LOS ANGELES — A major turnover in Los Angeles’ leadership is coming even as the city continues to grapple with its financial difficulties.
The city’s voters will replace termed-out Mayor Antonio Villaraigosa, and elect at least seven new members to the 15-seat City Council.
City elections in Los Angeles are conducted with a nonpartisan structure. There will be a March 5 primary. Anyone who claims a majority wins the seat outright, but otherwise a May 21 runoff follows, pitting the top two primary finishers.
On that date, a special election will also be held to fill the council seat vacated by Tony Cardenas, a Democrat who was elected to Congress.
Three of the leading candidates for mayor — city Controller Wendy Greuel, Eric Garcetti and Jan Perry — are Democrats and either current or former City Council members.
The other candidate seen as having a shot at the runoff is radio host and former federal prosecutor Kevin James, a Republican.
The new mayor and council members will inherit lingering budget problems.
In a budget report released Feb. 6, city administrative officer Miguel Santana described the city as being at a crossroads where it can choose between a path of crisis management or one of stability and reinvestment.
“The mayor of Los Angeles has the most significant role when it comes to the city’s finances,” said Yusef Robb, who took a leave of absence as Garcetti’s chief of staff to work on his campaign. “The mayor drafts the city budget. While the City Council does modify the budget, city finances start with the mayor’s budget and end with the mayor’s signature.”
Robb says Garcetti has a plan to get the city out of its “boom and bust” cycle.
Perry sees the “fact there will be new faces as a positive” and an opportunity “to build new relationships.”
James, who has campaigned as an outsider, said the solution lies in not electing one of the people who helped create the problem.
Greuel declined to be interviewed for this article.
Over the past four years, city leaders have whittled down what was a $1.09 billion projected deficit in 2008 to a projected deficit of $216 million for fiscal 2014. Los Angeles also appears to be gaining ground on the current deficit.
“While we are starting to see the light at the end of the tunnel — the security provided by this optimistic picture is still very fragile and not an accurate reflection of the structural problems that the city is facing,” Santana said in his report.
The failure to outline a rigorous new three-year plan, and-or a return to previous spending methods, could land the city in a similar spot during the next downturn, he said.
“Will future policymakers learn from the mistakes of the past by asking: Is this new hiring program, labor contract, tax relief measure or restoration of services sustainable?” Santana said. “Or will they simply rebuild the city back to where it was four years ago, vulnerable to the next economic downturn, multimillion dollar lawsuits, or reduction in state and federal funding?”
Voters in March will make another significant choice about Los Angeles’ financial future: whether to approve a half-cent sales tax measure placed on the ballot by the current City Council.
Santana says the tax hike is necessary medicine.
Estimated to bring in up to $214 million in its first year, the sales tax could nearly close Los Angeles’ projected shortfall of $216 million in fiscal 2012-13.
Without the half-cent sales tax, the city could be forced to cut public safety positions that comprise 70% of the budget, Santana said.
Villaraigosa endorsed the tax measure this month, but the four leading candidates to replace him all came out against it.
“This was a lazy way to solve the problem,” Perry said.
“We had just passed a sales tax at the state level and the amount of money generated by the sales tax was strikingly similar to the deficit,” she said.
Perry added that she didn’t feel comfortable asking city residents to absorb the expense “when it was clear we had not done what was needed to get the employees back to the table on pension costs.”
James said he is not “looking for additional taxes, fees or fines,” but instead proposes generating revenue by creating a welcoming environment for the private sector so that revenues from sales taxes and hotel occupancy taxes increase.
He also proposed eliminating the salary increases for city employees agreed to in 2007, freeing up $167 million.
Garcetti’s aide, Robb, said his candidate is not only opposed to the sales tax measure, but opposes any attempts to raise taxes to close the deficit or fix the city’s crumbling infrastructure. His revenue generation plans do not involve tax hikes. They involve getting the employees to give back, and economic development programs like coordinating training programs offered by the city, county and two-year colleges, and working with the city’s internationally renowned universities to create incubators for technology, Robb said.
