Because 78 percent of the City of Los Angeles budget goes to paying just salaries. This does not include pensions.
When a city politician in Los Angeles is ready to run for office, the first group they turn to for an endorsement and money is the City of Los Angeles Employee Union. It is basically set up to be you Mr. Politician, give us our raises and don’t cut any positions, and we will support you.
The average salary of the 40,000 city workers is $81,000. At the Department of Water and Power, there are 10,000 employees and the average annual salary is $101,000.
· At the same time, consider these problems the City of Los Angeles faces:
· $8.1 billion to replace and make the necessary repairs to the roads, water lines and sidewalks.
· $3.6 billion to fix the worst roads.
· $1.5 billion to repair the sidewalks.
· $3 billion to replace the aging water pipes.
· 40 percent of the region’s 6,500 miles of roads are graded D or F.
· More than 4,000 of the 10,750 miles of sidewalks are in severe disrepair.
· More than 10 percent of the 7,200 miles of water pipes were built 90 years ago.
· The average age of the city pipe is 58, compared to an optimal life span of 100 years.
· At the current level of funding, it would take the Department of Water and Power 315 years to replace the pipes in need of replacement.
What is the City’s response to these problems? Increase taxes!!
Earlier in the year, the Mayor and the City Council considered putting on the ballot a half a cent sales tax increase (The existing retail sales tax is 9 percent.) to cover the roads ($3.6 billion) and $640 million of the $1.5 billion needed to for the sidewalks.
There is no question that LA’s infrastructure is cracked, if not broken. LA is a house of cards. If you do not have money, you cannot fix your infrastructure and do good planning. If you have higher fees and taxes than your competitive cities, you cannot attract higher paying jobs. Without higher paying jobs, a city’s economy goes into decline. When a city’s economy goes into decline, the spiral is downward and good companies begin leaving. Once a few companies leave, more will follow. At that point, the cost of fixing the infrastructure is too great and the burden of the cost cannot be borne by electorate.
The question becomes how has this happened and what can be done about it?
Service to Our Residents and Business First
Today, in LA, the mantra of the politicians and bureaucracy is “we come first.” For the politicians, they have to worry about term limits, so their modus operandi is to not offend anyone and pad their resume for their next position.
The bureaucrats are interested in one thing: retiring at the highest salary possible. They would never want to rock the boat or work too hard. I know of situations where union leaders have told city employee to stop working on their lunch hour to get a project done on time.
The point of emphasis must change from me and my next job and my retirement to “what can I do today to help the residents and businesses in the city I serve have a higher quality of life and run a more successful business.” This change must come from the top. This was the attitude that prevailed when Tom Bradley and Richard Riordan were mayor.
Change the Representation Ratio
Currently, in LA, each of the fifteen city council members represents approximately 250,000 residents. This ratio does not work. In New York and Chicago, one councilmember or alderman represent 50,000 residents. Having lived in Chicago and spent a lot of time in New York, I can attest that their systems work a lot better. You must representatives who are accountable to the people. I mentioned this to a well thought of former councilmember, who responded: “I like it the way it is now. The people cannot get to me.”
It will take a citizen revolt to make this change. Since the Los Angeles Times, Daily News, and Los Angeles Register are all weak newspapers, this will be hard to do. If the ground swell became large enough, it would require a Charter Commission, which would have the brains and the guts to make such a radical change. It is not in the cards right now.
If you go to LA’s City Hall, all you hear are bureaucrats complaining about working too hard. Here are the facts. From 2002 to 2007, the City of Los Angeles averaged 9,800 residential building permits, with the highest year, 2007, having 12,500 residential building permits. For that same period, New York averaged 35,000 residential permits and Chicago 30,000. Here is the kicker: New York and Los Angeles had the same number of employees in the building department—4,400. This is true in every department in Los Angeles. They have more people on payroll than the work they produce, when compared to other major cities.
Prior to the Great Recession, the City of Los Angeles collected $120 million in Quimby park fees from downtown developers of apartment and condo projects. During the five year downturn, it was a logical time to put some of that money to work to improve the open space and parks of downtown. Land was available and prices were depressed from the pre-Recession highs. What did the Parks & Recreation department accomplish during the Recession? They completed a 10,000 square foot park on Spring Street. When the current Mayor was running for office, I mentioned this to him as an example of a general manager that needed to go. (If an NFL coach performed at this level, they would be gone.) The candidate Mayor was really concerned as a candidate, but kept the general manager when he became Mayor. This tells me that the Mayor’s standard for performance is for someone to sit on $120 million and create one 10,000 square foot park in five years. This is unacceptable.
Likewise, I tried for two years to replace 55 dead or dying trees at a cost to my company of $385,000, not because of any ordinance, but because it was the right thing to do. I had reports from arborists supporting my proposal. Unfortunately, it was blocked by one person in the Urban Forestry Division, in the Bureau of Street Services. I even agreed to replace seven of the City’s dead trees. But power and control was more important to this individual than trees. The trees are dead today.
When an entity has too many people, there are basically two choices. First, you can cut staff so that you are line with the “income produced.” Or, second, you can increase the income.
Use Private Contractors
When I was developing, I never paid traffic mitigation fees. I found out what the traffic mitigation measures were and we constructed them ourselves. Why? Because, if I gave the money to the city, there was a good chance the work would never get done. Then the residents would be upset. This pits the residents and the developer against the city. Second, if the city oversees the construction or tries to do it, they are not as efficient and it costs more money. Watching a city construction project is like watching someone try to cut steak with a butter knife. If someone is holding up a broom, there is someone there to supervise them. When you add the requirement for prevailing wage, you are adding incremental costs between 20-25 percent over what it would cost in the open market.
It will be more efficient and cost effective if the city uses outside contractors to replace their infrastructure.
Focus On Income
Instead of defaulting to: “We have to increase taxes or float a bond.” Politicians and bureaucrats need to see that a more efficient work and service attitude will produce more income. Los Angeles is at the forefront of California’s poor ranking in the country.
As a place to do business, California is ranked 49th. From a tax perspective, California is ranked 48th. The cost of living is ranked 45th. The quality of the education in the state is ranked 49th. For the cost of doing business, California is dead last.
Worse yet, California is ranked 48th in business friendliness. Many have said that the institutional hostility to business owners and most companies in California will remain as long as public sector unions maintain their political stronghold on the state.
Unfortunately, Los Angeles is not ranked much better than the state. Forbes ranks Los Angeles 117th overall for business and careers. For the cost of doing business, Forbes ranks Los Angeles 178th in the country, 115th in job growth and 85th in education.
As the great philosopher Yogi Berra once said: “When you come to the fork in the road, take it.” Los Angeles has come to a crossroads. They can either try to increase the taxes on a rapidly declining number of people that can afford to pay them. Or, they can make the radical changes that are necessary to become more efficient, more service oriented, more timely in the rebuilding of the city, and more aggressive in attracting quality businesses back to the city. Let’s hope they do, because the clock is ticking and the city is running out of time.