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Potholes or Pensions: A Fundamental Question

August 12, 2014

by Gary Toebben

Two weeks ago the headlines in Los Angeles included a Department of Water & Power water line failure in West L.A. and a ruling by the Employee Relations Board to overturn the creation of a new pension tier for future city employees. The juxtaposition of these two stories points out the tug of war taking place in the City of Los Angeles today. With our limited tax dollars, do we prioritize salaries and pensions or maintenance and services?

Although some may wish to ignore this fact, the financial resources in government coffers are finite. Every dollar spent on pensions for retirees is a dollar that is not spent on streets, water and sewer line maintenance, sidewalks, parks, tree trimming, police services, fire services and the other public service that matter to each of us daily.

Our current pension liability costs 20 percent of our general fund budget (and rising). These numbers are unsustainable. There is no greater danger to the long-term fiscal stability of the City of Los Angeles than our rising liability for pension benefits.

Over a year ago the City Council and former Mayor Antonio Villaraigosa, on a unanimous vote, took the fiscally appropriate action to create a new civilian pension tier for future employees. This new pension tier still provides an outstanding retirement benefit that is significantly better than the retirement plan for almost everyone reading this, but it will save the City millions of dollars in the short term and billions over the next 30 years.

The employee relations board that overturned the City Council action includes the arbitrator that recommended a 24.5 percent wage increase for city employees seven years ago. The recourse for Mayor Eric Garcetti and the City Council is to go to court to overrule the board. The business community strongly recommends that our elected officials take the legal action necessary to appeal this ruling.

Mayor Garcetti, the City Council, businesses and residents of Los Angeles must stand together on this issue or we will be left with more busted water mains, bigger potholes, more broken sidewalks and untrimmed trees. The City of Los Angeles exists to provide quality services to its residents and businesses, not to provide overly generous pensions that we cannot afford.

And that's The Business Perspective.

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No government worker should be unionized at all. This costs tax payers so much in costs and the city of LA will be driven into bankruptcy if not corrected. Regarding the pot holes. This subject upsets me greatly. Since January until now I have spent just about $3,000 in the replacement of tires on my care due to pot holes. Not just Pot holes but also from manhole covers that are too deep into the road that creates a man made pot hole. This has got to stop because I am now having to drive down the streets of Los Angeles and North Hollywood looking at the road for pot holes. I am about to send a bill to the city for the replacement of my tires if it keeps happening. This issue has to be fixed by the City of Los Angeles.
Posted by: Michael Lodge @ 10:37:00 am
I agree with Sally. Additionally Gary, this is the second time you have stated that City employees have this generous pension plan. While it may be a good pension plan, these employees contribute a larger amount than in the past because their unions agreed to help the City. If you want to be fair and objective, then educate your readers before you make these skewed comments. Yes, I agree that there should be change otherwise it may all come crumbling down. But the City leadership needs to be fair across the board. Many of these employees (civilian) have not gotten a raise in a few years while DWP and Police employees keep getting their raises. Everyone needs to share the sacrifice.
Posted by: Webmaster @ 5:50:00 pm
I agree, Gary. I also represent a chamber member but speak as an individual. While we are a rather liberal household and tend to vote on the progressive side the concept of company pensions is over. Friends at United have lost their pensions, a portion of which are now carried by the tax payer. So have many other legacy company employees. Employees of private companies contribute to 401Ks and therefore look after themselves. My recommendation may sound radical to some but lets do away with all pensions, strengthen, if need be, the 401K pretax retirement savings and spend the money on infra-structure and other projects benefiting our lives in this unique city. And by the way, do away with company / government cars at the same time. Pay mileage, where necessary and audit it correctly. Same is done in most private companies. I live a decent life without a pension or company car. I looked after myself with the help of 401K. Yes, it can be done.
Posted by: Ralf @ 8:37:00 am
Tell me why.. DWP Department of Water & Power have a $205.00 deposit needed for a new customer 4 Energy service.??? Come on California you need to finally get deregulated like the other states on this Energy, This is sorry... RERE Mitchell/ San Pedro,
Posted by: RERE Mitchell @ 11:00:00 pm
Another perspective is that LA City needs to improve cost-efficiency. Far too many regulations exist that contribute no value to improving services or accountability. If LA is going to be world class, it needs to improve its image--better roads, less congestion, clean streets, eliminate blight and homeless sleeping on streets, etc.
Posted by: Robert Gutierrez @ 5:25:00 pm
Please let the public know about www.transparentcalifornia.com. There you will find the average salary for a teacher is $84,000.00 for a 180 day work year. The public sector unions should know that when California goes bankrupt their pensions/benefits will be changed. Let's not vote ourselves more taxes and just let the state go bankrupt. So many of us are so clueless about this.
Posted by: Denise Soto @ 5:22:00 pm
I agree Gary. Sue the unions and if need be, the Mayor should ask for the resignation of every member of the Commission. He can selectively can every member that does not agree with the new City policy on pensions. Anything less demonstrates temerity which is something we cannot afford in these very uncertain economic times. If the unions want a court battle they have one. If the Mayor is serious he needs to go for broke, no matter the cost of litigation and use the courts until all possible options are exhausted. That is what the public expects.
Posted by: Sean McCarthy @ 5:08:00 pm
I run an organization that is a Chamber member, but I am speaking as an individual. While I support much of the work of the Chamber, this opinion piece is irresponsible and inflammatory. I can only imagine how the Chamber's own employees feel when they read such comments by their leader. Absolutely, the City should provide quality services to residents - but who provides those services? The employees. Services do not happen by magic. While I absolutely appreciate that we cannot have bloated pension systems that the City can ill afford - legacies that many organizations have had to grapple with - the wording of this opinion attempts to pit employees against services. Such views are short sighted and perhaps a more reasonable approach when discussing pension reform is in order, reform which no doubt is needed. Employees should be valued - indeed many of us are employees - and suggesting that the water main break happened as a result of pensions is unfair, along with pitting employees against needed services. Decisions were made by City leadership to create and maintain such pensions, but they are only one component of the budget. Yes, change is needed, and City leadership needs to implement change. But laying problems with maintenance and services at the feet of City employees is simply unfair and wrong.
Posted by: Sally Suchil @ 4:01:00 pm