Sunday, March 7, 2010

The Race to the Bottom in Los Angeles

The Los Angeles Times (March 1, 2010), Southern California’s rapidly shrinking, former newspaper of record, complains that Los Angeles’s elected officials, primarily Mayor Antonio Villaraigosa and the 15 members of the LA City Council, do not have a plan to guide them in their massive, highly selective cutbacks in municipal services, layoffs of public employees, and increases in fees for city services. It is too bad that the editorial staff of the LA Times has not bothered to read its own newspaper. If they had, they would know that LA’s elected officials have two plans before them, and they are carefully following one of them. They would also know that similar plans are also being implemented at the LAUSD, not far down the street from City Hall. Its budget is as large as the city’s, and its budget deficit is even larger ($600 million vs. $450 million). Likewise, LA’s regional transit agency, the Metropolitan Transit Authority, and the Los Angeles Community College District, are also facing massive budget deficits and responding to them with the same approach.

One plan available to LA’s elected officials, called the Los Angeles General Plan Framework (GPF), is required by California state law and cost the city millions of dollars to prepare back in the early 1990s. It was based on rigorous research and honed through several hundred public meetings. It was then carefully reviewed, debated, and legally adopted by the City Council and signed by the Mayor. This plan forecast the city’s growth and clearly identified LA’s policies and programs until the year 2010. But, shortly after the plan’s adoption the GPF was dropped like a hot potato. It became a shelf document. It has been totally ignored ever since by the city’s elected officials, department managers, and local press. This shelf document is about to expire, and there are no plans to update, rescind, or replace it.

Nevertheless, the officials at LA’s City Hall still have another plan to guide their cleavers in carving away vital municipal services and firing thousands of public employees. It is their “Race to the Bottom” plan. The difference is that the Race to the Bottom Plan was never openly researched, put in writing, debated, legally adopted, or shared with the public. Nevertheless, the LA Times reports about it every day, including intricate details about the two teams competing with each other to most quickly hit bottom.

So what is the Race to the Bottom plan, who are the two teams competing to implement it, and what are their differences?

In one corner is Mayor Antonio Villaraigosa. He is backed up by a majority of the largely Democratic City Council and guided by the City’s Administrative Officer, hatchet man Miguel Santana, as well as his own in-house Wall Street banker, Austin Beutner. The latter’s illustrious pedigree includes high finance jobs at Smith Barney, the Blackstone Group, and working for the U.S. State Department to assure the rebirth of market capitalism in Russia. The Mayor also has a cheering section from Wall Street’s three major bond rating companies. Their job, like the LA Times, is to stampede the City Council whenever it takes a breather in its slicing and dicing of city government’s non-police functions.

In the other corner are several members of the Los Angeles City Council. They are backed up by most of the city’s employee unions and some neighborhood associations. So far this team’s greatest achievement has been to cut city programs from the top through the ERIP, a golden handshake program to retire 2,400 older employees. Otherwise, they call for slightly less contracting out municipal services and more scrutiny in selling off city assets.

So, what is the mysterious Race to the Bottom plan on which these two teams agree? It has at least 15 components:

1) Reduce the non-police role of city government by eliminating several civilian departments, shrinking many municipal programs, and getting rid of thousands of career city employees in these superfluous offices. They are throwing overboard those civil servants who deal with cultural events, urban forestry, libraries, parks, environmental affairs, social services, and neighborhood councils. So far the two teams reluctantly agreed to the early retirement program and are now preparing to fire 4,000 city employees, with the Los Angeles Police Department, of course, exempted. While Los Angeles has had many smaller budget crises in recent decades, all associated with hiring and pay freezes, this time the elected officials have really rolled up their sleeves. In the midst of a deep recession, these wizards want to slash public payrolls to make sure that the city keeps up with the job losses of the private sector.

2) Cut the hours and pay of remaining non-police employees by 10 percent through furloughs.

3) Reduce the power of public employee unions to organize labor actions, negotiate contracts, protect their members, and set an example for workers in the private sector.

4) Increase the payroll deductions for remaining civilian employees.

5) Except for parking violations, minimize enforcement of the city’s many laws, especially building and zoning codes.

6) Accelerate the processing of building permits and related city planning land use “entitlements.”

7) Increase city revenues through jacked-up regressive fees on city services, such as electricity, water, and garbage collection, as well as enormous increases in the cost of parking meters and fines for traffic violations.

8) Offer truly enormous grants, cheap loans, fee waivers, and subsidized public infrastructure to large real estate projects.

9) Avoid any analysis of the causes of the city’s repeated budget crises in the past or at present, other than the current recession.

10) Never call for any progressive taxes and never mention Proposition 13, what serious analysts know has become a tax dodge for commercial property and which has cost state and local government dearly for over thirty years.

11) Maintain absolute silence on the long-term reductions in Federal program for cities since the Nixon administration, as well as two expensive current Federal programs for which the sky is the funding limit: the bailout of the banksters and the endless wars in Iraq, Afghanistan, Pakistan, and probably Iran.

12) Sell off money-making city assets, such as parking structures and parking meters.

13) Privatize city services, such as computing, which will go to Google.

14) Defer investment in the city’s infrastructure, even though Los Angeles sits on major earthquake faults and is subject to life-threatening floods and wild fires.

15) Begin to reduce public employee pensions by changing deductions, retirement formulas, and age requirements.

