UPDATE: 2 p.m. Wednesday.
The city council has just approved a motion to wrest control of the DWP away from the mayor. This would require a ballot measure.
I got a note late Tuesday night from a friend of mine who is a very talented LA librarian. She had evidently just heard Mayor Villaraigosa’s newest plan to shut down all of LA’s “nonessential” agencies’ for two days a week and other dizzying acts of fiscal brinkmanship.
“He’s making a whole lot of people very very scared including me,” she said. And then my normally refined and dignified friend, called Antonio a less than printable name.
The LA Times Op Ed for Wednesday explained the situation in stark terms.
Here are some of the most relevant parts of the essay:
Los Angeles is suddenly back in a deep and immediate financial crisis, and this time it’s not a result of recession, the mortgage meltdown or a persistent structural deficit. All those things pushed the city to the brink, but officials had begun dealing with the problem by making painful yet necessary program and job cuts. Now, just as the city was backing away from the edge, Mayor Antonio Villaraigosa and the Department of Water and Power are trying to see just how far over it the city can hang without falling. It’s an arrogant and irresponsible approach that leaves the city short of cash to pay its bills and compelled to imprudently empty its reserve fund, shut down city services or lay off more people.
At issue is the DWP’s breach of its commitment to transfer cash, as it does each year, from its account to the city’s general fund. As a municipally owned utility, it makes the transfers in lieu of the taxes that privately owned utilities must pay to the state or the dividends they must pay their investors. The DWP promised $220 million in the current fiscal year, and city leaders planned, budgeted and slashed accordingly. But the money comes in installments, and the utility had yet to pay the final $73 million. DWP officials now claim they never had any intention of making the final payment — unless the City Council agreed to increase power rates….
The city agreed to raise the rates—but not as much as the mayor and the DWP wanted. So in retaliation the DWP harrumphed and said it wasn’t going to give the city the $73 million period.
Things have gone downhill precipitously ever since. City Controller Wendy Greuel said that without that $73 million payment from DWP, the city’s General Fund would be $10 million in the red by May 5 and LA wouldn’t be able to meet its payroll. Next came the news that the city’s emergency fund—which is not meant to be the can’t-balance-the-budget purse—had to be raided. The fun-filled day climaxed with the mayor’s announcement that all city workers—save fire and police (or workers for any city agency that “makes money”)—will lose 2 fifths of their salaries, starting Monday. Those who are not laid off altogether that is.
Yeah. I think scared is an appropriate response.
There’s a lot going on in the city
UPDATE: The mayor is on Air Talk on KPCC Wednesday morning. Live right now. Podcast later.
Villaraigosa is interesting. Although I believe this problem deserves to be laid directly at his doorstep, there are some other doors that should get part of it, one of which he mentions.
He said, “If the union leaders would agree to a 4 percent pay cut [at least I think that was the number he gave.] we could generate $450 million. If the unions would take a voluntary cut, I wouldn’t have to shut down City Hall.”
The comments section for the KPCC story is particularly good—with a lot of very angry, and very articulate LA residents weighing in.
NOTE: I’m tentatively opening up the comments section. Operative word, “tentatively.”
First off, maybe a better solution would be to put the Mayor on a 2 day work week and have his salary cut, and secondly if the DWP doesn’t fork over the tax then the city should confiscate and occupy the DWP building and reposess all the equiptment and vehicles. And why not garnish the paychecks of all DWP executives, treat them like the deadbeats they are.
Oh yeah, let an ordinary citizen refuse to pay the tax and see how long they would get away with it.
What a shock and surprise the city of tax and spend is going bankrupt. We just need to add thousands more poor and uneducated “undocumented guests” to the cost of schools and other social service in Los Angeles to complete the financial collapse.
The Mayor and City Council should be commended for all their hard work balancing the budget over the last two years when their financial advisors first brought the budget shortfall to their attention.
You cannot do what LA does and survive financially. You can sure FEEL GOOD about yourself and what you are doing for those less priviledged. For awhile. Then the bill comes due. Then you don’t feel so good anymore.
Don Quixote says:
Oh yeah, let an ordinary citizen refuse to pay the tax and see how long they would get away with it.
LOL. So Mr. Quixote is upset about how the average citizen in LA is forced to pay taxes to bail out LA because of irresponsible government leaders while some people escape the heavy tax burden. Hmmmm. That’s exactly what the Tea Baggers say about the federal government. ROFLMAO.
Mr. Quixote also says:
And why not garnish the paychecks of all DWP executives, treat them like the deadbeats they are.
Take out DWP, insert GM/Chrysler and Mr. Quixote is making another Tea Bagger statement. The irony just gets more laughable.
I’m with you Mr. Quixote. The deadbeat executives at DWP, GM and Chrysler need to be held responsible for their failures. I’m not attacking you. I agree with you. Welcome aboard. Glad to see you’re finally fed up with the average citizen, the people, the gente, having to pay very high taxes to support government waste and chronyism.
We all need to support Mr. Quixote. Woody, Sure Fire, no smart aleck comments about this. Keep it clean. Keep it mature. Mr. Quixote should not be ridiculed or demeaned simply because of his conservative views regarding taxes.
ATQ, ditch the snide tone that is clearly geared to start a fight, or risk deletion.
I’m in a No Tolerance, entirely fascist state of mind about the comments section. So play it straight up, or you’re out.
City budgets don’t really lend themselves to the kind of left/right “analysis” we see so often at the state and federal level. In LA, 42 cents from every dollar goes to public safety – certainly a worthy goal. The next largest sum, 26.4 cents goes to keeping the city clean – street cleaning and sewage treatment and the like. Another 12 cents goes to transportation funding. If you look at only unrestricted revenue, nearly 70% goes to police and fire. Obviously the further breakdowns are important and I’m sure we could all find several things we individually find objectionable, but by and large the issues facing local government are about using money wisely and efficiently, not funding things that are outside the purview of local government.
This is from 2009: http://www.ci.la.ca.us/cao/budgetsum/BudgetSummary2008-09.pdf
I could see if the economy was doing fine elsewhere around the country and it was just Los Angeles having problems…
BTW, Celeste, last night comcast’s guide said Father Boyle was supposed to be on Tavis Smiley (PBS), and someone else was on. Now the guide says Boyle’s on Tavis, tonight. Would you happen to know?
You got it Celeste. No snide tone in an attempt to start an argument. Straight up.
LA is now having to pay the piper for it’s insane fiscal policies and practices. Member the Fram Oil Filter commercials? Their whole motto was “You can pay me now, or you can pay me later”. The fiscal situation in LA is a classic example of policians and city leaders wanting to please all the people all the time. In order to do this, they implemented insane fiscal policies and social programs that have bankrupted the city. Now the bill is due. Now Mayor Antonio, along with several other city leaders is not so popular.
Nobody would run a business like the gladhanders at City Hall have run LA. If they did they would be out of business when the bill came due. Only governments can run that way. When they go broke, their only answer is to keep raising the taxes of the citizens.
Here’s the kicker. The federal government is now running the country the way LA has been run for the last few years. Satnd by. LA is simply a thumbnail sketch of what’s happening in DC, and if it doesn’t stop the country will go broke.
ATQ, maybe I’m misreading things, but I think a look at the budget shows that most of “social programs” that you dislike are a miniscule part of the budget. The vast majority of discretionary funding looks to go to cops and firefighters. This kind of crap (http://tinyurl.com/y8595vo) is infuriating, but not particularly consequential. I encourage you to identify what you specifically object to and see if it’s really a significant contributing factor to our budget woes.
LA has only been run like this the past few years, ATQ? What changed a few years ago?
Let’s keep in mind that the mayor made an unusual personal appearance at city hall a few weeks ago or so, to back up chief financial official Santana on demanding some 4000 layoffs to appease Wall Street which had already downgraded the city and would continue to do so until it saw actual layoffs and the city doing something besides talking. But a number of councilmembers balked and called Santana “heartless,” notably Alarcon, while others like Bill Boyarsky called him “The only grownup in the room.” (Who’s now out of the picture and in rehab, after driving home from DA Steve Cooley’s roast.)
Janice Hahn demanded that instead of actual layoffs workers be transferred to payrolls of Ports – her area – LAWA, and DWP. Koretz, Rosendahl, Wesson etc. all concurred, anxious not to upset the unions – and in truth, creating unemployment and deciding where, is a heart-wrenching emotional issue. But this is hardly all about Democrats appeasing the unions: while the Republicans were happy to cut other people’s jobs, Parks and Smith wouldn’t accept pay cuts for themselves (Parks is famously getting a $500,000 annual pension in addition and Greig SMith a hefty one as well, both former LAPD). Trutanich of course wanted to sue the council for implementing any layoffs in his dept. and told the Daily News he wouldn’t take any cut himself because “I earned more in private practice,” earning himself a sharp and sarcastic rebuke in their editorial. Smith and Parks (who’s been called Republican in all but name) and Republican Zine were the caboose of the Budget Committee as it derailed the last two years. These are also the people who have insisted that the trash fee hikes which were tripled (for homeowners only) promised for cops, were never “really” meant for cops at all, but only to offset the “bargain” we’ve received til now on trash pickup. Putting the Mayor who shilled for the hikes, in the hot seat and being blamed by the public which doesn’t know the nuances of who does what in city government. New member Krekorian made a fancy speech denouncing the mayor’s plan but was absent for a key vote.
All these people are now pointing fingers at the mayor but as Wesson and Cardenas admitted, they all share the blame.
Jan Perry is seizing the role as head of the Energy Commission to scold DWP, and even Janice Hahn jumped in on the action yesterday, chewing out Freeman (who might wish he had stayed retired at the age of 81 or so).
Wendy Gruel meanwhile has been silent until it’s become clear that the public is demanding an audit of DWP to find out how much money it really does have. Eric Garcetti told CH. 4 news that the mayor is either weak, or strong and pulling the DWP’s strings while pretending to be weak. You quoted what Greig Smith thinks. Garcetti had a kumbaya moment a couple months ago when he declared that by all coming together, the council had averted disaster by the ERIP (which, as it turns out, means we’re losing the most capable workers) and union concessions, and clearly wants this DWP money to not look foolish.
So the mayor’s not any more at fault for the budget mess than the rest, seems to me. Where he did lost credibility is in starting out stating that the DWP needed the hikes for green energy plans (which Boyarsky claims is really all about the IBEW union wanting to ensure its members get any resulting jobs), without which the city would face federal fines (is that true?), and then claiming it was just about the budget crisis. Which is it? Where would the money go? And why has everyone forgotten about the decayed infrastructure, the bursting water pipes and exploding manhole covers and frayed overhead power lines? Isn’t that where any “excess” money the DWP has is supposed to go?
freeman was #@$^%$#@ing obnoxious as the moderator of the 4.24.10 “LA” panel of the LA Book Festival