver go all the way back to the days immediately following the primary. They were positive thoughts.

Things have gotten testy lately, especially with Kuehl’s jabs about Shriver being the youngest child or what his initials stood for. Those remarks are typical trash talk that emerge in any race; they won’t gain or lose any votes. Shriver appeared to ignore them.

But there was one remark by Kuehl which should be taken seriously. She called Nevada foolish for offering Tesla a $1 billion tax break for a battery plant which will eventually employ 6,500 full-time employees and create hundreds of construction jobs. Instead, she stated Nevada would be better off adding 6,500 government jobs.

Two problems with her statement: the tax break is an opportunity cost – not hard dollars – and government jobs come at the expense of the taxpayers.

Nevada is not giving up much, if any, revenue because there is no other employer on the horizon approaching the size and scale of Tesla to occupy the site for the battery factory. In addition, the new jobs will lead to more sales and property tax revenue. I analyzed the deal in an earlier article.

I can overlook her lack of familiarity with the Tesla deal, but her logic that adding government jobs is better than increasing private employment raises very serious questions. Perhaps it was partly hyperbole – politicians are prone to using it – but I sense she is deeply committed to developing a strong alliance with the public unions. They are certainly investing heavily in her – over $2 million.

While both Shriver or Kuehl will have no choice but to work within the County’s current $26 billion budget, Kuehl may be inclined to cement ties with county employees by offering retirement and health benefit enhancements which will burden future years. She could be the swing vote for labor on the board.

Perhaps I am reading too much into her statement, but where there’s smoke, there is fire.

And with important labor negotiations coming up, there will be much pressure by the public unions on Kuehl to deliver. This is an issue that needs to be pressed in the remaining days of the campaign.

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The office of State Controller rarely makes the front page. Cash flow management and audits are not the sexiest topics in any government.

Occasionally, it does attract attention, as when John Chiang, the current but termed-out occupant of the office, attempted to enforce Proposition 25’s provision that legislators would be denied their pay if a balanced budget was not passed by the statutory deadline. That was back in June 2011.

A lawsuit filed by none other than John Perez charged Chiang with exceeding his constitutional authority. The court ruled in favor of Perez.

The messy dispute proved two things: never trust a proposition that guarantees accountability, and that Perez was just another political hack with no interest in accountability.

It is ironic, then, that Perez ran for State Controller this year after weakening the office with his lawsuit. Seemingly invincible with the bottomless checkbooks of the public unions behind him, he failed to take in account the competence of his two major opponents.

In a rare victory for the public, intelligence triumphed over arrogance. Ashley Swearengin (Republican) and Betty Yee (Democrat) had superior qualifications. Their combined votes squeezed Perez out of the runoff.

But it was also because the union mantle worked against Perez. “Many fiscally conservative Democrats and independents simply don’t trust a crony of government unions with the state’s books,” according to the Wall Street Journal.

That brings us to today.

With Perez out of the picture, public union support is flowing to Yee, providing her with a funding edge. But Perez enjoyed a 3-1 spending advantage over Yee in the primary and still finished out of the money. Cash may not be as important a factor in a race for a position few voters can define.

Yee has flip-flopped on her position on the expensive high-speed rail project. While originally against it, she now favors it in an attempt to consolidate union and environmental support. Oddly enough, Swearengen also supports it, but she has never changed her position.

Yee serves on the State Board of Equalization, so taxation is a subject she can relate to, but she was also former Governor Gray Davis’ budget director, during which time California went from a surplus position to a deep deficit – not the type of experience you want on your resume. Swearengin is the Mayor of Fresno and won acclaim for saving the city from the brink of bankruptcy. She does not support Neel Kaskkari’s candidacy for governor.

Swearengin is definitely the underdog in the race despite finishing on top in the primary. Experts believe she would have benefited from facing Perez where her gender would have been an asset. She has been endorsed by the Los Angeles Times and the Daily News.

On balance, I favor Swearengin because of her experience as a public and private executive dealing with diverse operations. Yee, although also adept at crunching numbers, has served mostly in a supporting role.

For certain, this is the race that will garner the least attention in part because the two opponents are not dramatically different.

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As I stated in my previous article on the Ebola crisis, there is probably little risk of a major outbreak of the disease in the United States.

But there is a cost.

Just think of the resources that were devoted to dealing with the late Thomas Duncan. 76 staff members of Texas Health Presbyterian Hospital were involved in his care. One unfortunate provider was infected (fortunately, doing well according to reports). Her infection has triggered monitoring the other 75. If one of them comes down with it, another round of monitoring and possible infection commences.

A rate of one out of seventy-six does not sound ominous. However, do the math if the United States receives another unexpected carrier of the deadly disease. How about a few dozen?

British Airways and Air France, among other carriers, have already banned service to the countries suffering the wrath of Ebola.

The reason for Dr. Thomas Frieden’s objection to a United States flight ban to and from West Africa is evidence he does not want to admit his assessment of the medical establishment’s readiness to deal with this very dangerous virus was deeply flawed.

