Los Angeles is facing a crushing $1 billion budget deficit, leading to calls for layoffs of as much as 5% of city staff, service cuts and higher fees. S&P Global Ratings has already lowered the city’s bond ratings and the public is frustrated. Mayor Karen Bass—fresh off of her failures in response to the city’s wildfires—is caught flatfooted after Gov. Gavin Newsom wisely rejected her lobbying for a state bailout.
City officials would like us to believe that those wildfires are a root cause of the fiscal mess, but that’s not entirely the case. The fires certainly didn’t help matters, but the reasons are more basic. In her State of the City address last month, Bass said, “Cities like ours are going through challenging economic times across the nation.” Many major U.S. cities are indeed facing fiscal problems, but the root causes are long-standing and predictable.
Los Angeles and other progressive, union-dominated big cities have eagerly give in to the demands of their public-employee unions. They continue to increase compensation, refuse to tackle growing pension costs and drag their feet when it comes to reforming their bureaucracies. No one would argue that LA—with its crumbling infrastructure, crime problems and homeless epidemic—has provided public services in a competent and efficient manner.
“They did it to themselves,” Stuart Waldman, president of the Valley Industry and Commerce Association, said in published reports. “The city entered into a bad deal with city employees to give them massive raises, and now it’s coming back to bite us.” That’s exactly right. We urge readers to check out the Transparent California website, which lists in eye-popping detail the compensation packages earned by the city’s workforce.
Government leaders always need to account for a potential recession, yet Los Angeles officials seem blindsided by reduced revenues that come as a result of national economic uncertainty. We still fondly recall former Gov. Jerry Brown’s charts, which he trotted out during every budget reveal, explaining that downturns always are just around the corner. Well-run cities plan for such eventualities.
Another driver of costs are lawsuits. The Times reported last week on the “LAPD lottery,” whereby Los Angeles pays out tens of millions of dollars in legal settlements to “officers who claimed to be victims of sexual harassment, racial discrimination or retaliation against whistleblowers.” If the city can’t get this nonsense under control, then why should taxpayers in better-run jurisdictions bail it out?
Yet lawmakers representing the area sent a letter in March to legislative leaders calling for the state to provide $1.89 billion in assistance under the guise of wildfire recovery. Money is fungible, so any such bailout would only bolster LA’s business-as-usual approach.
But at least Gov. Gavin Newsom drew the line: “The state’s not in a position to write a check. When you’re requesting things that have nothing to do with disaster recovery, that’s a nonstarter … I don’t need to highlight examples of requests from the city and county that were not related to disaster recovery … .”
It’s not just about the money, either. A bailout will simply enable the city to continue on a path that hasn’t been working since long before the wildfires. It’s time for the city to make some hard choices.
