Los Angeles Budget Assessment L.A. Assessment

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The reason for this shortfall, as noted by the Balance Budget website, emanates from pension costs, previously agreed to cost of living pay increases, rising health care costs overall and a general weakness in the overall economic recovery that has ensued, albeit very slowly, since the end of the so-called "Great Recession" period that ended in approximately 2009 for the nation as a whole. The balance budget website notes that the shortfall in question is equivalent to 20% of the total police officer salary budget, 60% of the total firefighter budget and over 100% of the city's expenses for their libraries and parks (L.A. Budget Challenge, 2013).

Los Angeles Mayor Antonio Villaraigosa, in this budget summary document, notes that budget shortfalls will be addressed through expenditure cuts and increase efficiency. He makes mention of "painful" layoffs but not addressing the real problem of employee-level costs per person being the issue will lead to less headcount with each person on the payroll being more expensive. This is a lose-lose proposition for everyone involved. Even if it this tactic perpetually kept the budget balanced (and it will not), it's going to end up hurting the city in the long run. Even if the headcount cut is truly not needed (by no means impossible), the real problems are not being addressed (City of Los Angeles, 2013).

To his credit, the Mayor does mention pension reforms as being a priority to him and he suggests raising the retirement age to 67 (which would align it with Social Security) and prevention of pension spiking. Unfortunately, the Mayor cannot unilaterally enact such changes and he probably faces a rather tough road to get such changes completed as he would have to have cooperation of the City Council. This may be a tall order because the resistance to such a plan would be stifling and white-hot (City of Los Angeles, 2013).

Another major thing that the Mayor is suggesting is rewriting the zoning code, which is apparently nearly four generations old, and centralized HR functions for the city into a single location. Again, not bad ideas but health care costs, pensions and overall salary expenditures are the problem. Reductions in hiring or even headcount should not be a way to balance the budget in the sense that either a person's hire is financially and procedurally required or it is not. If it is not, then the person should not be hired and it matters not what the personal and political preferences involved happen to be (City of Los Angeles, 2013).

Also, the mayor makes mention of job creation and revenue generation. That all sounds well and good but when the city of Los Angeles (and most of the other tax jurisdiction in the county and state) are running huge deficits and the solution of many is to simply raise taxes (especially at the state level) is not going to encourage businesses to hire, let alone come to a state that ostensibly treats private enterprise as a piggy bank and not a partner (City of Los Angeles, 2013).

Even so, the Mayor is at least honest and is seemingly cognizant of the major issues at hand because he points to the fact that the shortfalls in the budget (which he notes as $238 million in total) come from employee compensation and retirement costs ($122 million), capital programs ($39 million), health benefits ($40 million) and unanticipated fire and police costs ($37 million) (City of Los Angeles, 2013). These sources of budget shortfalls dovetail nearly exactly with the details of the budget itself (City of Los Angeles, 2013).

The Mayor is addressing the overage employee costs through layoffs and is trying to adjust the pension outlays via a changed retirement age. There does not seem to be any head-on dealing with the health benefits unless one counts layoffs.

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However, the cost arc of health benefits is largely not in the control of the Mayor or even the City Council. The fire/police costs come from overtime costs, apparently. Staffing the department with enough people should be a priority unless the cost of benefits for these new heads would cause the overall budget to rise. If they would, then the overtime has to be accepted or, preferably, managed some other way. Obviously, if there are major events like the bombings that just happened in Boston, all bets are off. However, most events and expenditures are foreseeable and preventable and the people crafting the budget for the police and fire departments need to be diligent and honest about what is needed, why it is needed and how best to address what is needed (City of Los Angeles, 2013).

The budget deficit reduction amount for reductions/inefficiencies and other changes comes to $80 million. In a city with the budget and wanton waste through bureaucracy and out of line benefits/pay, that is probably the tip of the iceberg. The aforementioned typist salary of $35-45k a year is simply bordering on insanity. If a private industry person can't expect to make that much being a typist, than neither should a government position that is funded by taxpayer money (City of Los Angeles, 2013).

One thing the city of Los Angeles may wish to explore is the influence of unions and collective bargaining. May forward the idea that collective bargaining in a public employee environment is simply wrong on its face because of who the employees in question are effective bargaining against, that being the duly elected officials of the government. Those officials are elected by the people, so the logic is that the collective bargaining is against the people. These collective bargaining sessions are unnecessary and no doubt have a lot to do with why pension benefits, health benefits and salaries are so high.

Again, just because a person works in public service does not mean they should receive a salary or benefits package that is exorbitant. Cost of living increases, salary increases, pension amounts and what not should be based on industry averages for equivalent positions in the private sector and not based on what the union tries to coerce out of the city. A lot that can be said for a union in a private sector context cannot be said for a public union.

Public employees are working for, and their activities/benefits funded by, the people. As such, there should never be a clear demarcation between what a public employee gets in terms of pay/benefits and what a private employee gets and this is especially true when speaking of a situation where a job a public person is largely (if nto completely) equivalent to a private sector employer's tasks and pay.

Conclusion

In short, the current budget framework in place for the city of Los Angeles, as well as the county of Los Angeles and the state of California, are presented in a no-nonsense and basic fashion but they budgets of all three entities are no doubt under strain and there are legitimate questions about the long-term viability of the budgets in question. In particular, outlays for social safety net benefits and public pensions are of major concern and those concerns will grow over time. Many of the concerns are borne of the fact that Los Angeles is not a cheap area to live in, but the facts exist as they are nonetheless......

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