He is putting his personal image before public safety.

Regardless, the employees of the airline industry in the United States may decide otherwise. How long before flight crews, attendants and ground personnel decide they do not want to service routes in and out of the most affected nations?

No flight ban will be foolproof, but it makes no sense to increase the risk of spreading the disease through reckless disregard of human nature – people are going to want to get the hell out of West Africa, especially when WHO expects 10,000 new cases per week going forward. Undoubtedly, some of them will be asymptomatic carriers who will end up in our emergency rooms.

Dr. Frieden is suffering from Ebola of the brain. He needs to be removed and quarantined from formulating health policies.

We have other public health demands that will suffer as a result of redirecting valuable resources to combat Ebola.

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Ron Galperin has added more value to the City Controller’s office than all of his predecessors combined (the last occupant actually decremented the office’s role).

It is not just opening up the books of the city to the average resident and standing up to the thug running the DWP’s IBEW Local 18, either. Galperin has changed how the city reports its performance to the public.

The preliminary financial report is a scaled down version of the final Comprehensive Annual Financial Report (CAFR). It is the closest thing to an aggregate summary the city has, yet prior preliminary reports were an encyclopedia of vast detail with poor graphical or tabular displays of key relationships. One would have to spend hours sifting through pages of bureaucratic vernacular to uncover relevant details.

Ron’s integration of bullet points in the sidebar and crisp charts displaying the most meaningful data are refreshing enhancements compared to the mind-numbing narratives prevalent in past reports. Not only do they facilitate a better understanding of performance drivers, but the points should spur some casual readers to delve deeper into the subject matter, perhaps searching the internet for related topics.

There is always room for improvement.

A summary similar to the preliminary report should be included in the final CAFR. While little should change in the time between the issuance of the two reports, there should be a summary that is a product of the audited financial statements.

Both the preliminary and CAFR should include more trend analysis with respect to key revenue and cost components. For example, property tax revenue is the largest single source of revenue (33%), but it is the least controllable. Assessed values have stayed relatively flat since the mortgage crisis. Oddly enough, it may have been Proposition 13’s automatic increases that prevented them from falling through the floor. Links to real property data and projections should be an integral part of the report. I would go so far as recommending an annual report on this subject alone.

The city’s share of pension contributions, just short of a billion dollars in 2013-14, represented 16% of the general fund. It was a mere 4% back in 2002-03 at $194 million. It will likely grow, especially if the Coalition of City Unions is able to halt the rather sensible reform measures Mayor Garcetti helped craft when he was president of the City Council.

The growth rate of the city’s contribution is unsustainable. Galperin should issue an annual report tracking the latest developments on this front and the potential impact upon future years. He can work in concert with Chief Administrative Officer Miguel Santana.

These are just three examples of important disclosures.

The voters elected the right person to the office. We now need to do everything possible to support and encourage Ron’s practical and informative approach to reporting the city’s financial position.

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I am not fearful of an outbreak of Ebola in the United States as a result of the turn of events that landed an infected person in Dallas.

Public health authorities will not leave a stone uncovered along the trail of contacts left by the patient.

What I am concerned about is the assumption by public health authorities that the United States is fully capable of defeating an outbreak of the disease within our borders.

CDC Director Dr. Tom Frieden assured us in no uncertain terms that the medical establishment is up the challenge. Within days, his confidence has been repudiated.

Dr. Frieden might be the best physician in the world for all I know, but he lacks common sense when it comes to gauging human behavior.

You see, one cannot count on infected persons to share all of their pertinent, personal medical information. One cannot depend on trained medical personnel to connect the dots even when they are arrayed in front of them. Finally, one cannot depend on the government to make the lives of citizens and residents a priority.

The patient, Thomas Duncan, although he informed the ER at Texas Health Presbyterian he had traveled from Liberia, did not bother reporting he had been in contact with an infected person exhibiting full symptoms of the disease. Given the sorry state of knowledge about geography in our nation, it is possible Liberia’s location on a map did not click with the ER staff responsible for taking the patient’s information. And just why did our government allow anyone traveling from West Africa to enter without being quarantined? Taking someone’s temperature at the point of departure is ineffective screening for a disease with an incubation period as long as 21 days.

Other facts are equally disturbing regarding the dangers from this procedural breakdown.

The disease is spread by the exchange of secretions. Mr. Duncan was visiting his girlfriend. Need I say more?

He came in contact with children. Children are secretion machines both at home and in the play yard.

About 20 people had direct encounters with Duncan, no telling how many had indirect contact.

Public health workers will be hard-pressed to monitor the 20, not to mention search for other possible secondary or tertiary contacts.

The official death toll in West Africa is around 3,500, a marked increase from just a few weeks ago. All medical professionals acknowledge that the number is a gross understatement.

Would it be too much to ask our government to quarantine passengers from the afflicted areas, if not ban all non medical travel until the outbreak has burned itself out?

We have more than enough medical priorities here.

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