Viewed in the aggregate, the Mayor and the City Council clearly have a plan, and its essence is to use the cover of a deep recession to institute many existing proposals, usually labeled “neo-liberalism.” In the view of the think tanks and politicians, its intent is to make government more “business friendly.” In more straight talk it is “crony capitalism” or the use of tax payer money to increase the short-term profits of private investors with political connections.

Although most of the pols don’t see it, there, however, is a deeper method to their madness. They delude themselves with claims about imminent prosperity and that they are just pursuing short-term budget fixes until the U.S. economy recovers from a deep recession. Few of them realize that the U.S. economy, like the global economy, is in the midst of a deep, long-term financial crisis. Most of their cuts and layoffs are here to stay and will get worse.

If an economic recovery eventually returns, it is not going to be used to raise the salaries and benefits of public employees, fortify pension funds, build libraries, plant trees, and educate students. This is because, sadly, the decision makers prefer to sacrifice most local government functions to pay for other priorities: corporate bailouts and energy wars. Their plans to fill these enormous local gaps with such gimmicks as charter schools, high stakes testing, contracting out, and privatization, are nothing more than an unintended strategy to reach bottom. While the pols might actually believe in these schemes, or that cities can function without adequate schools, libraries, parks, urban forests, cultural events, inspectors and building plan checkers, and neighborhood groups, they are really diverting local public resources to support Federal priorities.

There are some clear lessons to be learned from this debacle:

1) The slashing and burning of most local public services is a long-term trend. It is not just a blip resulting from the Great Recession.

2) It purpose is not just to dish out public favors to well connected investors who need a short-term boost in their bottom line through contracts or bailouts, but to martial public resources for other projects and programs.

3) The public employee unions do not have a program to reverse these trends. They have yet to organize work actions to stop cutbacks and layoffs or form strong alliances with the public, the other victim of these cutbacks.

4) Any solutions to this long-term crisis will come from the bottom up, not the top down. There are no politicians on the horizon capable of rectifying this situation, nor economists with a magic formula to fill local government coffers in order to provide high quality employment and public services.

Monday, March 1, 2010

Rebuttal of Eric Garcetti’s Cutback/Layoff Arguments

By Dick Platkin*

Councilperson Eric Garcetti has given four reasons for supporting cutbacks in municipal services and layoffs of Los Angeles city employees to balance the city’s budget. His reasons do not hold up to a careful analysis.

“The City's work force has expanded by 4000 people since 1999.”
This is misleading for several reasons. First, compared to the Tom Bradley era, the city's work force substantially declined under Mayor Riordan. For example, under Mayor Tom Bradley the Department of City Planning’s staffing levels peaked at about 350 employees in 1987, when LA had 3.2 million people. By the end of the 1990's, under Mayor Richard Riordan, the number of employees had dipped to about 250 even though LA’s population had grown by about 500,000 during that decade.

Second, the subsequent hiring increase did not evenly apply to all city departments. For example, the LAPD has continued to grow through every Mayoral administration from Riordan onward. City Planning, like the other non-LAPD departments, did modestly grow, but never returned to its 1980 levels. Under the new Director of Planning, Gail Goldberg, staff levels nearly reached 300 people in 2009, but by the time the ERIP golden handshake, furloughs, and layoffs fully kick in, the staffing level will be closer to 220 full time positions. This is about 170 positions lower than the Bradley years, when Los Angeles had nearly 1,000,000 few residents.

2. Garcetti,
“Pension and pay has risen "a little" more than inflation.”
This is also misleading because the Federal government’s measures of inflation have long ago been rigged to minimize real inflation, such as the exclusion of food and fuel items. Besides, if increases in employee deductions are factored in, especially for insurance premiums and deductibles, there has been no increase in city employee compensation at all. As for indexing salaries to inflation -- what is called a Cost of Living Adjustment (COLA) -- in most MOU negotiations the city’s officials have rejected this option while the city’s unions have proposed it.

3. Garcetti,
“The economy has fallen.”
Again this is selective. The falling economy has not impaired the increased funding and staffing levels for the LAPD. It has not stopped the City Council from continuing grants, cheap loans, and fee waivers for large real estate projects, such as those of CIM, Grand Avenue, and AEG. Furthermore, the falling economy has not stopped the construction of large real estate projects, electronic billboards, supergraphics, and McMansions throughout Los Angeles. Finally, the recession has not been a barrier to truly enormous government funding for bank bailouts, wars, and other military expenditures. Bottom line, the poverty argument is only invoked when it comes to the 20 percent of the city budget which is not for police and fire.

Furthermore, the role of government as a countervailing economic force during recessions and depressions is as valid in the 21st Century as it was in the 1930s!

4. Garcetti,
“The increase in the amount the City has had to contribute to the employee pension systems is due to investment losses the pension funds have recently sustained.”
This is true but also misleading, since it ignores the city's decision (unlike other public sector entities, most notably the UC's) to not contribute to employees’ deferred compensation retirement accounts and not include city employees in Social Security. Furthermore, the city has long ago had a policy of ageism against older employees, in which the pension system promotes retirement at age 60, and in which most city departments then encourage employees reaching their 60's to retire by denying most promotions and reducing responsibility, independent of capability.

* Dick Platkin is a city planning consultant who formerly worked for LA City Planning. He welcomes comments on this article and can be reached at