PENSIONS AND PAYROLL
All four candidates have campaigned on platforms of fiscal conservatism that call for more city employee pension reforms and hammering out more sustainable contracts with city workers when their contracts expire in 2014. All four also opposed a half-cent sales tax measure for the March ballot that was passed by the City Council on Nov. 14 and is supported by Santana.
Firefighters and police officers currently contribute 10% and 11%, respectively, to their pension and retiree health care costs. Perry would like to see all city employees represented by 40 different unions contributing at the same level. The rest are contributing anywhere from zero to 5%, she said.
Not only with pensions, but also in salaries, Perry would like to see the disparities in employee salaries disappear. She pointed to a report released by the ratepayer advocate for the Los Angeles Department of Water and Power that showed employees in that agency earn salaries 40% higher than other city employees performing similar work.
Garcetti, whom Robb said lead the charge two years ago to get fire and police contributions to their current level, also wants to raise the other employee pension contributions to the same level. He also wants employees to contribute similar amounts to employee health care plans, Robb said.
James would go a step further and explore having all but public safety employees contribute to 401(k)-style defined contribution plans rather than receiving pensions.
Greuel took a U-turn two weeks ago, coming out with a plan to increase the number of police officers by 2,000 and firefighters by 700 as city revenues increase.
The plan backfired on her and she changed her “plan” to a “goal.”
The other three candidates said they were astounded Gruel would propose hiring more employees at a time when crime is down and the city is struggling to pay the salaries and pensions of the employees it has.
“It’s not about any magic number for the police department,” James said. “We can’t afford 2,000 new police officer salaries or pensions.”
James said rank-and-file officers have told him they are spending two-thirds of their time behind the desk working on paperwork based on old technology.
He recommends updating the technology and streamlining the paperwork to get the existing cops on the street.
“What we need is more police hours in the community instead of spent sitting behind a desk — that costs us nothing,” James said.
The $160 million Greuel claims to have saved Los Angeles as controller has also been called into question. Robb estimated a more accurate amount would be closer to $250,000.
Her campaign website lists a tally of waste she has uncovered equal to $160 million and points residents to the reports produced by the controller’s office accessible at the website for more detailed information.
Polls have reported either Garcetti or Greuel as the leader in the race at different intervals over the past several months.
All four candidates have advocated for getting employees back to the table on raises approved in 2007 and scheduled to begin taking effect this year, which could cost the city $167 million a year after mid-2014.
Most of the contracts for city workers will also begin to expire around the same time.
“We need someone completely independent from union relationships,” James said. “My opponents won’t go where they need to go. They will continue to transfer employees from one general fund department to another.”
He said 1,600 employees were transferred from general-fund-supported positions to the ratepayer-funded Los Angeles Department of Water and Power, but are counted in city layoff numbers.
Perry argued that those city employees had to apply for the open positions, and she would much rather see people get new jobs than be laid off.
James counters that “LADWP didn’t have a help-wanted sign for 1,600 new employees at the time those positions were filled.”
Perry — who unlike Garcetti and Greuel has not been endorsed by any unions — is “not beholden to any group,” she said.
“I want to do what is best for the city and the employees, by helping to create more stability in their lives,” Perry said.
At a town hall event, Perry said she received a positive response to her plan to have employees contribute more to their pensions and equalize salaries across departments, including from an LADWP employee. She said workers are willing to come to the table because they want to work for a city not marred by furlough programs and where their jobs are more certain.
“If everyone contributed 10% for pension and retiree health care benefits, it would save $40 million to $50 million a year,” Perry said.
Villaraigosa isn’t playing kingmaker. When asked who he would support, Villaraigosa said: “Wendy Greuel would make a great mayor. Jan Perry would make a great mayor. Eric Garcetti would make a great mayor.”
He didn’t mention James, who has support from the city’s last Republican mayor, Richard Riordan.
The longtime advocate for pension reform said James is the only candidate willing to take the necessary steps to deal with the city’s pension liability issue.