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Archive for July, 2017

In several of my articles, I’ve characterized the City of Los Angeles’ finances as being in a state of virtual bankruptcy.  Pension costs are the key drivers of the city’s unsustainable model. Growing pension costs are plugged by reducing service levels or holding them flat in the face of higher demand.

It appears as if I am not the only one to coin a term for this form of neglect.

An article published by the California Policy Center describes it as “Service Insolvency.

I like mine a little better.  It’ packs more punch.

No problem, though. Service Insolvency gets the point across.

One need not look much further than police staffing to understand what it all means.

The city’s population grew from 3.7M in 2010 to 4.0M in 2017….and the trend will continue.   The 300-thousand increase is the equivalent of a small city.

Violent crime grew 38% over the two-year period ending December 2016, after a period of stability going back to 2010.

Robberies increased 14% since 2015 citywide.

The LAPD ranks have fallen below the 10,000 achieved in 2013.  Its per capita numbers rank way below New York’s and Chicago’s.

Despite the widening gap between higher crime and LAPD’s resources, there has been no serious plan offered to narrow it.

City Controller Ron Galperin’s recommendation to reassign officers from desk jobs to the streets was a good one, and has the potential to free up 450 officers.  But the city requires a force of 12,500 to perform effectively, that’s according to our current police chief, Charlie Beck, and his predecessor, William Bratton. That level requires a bit more than what Galperin’s proposal would cover.

One can argue about the exact size of the force required to maintain an acceptable level of service, but trends clearly support the need for a sizable increase.  Let’s not forget the additional civilian jobs needed to support a larger force and those hired to backfill the desk jobs.

The problem is money; that has always been the case.

To put it in perspective, if you assume the LAPD has a budget of $1B, a 25% staffing increase would add $250M per year.  That’s a very raw number and does not factor in economies of scale. Still, an overall increase of well north of $100M would not be a surprise.

A key factor which limits how much can be budgeted is the city’s share of pension costs. They consume 20% of the general fund budget, up from 5% in 2002. In 2008, the beginning of the great recession, it was 15%. So, despite a robust recovery, the slice has increased in size.

And let’s not get into the unfunded liability, which has also grown significantly since 2003. It is a leading indicator of more financial stress in the years to come. Citywatch’s Jack Humphreville could teach a course on the subject.

It is difficult to increase the level of service while lugging that much baggage.

Former Mayor Antonio Villaraigosa promoted a trash fee hike to pay for an additional 1,000 officers (although it fell far short of that number).  But the public is not going to tolerate a layer of expensive new fees, especially if they disproportionately fall on property owners.

Until City Hall pushes back against the public unions and demands higher employee contribution levels to go towards their incomparable retirement benefits, look for the mayor and City Council to propose fees. Probably not all at once – that would never fly – but over time.  A parcel tax here, a sanitation fee there.

Outsourcing many civilian jobs to the private sector would also help to decrease the benefit load.

Restructuring the labor force and increasing employee contributions are not going to happen given the composition of our current city council and the grip the unions have on its members.

Diminution of vital public safety services will continue until reaction time and effectiveness become intolerable.

And for many, that is probably the case today.

If only they voted.

 

 

 

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LA unFitness

I am a member of LA Fitness.  I most often use the facility at Universal City because it has a hardwood basketball court.

Although my recreational playing days are over – no semblance of speed left in me – I derive much fulfillment  from moving the ball around the court, going in for a layup and nailing a 3-pointer from the corner.  Actually, I still have a pretty good shot.

Overall, it amounts to an enjoyable form of exercise and loosens me up for the rest of my routine…..and I can pretend to be any guard in the NBA,  although delusion might better describe my thoughts on the floor.

My basketball activities are best suited for times when the court is not crowded, usually late Saturday and Sunday afternoons and early evenings; and that’s when I notice it.  It was particularly evident today.

The sidelines were lined with empty water bottle and energy drink containers,  with partially eaten food items, too- I saw two banana peels just today.  Based on the volume of refuse, I estimate about 30 people were responsible .

I have complained to LA Fitness about this before.

I did so, again, today.

This time I made a suggestion that the facility’s management place signs in the gym reminding players to clean up before they leave. Even then, there will probably be those who ignore the message.

If that doesn’t work, LA Fitness should threaten to close the gym for, say, a week. Then do it again, if necessary. Maybe then there will be some peer pressure by responsible members to get the slobs to perform the simple task of tossing waste in a trash can.  Even the worst players can make that shot.

I know this solution sounds like a form of parochial school discipline one might expect from the Sisters of Perpetual Abuse, but we are dealing with those who lack basic respect for other members, and especially for the maintenance crew assigned to clean it all up at the end of the day.

 

 

 

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Much has been written and discussed about the recently approved contract with DWP’s IBEW Local 18 members.……but not enough.

I will not revisit the points already covered by Citywatch’s Jack Humphreville and the LA Times’ Steve Lopez –  mainly, the unconscionable disregard by our elected officials for their constituents and neighborhood councils across the city, all of whom should have had a voice in the negotiations.

Consider this the epilogue.

Where was our Ratepayer Advocate? Did anyone hear from him?

In all fairness, Fred Pickel was left in the dark throughout the process.  Basically, he knew what we knew, and at about the same time.

But as a ratepayer advocate, he needed to step up and at least rally the neighborhood councils, to inspire an outcry against this blatant insider process which denied their participation.  Perhaps nothing would have changed, but allowing the mayor and City Council to conduct such critical business in the absence of public input – unchallenged – is not the stuff of advocacy.  Pickel could have at least picked up the phone and called Steve Lopez.

The NCs are also partly responsible for the current state of affairs. If ever an issue should have called for drawing a line in the sand, it was this one.  The NCs have quietly and steadily acquiesced to City Hall over the years.  Oh, how things have changed since they backed the effort which defeated Measure B!

The IBEW did not agree to any substantive concessions.  The members were well compensated before the deal; they are now more so.  Still no contributions towards health care, either. The argument about staying competitive with other utilities is as big a sham as Pickel’s approach to advocacy. There is not going to be a mass exodus of trained DWP employees for greener pastures.  If anything, some turnover would be desirable to maintain a better balance of age demographics. It would facilitate an orderly and more gradual replacement of retirees over the long-run.

City Controller Ron Galperin recognized the need to adequately compensate those workers who require special training and are susceptible to competing offers, but as he told the Times: “At the same time, I’m not convinced that all of the across-the-board increases were justified by the need to attract and retain employees.”

He is correct.

Then there’s the matter of the two Joint Trusts, those grossly mismanaged entities which were used to fund conferences in Hawaii and Las Vegas, along with five-star dining, for union bosses and their minions; to pay inflated salaries to staff who could not balance the books and to promote safety programs, although DWP maintained a robust budget to do the same. Funded by an annual contribution of $4M from ratepayers, it was quite a perk for D’Arcy and company.

The good news is the trusts will be dissolved; unfortunately, not right away.  The first step will be to consolidate the two, which was one of the necessary reforms requested in the wake of Ron Galperin’s revealing audit – and should have been accomplished already!

The audit exposed the negligence of the day-to-day management and the shameful indifference to it by the trusts’ board members, half of whom were appointed by the city. It also pointed out the inefficiency of maintaining two separate trusts when they could easily have been managed as one.

But here’s the kicker – there may be as much as $15M in cash remaining with the trusts. The latest available IRS 990 filings are through June 2015 and reported $12.5M on deposit.  Given past spending patterns, $15M is a reasonable estimate for today’s balance. The surviving trust will draw it down to zero. And given those same patterns, don’t expect the money to be spent wisely.

For that matter, what happened to the progress reports for the reforms? The last one I saw posted on the DWP website was from over a year ago.  It was written by former GM Marcie Edwards.  The details were scant.  She appeared to have approached it with the enthusiasm of a fifth-grader writing a punish assignment. From her perspective, maybe it was.  After all, she openly endorsed D’Arcy’s criticism of the audit. Regardless, given the trusts’ track record, the progress report meant little without a new audit,..and no one downtown was clamoring for Galperin to do a follow-up, much less fund one. I am certain he would have welcomed the opportunity.

Considering how generous Garcetti was by agreeing to allow union members free health care, you would think he could have sweet-talked D’Arcy into returning the remaining cash.  It would have been a one-off item with no effect on the other provisions of the contract.

Now $15M is not large relative to the overall cost of the deal, but in a city where residents are paying more to expand mass transit and construct homeless housing; where the backlog of street repairs extends for decades; and where the LAPD lacks the resources to combat growing property crime, leaving cash on the table sends a disrespectful message to the residents.

It amounts to a poke in the eyes to all of us.

And not just a one-finger poke.  No, I’m talking about the two-fingered jab used by Moe on his fellow Stooges.

To the mayor and most of the City Council members, we are Larry, Curly and Shemp.

 

 

 

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