by Webmaster

L.A City Council Should Embrace Reform To Reduce Budget Deficit

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. 

And that’s The Business Perspective.