[Pictured: The two central figures from last night's Budget & Finance Committee meeting in Van Nuys. Q&P Czar Zuma Dogg & CAO Miguel Santana. I took notes! Plus, had the floor for four minutes. Which is four minutes better spent than greIGgy-poo Smith, the teacher, who is going to teach people how to go bankrupt, I guess.]ZUMA DOGG'S NOTES from L.A. City Chief Accounting Officer (CAO) Miguel Santana presentation at Budget & Finance Committee meeting at Van Nuys City Hall (1.25.10):
ZUMA DOGG PUBLIC COMMENT: ZD BLASTS WENDY GREUEL & GRIEG "DUMB" SMITH:
We are broke, but we are not bankrupt.
Bankruptcy is NOT an option that will be pursued until all other options are pursued.
Working to make sure "B" is NOT an option for city of L.A.
Started with over $300 million deficit.
Working to reduce deficit through shared sacrifice.
Within first quarter, deficit grew another $100.
We continue to see that loss grow. Total loss=$185 worse than accounted for, so far.
Good news (if there is any): As a result of labor negotiations we've reduced deficit by $100 million through ERIP (Early Retirement) -- and better management of overtime and bargaining with labor.
Previously, expenditures were the only problem. (Not revenue.) And we could take a hit on the reserve fund to cover budget gap because expend. Unfortunately, expenditures aren't the only problem, now. Revenue is also a problem.
We've seen four (4) quarters of DOUBLE DIGIT drops. Went back and checked, and is first drop like this since the GREAT DEPRESSION.
This drop in revenue never could have been anticipated. (ZD: BULLSH*T. I predicted it, ON THE RECORD, and that means CAO and MAYOR ALSO KNEW.)
We are now forced to make cuts.
25% are structural cuts. That's a good start, but not enough.
What is proposed by the mayor, ERC committee (labor negotiations) and some Councilmembers: We need to identify 1000 people to lay off.
These lay offs will have an impact on every department in the city. Some departments will be eliminated; others consolidated; some cut in half.
This will have an impact on services.
PRIORITIES:
Keeping the lights on and the books paid.
Don't lay off people who produce revenue. That will cause further layoffs.
Don't lay off where it will affect public safety services.
We need to ask ourselves, "How quickly can we have this person leave?" (Sooner the better, I guess.)
What would the impact to the service be?
How does it impact the structural problem.
IMPORTANT:
There will only be minor savings for this year.
This process of layoff is biggest process for the city ever. It will take 2-3 months to complete.
Savings will be minimal for this year.
Agreements with labor prevent other lay offs.
All of these measures will help NEXT YEAR.
We wouldn't be this bad off is we had taken action sooner. We weren't able to maximize savings this year.
We need to make sure we don't delay and get a FULL YEAR'S WORTH OF SAVINGS, NEXT YEAR!
Looking at over $1 BILLION deficit in four years if we don't take SERIOUS REDUCTION ACTIONS, NOW!
3 YEAR PLAN:
How we reduce deficit on on going basis and leave city in a position of financial sustanability?
1) Must adopt basic fiscal policy to make sure we aren't in this position in the future. (Whomp, whomp, whomp, whomp...[deflated]...WHOOOOOOOMP!)
2) Must maintain 5% of general fund in reserve fund. (ie: Haiti, was mentioned. So I guess that means for emergencies like fire, floods, earthquakes and riots on the street.) A healthy reserve fund is what signals to lenders and credit agencies that the city is in good financial health.
* MICAL (is that how you spell it?): CAO says ZD is correct about cutting off the city's credit card. CAO recommends putting credit card away.
* Must create longer term budgets (not just 1 or 2 years ahead).
* MUST GET BACK TO BASICS AND DECIDE WHAT CORE SERVICES WE DO AND DO WELL.
* MUST IDENTIFY WAYS TO STREAMLINE OPERATIONS SO WE CAN BE MORE EFFICIENT TOWARD CORE MISSIONS.
PENSION REFORM:
Pension system is simply not sustainable. We don't have authority to change the pension system for people currently in the system. So at the end of the day, any changes to current system will not affect current crisis (create any savings for today), but will establish new set of rules for future employees.
WE WOULD BE IN A MUCH DIFFERENT PLACE HAD WE MADE THIS REFORM 10-15 YEARS AGO.
HAND OVER WHAT CITY DOESN'T DO WELL TO PRIVATE PARTNERS.
We need to ask, "Can it be done more cheaply in the private sector for things that are not core to the city -- or things that we HAVE to do as a city. This will also help reduce the pension liability by getting more pension employees out of the picture.
THE CAO'S STATUS REPORT WILL BE OUT ON FRIDAY.
The CAO noted on the record that, "THE PEOPLE WILL BE WATCHING!"
The hardest decisions are in front of us.
With unemployment reaching 15%, we don't want to add to it (with lay offs) but we have no choice! The workforce is NOT SUSTAINABLE!
The last time the city encountered a recession due to the internet bubble burst (among other factors) not GREAT DEPRESSION LEVEL BUDGET HIT), it took the city almost ten years to make up for the early 90's loss. THIS IS MUCH WORSE!
