Posted on 04/24/2012 4:10:08 AM PDT by SeekAndFind
When the nation’s second largest city teeters on the verge of bankruptcy, local elected officials – and especially taxpayers elsewhere – ought to take it as a wake-up call and ponder the evident public policy blunders that laid the groundwork for such an unnecessary scenario.
Los Angeles’ potential bankruptcy and $238 million budget shortfall were predictable and preventable. So predictable in fact that former Los Angeles Mayor Richard Riordan warned of the looming crisis in a Wall Street Journal editorial in 2010. Now he says bankruptcy may be just a year away.
What underscores this municipal catastrophe is undue influence of public employee unions on city expenditures, irresponsible decisions by elected leaders and unsustainable benefit structures practically germane to the government sector.
When reporting the projected budget gap for the 2012-13 fiscal year, L.A.’s chief administrative officer, Miguel Santana, noted that the budget shortfall is likely to be much greater – $427 million – by 2014-15, if drastic action is not taken.
Ominous as the projections are, they understate the forthcoming structural challenges in L.A.
A study released earlier this month by the Stanford Institute for Economic Policy Research estimated that each of the city’s three independent pension funds are unfunded by billions of dollars: the City of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the City of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded. To put the numbers in context, L.A.’s 2011-12 operating budget is $6.87 billion, according to the city.
Stanford’s study also found that “pension costs increased from 8.5 percent of total city expenditures in 1999 to 13.7 percent in 2011.” For fiscal year 2011-12, estimated pension costs look to be “15.4 percent of city expenditures.”
(Excerpt) Read more at briancalle.ocregister.com ...
I don’t see this as preventable. You have a steady trend of people leaving the state...with business operations looking over into Nevada and Arizona. If you can’t stop this exodus...then you need to adjust your compensation to various public projects and downsize....which no one wants to do.
It’s kinda like watching a cruise boat get a 2-inch gash on the bottom of the ship and you’ve got two weeks before it sinks...but everyone keeps partying until the ship is ready to sink...never trying to fix it or at least jump off the boat.
-——I don’t see this as preventable.-——
The problem can and might be solved by the Big’un.
A massively destructive earthquake would solve the fiscal problems and provide reason for curtailing pensions
And let us not forget that the conductor of this train heading over the cliff, Mayor Villagrossa, will be the KEYNOTE speaker at the Dem convention..
Forward Gallop · SubscribeSubscribed · Works at Teamsters Local 320 Taxpayers United of America is another one of those shady 'AstroTurf' groups funded by America's largest corporations. Why would anyone want to lose their pension for a 401(k)? Under a defined benefit plan or a pension, the investing is done for you and you are guaranteed your retirement benefit. That benefit is calculated by your salary and time served. Your pension is guaranteed for the rest of your life. A defined benefit is best for those who are unfamiliar with investing or playing the stock market, and want a guaranteed retirement. The 401(k) plan, or defined contribution, is only worth the money it gains or loses. Because defined contributions rely on the market, you could double your investments, or you could lose it all only a few years before you retire. Your benefits are defined by how well your investments did, and will end when the money is spent. Defined contribution plans are best for those who are wise investors and like to roll the dice by playing the market.
Reuters gives us a preview of our future!
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