Originally posted at City Watch LA.
By Jack Humphreville.
Mayor Eric Garcetti has had a relatively uneventful 150 days in office other than a successful dust up with Union Boss Brian d’Arcy over the IBEW’s labor contract with our Department of Water and Power.
But there are storm clouds on the horizon that will adversely impact the City’s finances and our wallets.
Despite record revenues of almost $5 billion, Eric must eliminate next year’s projected $250 million budget deficit that is the result of ever increasing salaries, benefits, and pension contributions.
Balancing the budget will be further complicated as there are demands for additional spending. The Fire Department is requesting funds for almost 300 more firefighters, improved technology, and new equipment while there is a push for more affordable housing and additional employees by relaxing the Managed Hiring guidelines.
Eric and the City Council have also been sandbagged by Mayor Villaraigosa’s final budget which was based on bogus wage assumptions, including that the civilian unions would forego a contracted raise of 5.5% on January 1. As a result, the Villaraigosa magical surplus of $15 million in 2018 will turn into $80 million of red ink. The four year cumulative deficit will also increase by $350 million to over $700 million.
At the same time, the City will commence negotiations with its unions whose labor agreements expire on June 30. These campaign funding unions that already own the City Council are expected to ask for significant raises for their already well compensated members and resist any calls for employees to contribute to their Cadillac healthcare plans.
In January, DWP will be asking for increases in our water and power rates that far exceed the rate of inflation. These rate increases are designed to fund the repair and maintenance of the Department’s neglected infrastructure and numerous environmental regulations, including meeting the State’s mandate that requires that 33% of our energy be from renewable resources by 2020.
But these rate increases will also finance portions of some very expensive projects that are being dumped on DWP by City Hall. They involve the Los Angeles River, the City’s Stormwater / Urban Runoff program, and a multibillion solar plan that is not dissimilar to Measure B, the 2009 measure that was rejected by the voters.
Quite frankly, this is not a very nice way for Eric to treat the Ratepayers whose votes propelled him into office.
The City is also considering a controversial $4.5 billion Street Repair Tax that will fund the repair of the one-third of our streets that are in a failed or near failed condition. This mess was caused by the City diverting infrastructure money to pay for increases of over $1.4 billion in salaries, benefits, and pension contributions. In essence, this new revenue stream that will bump our property taxes by up to 6% is just another gimmick to pay for salary increases and ever increasing pension contributions.
Eric also has the opportunity to be a bold leader by endorsing the Pension Reform Act of 2014 (www.ReformPensions2014.com), the State ballot measure proposed by San Jose’s Democratic Mayor, Chuck Reed. While this reform is opposed by the self serving union leadership, it does not impact benefits already earned. Rather, it would allow the City to negotiate changes to future pension benefits through the collective bargaining process. As it is, the City’s projected pension contributions of $1.2 billion are expected to gobble up almost a quarter of the City’s budget.
A $250 million budget deficit, demands for increased spending, contentious labor negotiations, a huge increase in our DWP water and power rates, a $4.5 billion street tax to finance even more salary increases, and long overdue pension reform.
The honeymoon is about to end.