Can L.A. balance its taxes and salaries?

first_imgThe issue was spotlighted last week as details emerged of Los Angeles officials’ deal with six unions that would give most of the city’s 22,000 workers a 23 percent raise over five years. The deal was announced a day before the DWP’s board approved another round of water-rate increases: 3.1 percent next July and another 3.1 percent in July 2009. Power rate increases also were approved and await action by the City Council and mayor. City officials defend the proposed hikes and salary deals as needed to maintain city services and pay workers a decent wage. City Administrative Officer Karen Sisson said the city’s budget is being squeezed and the council and Mayor Antonio Villaraigosa are working to create a tax and fee schedule that better reflects what it costs to run the city. “The city has taken action to slowly recover the costs of its services,” Sisson said. “The city provides a number of services from the Planning Department to building plan reviews, to fire inspections. ? The law allows us to recover the cost of the services we provide. We’re not getting a profit.” Among fees that have been increased to recover service costs: Ambulance rides up from $161 to $610, brush administrative fees from $668 to $982, and various planning fees up 15percent. Sisson said utility rate increases also are a reflection of cost-recovery efforts because power rates haven’t risen since 1992. Councilman Greig Smith said the city is facing several major money decisions. “I think it’s terrible timing, all these financial issues coming to a head at the same point,” he said. Still, Smith said he supports the proposed city-union contract because the employees had agreed to forgo pay raises during a tough budget year in 2004. “We have to remember these guys did the right thing. Now they just want to be treated fairly.” And Smith said the city is still struggling to appease employee unions that want to match the salaries for DWP workers, which are the highest in the city. “These unions are feeding off each other, and the council needs to put its foot down. But not with this contract,” Smith said. “We have to stop it at the Department of Water and Power.” Councilman Bernard Parks also said he backs the contract, noting it reflects cost-of-living increases and the unions have agreed to give up later wage increases if needed. “It’s the first time in my history that unions have agreed to help fund their increases,” Parks said. Parks said the city also has to keep city employee contract issues separate from the telephone-users’ tax debate and the DWP rate increase plans. “You can’t tell an employee, `Sorry, the (telephone-users’ tax) came up so you don’t get paid.”‘ Since California voters capped property tax increases with Proposition 13 in 1978, cities have looked to other sources of revenue to stem rising costs driven by salary increases and other compensation. In Los Angeles, city records show salaries for civilian, police and fire employees have climbed nearly 30 percent just this decade to about $2.9billion. Costs for civilian salaries have risen to over $1.7 billion. Those who have been fighting cities’ efforts to circumvent Proposition 13 by adding more taxes and user fees are critical. “I think it’s one of the most poorly managed cities in the country,” Jon Coupal, president of the Howard Jarvis Taxpayers Association, said of Los Angeles. “They collect boatloads of revenue but have very little oversight and management. We see that over and over again. The city leadership is far too beholden to the public employee unions – so much so that it’s impacted the ability to deliver public services in a cost-effective and timely manner.” Still, Bob Stern, president of the Center for Governmental Studies, said the city’s problems stem from deteriorating infrastructure and public demands for services when key revenues – $30million from DWP’s water revenue fund, and $270million in annual phone use taxes – are in jeopardy. “They really have a dilemma,” Stern said of city officials. “When you rely on streams of income and they’re being cut off, maybe panic is too strong of a word, but at least you’re concerned. This is big money you’re talking about. “If that money is not available to you, where do you go to get it or what do you cut?” And Stern said the public bears some of the responsibility. “The public wants all these services, and they’re not willing to pay for them. The chickens are coming home to roost.” Ultimately, city officials are wrestling with balancing myriad demands at a crucial time for Los Angeles. [email protected] [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! The people of Los Angeles are City Hall’s targets even as city workers have gotten recent double-digit salary increases and the city budget has soared nearly 60 percent to $6.8 billion in just seven years. To some, the trend is evidence that the nation’s second-largest municipality is in trouble. “The hole just keeps getting deeper all the time,” said David Fleming, chairman of the Los Angeles Area Chamber of Commerce. “So much of the tax money goes out in salaries that are significantly higher than people get in the private sector. It didn’t start out that way 50years ago ? but to encourage people to stay they gave a pension system no one could afford. “This whole system is upside down.” FUNDS: Some say the city is in trouble as it tries to accommodate pay increases and a soaring budget. By Beth Barrett and Kerry Cavanaugh STAFF WRITERS More hikes in electric and water rates. A ballot scheme to save the phone tax. A plan to tax Los Angeles property owners to pay for gang intervention and prevention programs. last_img