On
Tuesday, Aug. 3, the Los Angeles City Council will discuss two items
that cut to the heart of the City’s ongoing budget crisis – ballooning
public pension obligations and the chronic inability of the City of Los
Angeles to collect outstanding debt.
Action or inaction on these two
issues will let voters know whether Councilmembers are committed to
major changes that will put the City on the right track toward solving
what has become an annual and perpetual budget crisis.
The Council will
discuss next steps on public pension reform. Pension contributions by
the City of Los Angeles to the three city employee pension funds are
growing by more than $300 million per year, with no end in sight. By
2014, the contributions will amount to more than 25 percent of the
general fund.
The pension reform
discussion comes just days after the Engineers & Architects
Association union (EAA) under pressure from the Service Employees
International Union rejected a tentative negotiated agreement with
Mayor Antonio Villaraigosa’s office. Had the agreement been ratified,
the City would have made progress toward reducing its budget deficit by
reducing health insurance costs. EAA members would have paid 5 percent
of their monthly health care premium and $20 per office visit rather
than the current $10 fee. L.A. taxpayers currently pay for 100 percent
of family health insurance, plus an additional $15 per month insurance
"enhancement" for most city employees.
The Council will
also take up a motion to outsource billing and collections for city
ambulance services. Most major U.S. cities contract out these services.
The proposal – endorsed by the L.A. Fire Department Commission and the
City’s Chief Administrative Officer – is expected to save millions of
dollars in annual costs AND generate more revenue through better debt
collection.
It is reforms like
these that will save money and add revenue without a tax or fee
increase. The result will be fewer layoffs and smaller cuts in public
services. The City’s budget deficit for the next year is already $320
million, despite the major spending reductions and downsizing that took
place this spring. There is no time to waste. Pension reform and
contracting for debt collection are two changes that need to take place
right away.
We’ve all heard
the definition of insanity – doing the same thing over and over again
while expecting a different result. The topics on the agenda for
Tuesday’s L.A. City Council meeting will give voters and taxpayers a
glimpse of whether change is occurring at City Hall.