Tuesday, February 2, 2010

Two strategies to avoid LA City going bancrupt.

The City of San Diego, like most California cities and other local agencies, such as the LAUSD, are facing the same financial crisis as the City of Los Angeles. In the case of San Diego, some uninformed people have proposed having the city declare bankruptcy as a device to cancel pension payments. The mayor of San Diego argues that this strategy will not work, and instead the city should pursue a combination of pay cuts for current employees with increased retirement deductions.

The San Diego mayor's alternative to bankruptcy of reducing compensation to current employees while increasing their retirement deductions is already being pursued by the City of Los Angeles -- with disastrous results.

But neither alternative -- bankruptcy or cutbacks -- is desirable or inevitable. The real thrust of labor should be:

1) Identifying financial resources which, if collected, would prevent cutbacks on public services through furloughs, layoffs, and increased deductions. The obvious sources are:

- Uncollected fees, largely on the thousands of bootlegged construction projects and signs in Los Angeles. Not only did the owners of these projects avoid paying Building and Safety their clearance fees, but the increased valuation of their property never translated into increased taxes.

-Reclaiming the hand-outs to the larger real estate projects, such as LA Live and Hollywood and Highland. They got loans from the City, as well as waived fees and taxes, plus subsidized infrastructure. These gifts now total several hundred million and probably more if there were detailed accounting by the CAO and the City Controller.

- Restoration of Federal programs, cut over recent decades, which have contributed to the City's perpetual budget crises. Of course this requires serious advocacy by our elected officials, who appear to care less about this incremental loss of Federal funding.

2) Reviving the labor-neighbor alliance which existed for several years during the fourth Bradley administration and the two Riordan administrations, when similar cutbacks, demotions, tiers, and layoffs were imposed on city employees and residents. Under the old EAA's leadership, the providers of municipal services (City employees) linked forces with the consumers of municipal services (residents). The current budget crisis offers the opportunity -- now emerging through the work of Ron Kaye -- to revive a labor-neighbor alliance.

These approaches, rather than arguing over which ox should be gored, while the Mayor's office takes advantage of the budget crisis to impose its own grim reforms on City government, is the way to go!

Dick Platkin


Tierra Concepts, Inc.

Tel. +1-213-308-6354, FAX +1-323-938-7027

No comments: