Solving Los Angeles: 2020 Commission Seeks Far-Reaching Change
Illustration by Evan Hughes
Our story begins back in the heady days of March 2013. With Los Angeles knee-deep in the muck of the mayoral election, City Council president Herb Wesson announced the formation of a blue-ribbon committee to figure out just what the hell is wrong with the city's economy, find some way to create jobs, and try to solve the government's fiscal mess.
It was rather odd timing: What if the new mayor, soon to be elected, didn't like what the commission said? Nevertheless, the Los Angeles 2020 Commission was born.
The 12-member body would be headed by former U.S. Secretary of Commerce and California power broker Mickey Kantor, and would include a range of ideologies - among them union leaders Brian D'Arcy, head of the powerful IBEW Local 18, and Tyler Izen, president of LAPD's union; business leaders such as Latham & Watkins attorney David Fleming and investor turned would-be civic leader Austin Beutner; nonprofit leaders Kathay Feng, chief of California Common Cause, and Antonia Hernandez, head of California Community Foundation; and political figures including former governor Gray Davis and former Secretary of Labor Hilda Solis.
Its first report, issued in January, dramatically titled "A Time for Truth," was a damning indictment of the city's economic stewardship.
"Los Angeles is barely treading water while the rest of the world is moving forward," it began, adding that L.A. was "sinking into a future in which it no longer can provide the public services to which our people's taxes entitle them and where the promises made to public employees about a decent and secure retirement simply cannot be kept."
The report was criticized by the Los Angeles Times for being driven by some of the commissioners' business interests, and by L.A. Weekly for reading like a dour, disorganized op-ed. Others found it excessively bleak.
"For me, there are a lot of issues and challenges that L.A. faces," says Jordan Levine, director of economic research at Beacon Economics. "But I don't think we're the economic basket case that L.A. 2020's first report made us out to be."
This morning, the commission released its sequel, "A Time for Action," an attempt to prescribe some solutions, including nine concrete ideas and reforms to improve the economy and city government.
One reform sure to get attention involves the Department of Water and Power. The infamous utility has burned through 10 general managers in 12 years, and has bounced from scandal to scandal, many involving IBEW, which represents nearly all DWP employees. DWP also has become something of a piggy bank for the L.A. City Council, which takes roughly $250 million a year from the agency, plus taxes and various other add-ons that council members scheme to procure.
"The biggest problem with the DWP is City Hall," says L.A. budget activist Jack Humphreville. "They're basically ripping us off for a billion and change a year."
The 2020 proposal would dramatically alter DWP's governance, replacing its Board of Commissioners - who serve part-time and without pay - with the "Utility Rate Commission." Its five members also would be appointed by the mayor (subject to City Council approval), but would be full-time professionals with industry experience. They'd carry even more heft thanks to a full-time staff that answers to them.
"Most municipal utilities have a regulatory [board] that's quasi-permanent and staffed by professionals," says Beutner, who was first deputy mayor to Villaraigosa for a little less than a year and is a key force on the 2020 Commission. "We don't have either of those."
The current DWP commission can raise utility rates (for all intents and purposes, a tax hike), subject to City Council approval. The new commission would not be subject to City Council veto, and - at least in theory - would be impervious to council members' earmarks. "These professionals would have independence from City Hall as a whole," Beutner says.
"If it can make the DWP more independent of the jokers over at City Hall, I'm all for it," Humphreville says. "If it's gonna be a bunch of political hacks, that's a different story."
Perhaps most far-reaching is the 2020 Commission's proposal to create an "Office of Transparency and Accountability," a five-member board (two appointed by the mayor, two by the City Council, one by the city controller) of professionals to provide independent budget analysis to City Hall, a bit like the Congressional Budget Office in Washington, D.C., or the Legislative Analyst's Office in Sacramento.
City Hall already has a budget adviser, city administrative officer Miguel Santana. But Beutner is fairly dismissive of that post, which is not politically independent, saying, "Miguel is an administrative officer who works for the mayor. He's a City Hall functionary."
Beutner points to how Santana sided in 2013 with Villaraigosa and police chief Charlie Beck, who warned of dire threats to public safety if voters didn't approve a half-cent sales tax hike to raise $211 million annually. Once voters rejected Proposition A by 55 percent, however, their warnings of police or firefighter layoffs faded away.
Santana, too, seems to have abandoned that position, with a report last month titled "Staying the Course," "This is the same guy who, a year ago, was lighting his hair on fire," Beutner says. "I'm a fan of Miguel. He's professional, competent, his heart's in the right place." But "you need an independent arm to ... be a real-time purveyor of facts."
Former city controller Laura Chick thinks the idea has merit, but says that even the most independent and responsible entities will "still have to deal with the elected leadership and the political system in L.A."
Humphreville and Levine praise another L.A. 2020 proposal: to lower the optimistic rate at which City Hall assumes its pension funds will grow. The city assumes a 7.75 percent rate, basing important decisions on a return that's higher than those super-investor Warren Buffett projects for his own company's pension fund.
The L.A. 2020 plan also would force the mayor to draw up three-year budget projections to encourage long-term thinking - a skill not uppermost among the city's elected officials.
And it recommends that local elections for City Council, mayor and city controller be held during national elections. The idea is to piggyback on hot national races to boost voter turnout, which currently hovers at about 20 percent.
Three other proposals target the lagging L.A. economy. One would form a partnership between the ports of L.A. and Long Beach, creating the fifth busiest port in the world and the busiest in the Western Hemisphere.
"There's a lot of economies of scale you get by being bigger," Beacon Economics' Levine says. "I could see a lot of efficiencies."
The 2020 group also suggests creating "economic clusters" to encourage industries in certain L.A. locations, as did New York City, which is building a technology center on Roosevelt Island in partnership with Cornell University. Los Angeles, the report says, should build a bioscience and technology cluster that taps three globally ranked research universities: Caltech, UCLA and USC.
Levine likes the idea but notes, "This is classic economic development jargon. ... There are lots of things that it takes - an educated workforce, and having locally available skills that can feed into those businesses to make them grow."
L.A. is not San Jose or Seattle, whose residents rank higher in education and skill levels. "None of these are easy," Beutner says. "But nobody elected into office was dragooned into it. They claimed they could help. So it's time to step up."
Noticeably absent from the report are ways to tackle pension reform, cut into city employee salaries, fix desperately neglected sidewalks, roads and water mains - or push LAUSD, as Villaraigosa did, to improve the teaching of sought-after skills like math and science.
Beutner says the group, which met 12 to 15 times, discussed pension reform, but "came to the view that we were not well enough informed. We think it's an important conversation to have, but need more facts."
Humphreville hoped the commission would tackle some of these issues, which threaten L.A.'s long-term fiscal stability. Instead, he says, "They wimped out."
See also: How the L.A. 2020 Commission Screwed Up
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