November 18, 2007

Not just in LA or Ca anymore..its all over

Sooner or later the voters/taxpayers will wake up. But it will likely be too late. The taxpayers need to take on the government workers and the unions as the politicians sure as hell are not going to do it.

Why L.A. is going broke
City worker costs up 7.5% a year, but revenue up just 5.7%
By Beth Barrett, Staff Writer
Article Last Updated: 11/18/2007 12:52:27 AM PST

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Do you think city workers are overpaid?
Yes 72.5 %
No 27.50 %

Salaries, pensions and benefits for Los Angeles city workers have soared in the past seven years, outstripping revenue growth and pushing the city toward a serious budget crisis, according to a Daily News study.

Since 2000, Los Angeles workers' costs have surged 53 percent - to $4 billion a year - rising an average 7.5 percent every year.

General fund revenues also grew strongly but only at an average 5.7 percent a year.

The result is a swing of almost $1 billion, pushing the city from a surplus to an anticipated shortfall of $300 million next year.

"It's almost like we're working for them; they aren't there to serve us. The situation has gotten badly out of whack," said Jack Kyser, chief economist for the nonprofit Los Angeles County Economic Development Corp.

Why the large gap between employee costs and revenue growth? It's the power of city employee unions to get politicians elected to office, said Alice Rivlin, a former director of the Congressional Budget Office and now a senior fellow at Brookings Institution, a highly respected think tank based in Washington, D.C.

"It's very hard politically for mayors or city councils to go against (unions)," Rivlin said. "They can turn out the votes and turn out the lights."

One example of city employee unions' clout in Los Angeles is the recently negotiated contract covering most city workers - except police and firefighters, who usually do as well as or better than
other municipal workers.

The contract - which comes at a time when when revenue growth is expected to fall sharply - provides 23 percent wage increases over the next five years. Those increases come on top of regular "step" increases that can add as much as 5.5 percent a year to workers' pay.

The new contract attempts to contain health-care costs long term, but comes after pension costs have skyrocketed 231 percent.

As the city races to keep up with worker costs, its $7 billion budget - including the general fund - gets balanced because of reductions elsewhere. Liability claims, for instance, have declined 11.4 percent this decade.

City Administrative Officer Karen Sisson said officials are now taking a longer view to address the gap as the housing downturn is predicted to slow revenue growth to just 1.3 percent next year.

Sisson said a central element will be working with unions to boost employee productivity - including offering cash incentives in the latest contract - without cutting services to the public.

"Part of that process is to work with the city to make it more efficient and innovative," Barbara Maynard, spokeswoman for the Coalition of L.A. Unions, said of the city unions' recent contract deal.

And that includes trying to reduce costs of health care, which the unions think is the primary driver behind escalating city expenses.

"It's in everyone's best interest to lower insurance costs," Maynard said.

Mayor Antonio Villaraigosa has ordered general managers of all departments to absorb cost-of-living increases but not cut services. He also has asked them to submit budget proposals that contain their plans if faced with cuts of as much as 8 percent.

The city is using a recently approved trash-fee hike to pay for new police officers, and it is putting $16 million more into new police facilities, increasing firefighter-recruit training, continuing extended library hours, and increasing the number of homeless shelters.

About 4,000 of the city's nearly 40,000 positions are unfilled and could stay that way. At the same time, the city is grappling with the potential loss of a telephone-users tax that could sap $270 million a year from the budget.

Two courts already have found that changes in the tax three years ago made it illegal. In anticipation of a definitive ruling next year, Villaraigosa and the City Council last month declared a fiscal emergency and put a new phone tax on the February presidential-primary ballot, where it will need only a simple majority to pass instead of the two-thirds required for nonemergency measures.

"With the crisis in the housing market and other developments in the economy, we can no longer expect to get unanticipated revenue at the end of the year, which means we must budget very, very closely," Sisson said.

"We're going to be forced to continue to deliver services with fewer resources than we've had historically."

City Controller Laura Chick, the watchdog on city spending, warned the city is adopting a crisis mode that will hamstring general managers' creativity.

"What we never do is figure out that if we're increasing the cost of delivering services, where are we getting comparable revenue? How are we delivering services more efficiently and effectively?

"What the city does in a reactionary way to these crises ... (is) we stop hiring, let positions go vacant. We run on a crisis/emergency budget where we slash and burn wherever it's doable - and not necessarily in a strategic way.

"It's a bad situation."

The fact that the city's elected officials are the highest paid in the nation has been a particularly sore point. In the past two years, the mayor, City Attorney Rocky Delgadillo, Chick and council members have seen their paychecks increase 20 percent.

The policy that ties their wages to judges' salaries means they get a 4.16 percent raise retroactive to July1, the fourth boost since early last year.

Meanwhile, workers' compensation also has jumped - from $100 million to $127 million. And the recent deal for workers without police or firefighter status will cost taxpayers more than $200 million. While most of these employees' last contract was for a 6.25 percent pay raise over three years - no raise the first year, 2 percent the second and 4.25 percent the third - their average raises were about 7.7 percent with the step increases factored in.

Maynard said that while some employees got the step increases, others reported they still couldn't keep up with rising costs in Los Angeles.

"Back in the good old days, there was a trade-off: If you worked in government, you didn't get what the private sector did, but you had security and good benefits, and that seems to be tossed on its side," Kyser said.

But Sisson said city officials are now working differently with unions.

The new contract says that if workers can find $25 million in sustainable, verifiable savings, they will get an equal payment in "flex dollars" in the last year of the contract to buy additional benefits or take in cash.

Sisson said the five-year contract provides budget stability. And she said that with six unions participating, it has resulted in standardization of bonuses and other financial items.

It also delays by six months when most new employees get their first 5.5 percent step increase in pay, which amounts to a $4 million to $6 million annual saving.

Sisson said that with stagnant revenues, the city is facing a tough situation. But, she said, it's manageable.

"'Crisis,' to me, implies that you haven't thought about it and you don't know how to get out of it," she said.

"And I think we have thought about it, and we have planned for it, so in that sense, it's not a crisis."

Lakewood Accountability Action Group™ LAAG | | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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