REVENUES WILL NOT SOLVE THE PROBLEM, THIS TIME.
This means, RAISING TAXES!!!: We will have to prove to taxpayers that we have timmed and improved efficiency before we go to the public for more. (Parcel taxes on the ballot.)
WE CANNOT WAIT MUCH LONGER BEFORE WE TAKE DECISIVE ACTION!
(COUNCILMEMBER PARKS ASKED FOR FOLLOW UP ON WHERE CITY SUFFERED GREATEST DECLINE IN REVENUE LOSS, FOR THE PEOPLE'S KNOWLEDGE.)
REVENUE - Greatest loss/decliners:
What we're seeing is something we haven't seen in a long time. A loss of revenue across all areas and all departments.
Now it's MUCH LARGER than the 10% we envisioned as a "worst case scenario."
* SALES TAX: People are not buying like they did in the the past.
* HARBOR REVENUE DECLINE: Impacts us ALL.
* REDUCED WATER & POWER USAGE: Means less transfer of money to city. (I DOUBT it's because of conservation, but evacuation and closures of business and people who can no longer afford to live here.)
* HOUSING CRISIS: Impacted/hurt city revenue.
* GAS & UTILITY TAX: With natural gas drop, city also sees drop. (Did I get that right? If nat gas goes down, city loses?)
* PHONE TAX: People are canceling home phone service and only having a cell phone. And parents are canceling cell phones for kids. [Both impact city's "Prop S" phone tax revenue. (LOL!)]
THE CITY HAS SUFFERED A DRAMATIC REVENUE LOSS IN ALL AREAS!
We're HOPING we've bottomed out. Unfortunately, we've said that every quarter. And each quarter is worse than the one before. (Four down quarters of double digit loss=worst since GREAT DEPRESSION, and that depresses me greatly.)
NATIONAL REPORTS MAY SAY the economy has bottomed out and is improving, but LOCAL CITIES are LAST to see improvement. It's likely revenue will hover at record low levels for many years. So that's why we need long-term solutions.
THE CITY STARTED THE YEAR anticipating only a 10% drop in revenue over the previous year, but it's a $180 million drop instead. (Oooops, Antonio's bad. He apologizes for the miscalculation on his part.)
THE CITY OVER-ESTIMATED REVENUE AND WAS NOT AS PESSIMISTIC AS THEY SHOULD HAVE BEEN (AS ZUMA DOGG WAS, ON THE RECORD A HUNDRED OF TIMES AT A HUNDRED MEETINGS).
AGAIN, THE CITY WAS NOT AS PESSIMISTIC AS THEY SHOULD HAVE BEEN. SOME OF THE REVENUE DROPS ARE DOUBLE OF WHAT THE CITY THOUGHT THEY WOULD BE.
LA COUNTY & SACRAMENTO A PROBLEM, TOO: L.A. County CEO Bill "The Fuje" Fujioka says County facing $320 million drop in revenue COMPARED TO WHAT WAS ADOPTED IN THE BUDGET. County has a lot of the same revenue sources.
Sacramento also a problem.
xxx
Those are not MY words, [except the few comments in brackets.] THOSE ARE THE WORDS OF L.A. CITY CAO MIGUEL SANTANA.
YIKES!
At least I just wrote part of the back story for my new Hollywood Blockbuster film, "Mad Max - Return To Los Angeles" (filming soon in Massachusetts.)
PHOTO GALLERY FROM LA CITY BUDGET & FINANCE MEETING IN VAN NUYS (1.25.10)
Ray from CAO's Office. (Also knows what's up!)
790 KABC's Michael Linder. (PLAY MY SOUND BITE!)
ZD, LA Weekly's Patrick Range McDonald & Videographer Michael Cohen
Do 2 councilmembers constitute a quorum? (What passes for representation, these days.)
Caption: Help! Where's my staffer to pull me out of here?
Caption: Sure! Anything you say lady. Did I say I'm running for mayor?
ZD waiting for City to read back minutes from his past two years of public comment. (Aka: CAO report.)
There's A LOT to laugh about!
Breath mint?
I thought you two were both married?
ZD LOVES when these guys talk. Lots of "I told you so material!" (Not THEIR fault though. Council only NOW starting to take wax out of ears.)
This guy at Lamplighter after the meeting not only knew ZD, he knew my real name, all about my radio career, my Kevin James calls...just happened to walk in and catch "the realest dough!" (THAT'S HUGE!)
FOOTNOTE: Today, now that the whole world is already aware of the budget disaster and it's been exposed in it's entirety, Wendy "Hellen Keller the Controller" Greuel decides to post something about it. WOW, Wendy! You're sure on top of things. Of course you were the big problem as Councilmember. So I hope you blamed yourself, you dim-wit, dummy.
CLICK HERE FOR REAR VIEW MIRROR NON-LEADERSHIP FROM WENDY.
BREAKING NEWS: Today, L.A. City Council voted to push marijuana sales into city streets, residential neighborhoods & parks. Gangs celebrate!
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