Villaraigosa's Fiscal Folly

The ant (L.A. County Board of Supervisors) and the dung beetle (City Hall)

Comments (0) By David Ferrell Wednesday, Oct 15 2008

In a remarkable lesson in hindsight versus foresight among the city’s power brokers, Mayor Antonio Villaraigosa and the 15-member City Council are mired in a panicky fiscal disaster, while just three blocks away, the equally influential five-member L.A. County Board of Supervisors is placidly reviewing its untouched rainy-day fund and solid fiscal health.

A nervous, ashen-faced Villaraigosa in 2009 faces an almost overnight $300 million to $400 million deficit that has observers wagging about his administration’s bizarre decision several weeks ago to lay off just one unnamed worker from a 48,000-employee force, and his continuing penchant even during Wall Street’s meltdown for taking out-of-town trips to attend fund-raisers — for himself.

Illustration by Mitch Handsone

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On October 1, without discussion, the City Council voted to raise money selling “surplus city property” — abandoned fire stations, old animal shelters and empty parcels — that the council had stubbornly refused to sell because individual council members wanted to control half of the money instead of letting it go to the General Fund. Now, taxpayers, who actually own these properties, will lose millions selling badly devalued land the city was urged to sell during the housing bubble.

Angry City Council gadflies estimate that Los Angeles City Hall is spending $800,000 an hour to run its departments and services, even as city officials prepare to revive ideas such as charging homeowners to fix the public sidewalks themselves — often at a cost of up to $8,000 per home.

Against this backdrop, Villaraigosa’s fiscal policies could not offer a greater contrast to what’s unfolding just west of City Hall. There, in the relatively obscure County Hall of Administration — where five elected supervisors oversee a $22 billion budget that pays for such big-ticket items as indigent health care, food stamps and welfare, among the nation’s biggest sheriff and fire departments, huge jail and public hospital systems, property tax assessing and elections — all is calm.

Chief Executive Officer Bill Fujioka, the top fiscal boss for L.A. County, who left the same city job under Villaraigosa and recently started work for the Board of Supervisors, explains that, “Because the county [board] requires strict compliance with its own financial policies, we saved some of the money from previous increases in property taxes and socked it away like your aunt might do.”

Key among the county’s efforts has been a strict, bipartisan push by the three Democrats, Zev Yaroslavsky, Gloria Molina and Yvonne Burke, and two Republicans, Mike Antonovich and Don Knabe, to continuously set aside county revenue, regardless of economic booms or busts. That money is untouched, creating a permanent rainy-day fund. In addition, the board has embraced a policy against spending “temporary” revenue on permanent programs or long-term costs. Instead, temporary money goes to one-time costs like constructing a building.

No similar effort is under way at City Hall, where Villaraigosa a year ago surprised some economic experts by very quickly agreeing to unexpectedly large, multiple-year raises for 22,000 city employees, funded in large part by city revenues from a housing boom that was already dead.

Those raises are taking a massive bite that will reach $255 million in a few years. Moreover, the raises, which were intended to bring the mayor labor peace, are now working strategically against him, as he was warned, inspiring a probable springtime revolt by police and fire unions — who want the same generous deals.

Fujioka, who was the city’s finance czar for more than a decade before leaving, says simply, “If I went back to the city, I would start from the ground up.”

There’s little chance of that, with City Hall in disaster mode. In this side-by-side lesson, the county board is the ant from Aesop’s Fables, who saved ears of corn for the winter, while the dung beetle — that would be Villaraigosa and the council, led by President Eric Garcetti — busied itself but didn’t set aside anything for bad times, then starved when all that nutritious dung — the housing-bubble-related revenues — vanished.

Amid the Wall Street crisis, Villaraigosa has announced a fast-track effort to prioritize the most crucial spending to protect such items as garbage pickup and policing, and begin cutting nonessential services.

At the Hall of Administration, the supervisors are undertaking the same basic task without any sense of panic, in case the economy gets far more sour in the coming months. By contrast, at City Hall, the mayor has publicly conceded, there’s no time left.

Despite all this, on Thursday, October 8, the mayor was not focused on these fiscal troubles. Instead, he was pursuing his usual flurry of PR events, photo-ops, out-of-state travel and fund-raising, as delineated by L.A. Weekly’s Patrick McDonald in his September 11, 2008, investigative cover story, “The All-About-Me Mayor: Antonio Villaraigosa’s Frenetic Self-Promotion Leaves Little Time for His Job.”

As huge U.S. companies teetered, the markets plunged again, and Governor Arnold Schwarzenegger and state leaders considered calling the 120-member legislature to a special session to avert their own statehouse disaster, City News Service in Los Angeles reported on October 8: