Skip to comments.Will Los Angeles Join Detroit As a Fiscal Zombie City?
Posted on 03/07/2013 6:42:35 AM PST by SeekAndFind
Few people should have been surprised when Michigan Gov. Rick Snyder said last week that he was beginning a state takeover of insolvent Detroit. After all, the city's schools have been operating under state control since 2009, while Detroit government itself has been running an accumulated deficit since 2005 and papering over its finances with borrowing.
No one would mistake Los Angeles for Detroit, however, and not just because of the weather. Los Angeles is not a fading rustbelt metropolis but a global city, a center of entertainment, finance and trade. But at a forum for mayoral candidates last month, one journalist on the panel of questioners asked the contenders whether they thought Los Angeles faced a real prospect of bankruptcy, and at least two of the candidates agreed it did.
The question didn't come out of nowhere. Last April, the city's administrative officer issued a report on Los Angeles' deteriorating finances and its long-term structural imbalance, which is budget talk for the fact that the city's projected revenues and spending don't match up over the coming years. Just to ensure that readers didn't miss his point, the CAO, Miguel Santana, started his report by recounting the path to insolvency trod by another California city, Stockton, and observed that in that case, "Getting to the doorstep of bankruptcy did not happen overnight."
Since then, Los Angeles' political leadership has engineered small changes in its budget, such as less expensive pensions for new workers, but that won't generate substantial savings for years. Now a new report issued last week by a budget watchdog group, California Common Sense, says that Los Angeles' current workforce retirement costs alone are so great that reforming then is essential to avoiding insolvency' in the nation's third largest city. Pension costs have gone in 10 years from 3 percent of the city's budget to 18 percent, and even with the increased contributions by the city, its pension debt is growing larger.
Los Angeles represents the new model of urban distress. That is so because it isn't coming face-to-face with its crisis after decades of decline spurred by job losses in its single most important industry, as Detroit did with the auto makers. For all of the shortcomings of Los Angeles' civic leadership, the city also hasn't endured the political follies of Detroit during its economic decline, like the tenure of Mayor Kwame Kilpatrick, dubbed "America's hip-hop mayor," who went to jail for obstruction of justice after lying about an extramarital affair in a sex-and texting scandal with a city employee, and who still faces federal charges for extortion, bribery and fraud.
CLICK ABOVE LINK FOR THE REST...
Holding out for a Pelosi speakership and a post-2014 Federal bailout of their pension funds.
Comment: Los Angeles has fallen under Third World governance and it is obvious they are following their third world traditions and practices of stupid incompetence. The non Third World people that remain are time serving human nothings.
another innocent victim of heartless Republican cruelty
Now come on here, let’s call a pig by its name.. The embezzlement of public funds by public employees is at an all time high, and politicians have enabled this massive grab while at the same time making sure to take a bit for themselves as well. After all, THEY don’t have to pay for it, budget for it, account for it, or be held accountable when the whole house of cards falls down.
I do feel sorry for some public employees, who think that they’ve an unlimited gravy train to ride for the rest of their lives and are taking no precautions or actions to protect their stolen funds. I’m sure we’re going to hear story after story about how retirees are losing their homes, their cars, their cell phones, and being forced to live on a payout a little better than social security.
If you are a public employee, in any position, you should plan on this scenario playing out. And honestly, any one who whines about not being able to steal as much as they wanted should be tossed in a jail cell and charged with embezzlement. Because that’s really what it is, the theft of public funds. Just because you took the job and someone promised you’d be able to steal DOESN’T excuse the theft.
All municipal budgets, with the exception of voter approved bonds, should be zeroed at the end of each fiscal year. Retirements should be fully funded, and if that means that they can’t promise the moon, well, gosh, welcome to public service. Maybe you should pay for your own retirement, with the city’s contribution capped at the same contribution a private business would make to social security.
But how can that be? El burrito poco mal, Antonio Villaraigosa, is a rising star in the Democrat party. But he couldn’t even handle the God vote at the shortened Democrat Convention.
The state of Illinois came out with their budget yesterday. Every spare dime is now going into the pension system. Bankruptcy is inevitable.
If a city needs to be bailed out, then the people lose their votes. If a private business needs to be bailed out, then it loses it’s ability to make campaign donations. THE LAW OF EFFECT shows us that you generally receive more of the behavior you reward and less of the behavior that is punished. If the state or federal government bail out Detroit, is that a reward or a punishment. It will be a reward. And what behavior is being rewarded? Intentionally, and continuously voting for thieves. Bail out Detroit, and they will just keep electing thieves.
I think it’s almost a foregone conclusion that by 2016 there will be federally guaranteed state bonds for Cal, Ill, and NY.
With those electoral votes locked for Dems, they’re good to go for another 8 years.
Will the last middle class American leaving Lost Angeles please turn out the lights?
There aren’t any left; someone else will have to do it.
Detroit and Los Angeles both have the same problem. The people that built the cities up from nothing have been replaced by people that can’t sustain them. A city and its condition is only a reflection of the people that live there.
The simple fact is that many cities are already in as bad or worse shape than Detroit. The difference is that cities like Chicago and LA are racking up debt at an astounding rate with every intent of the feds bailing them out.
You’re correct, of course.
And the state bailouts will happen, most likely before the 2016 elections.
To make matters worse, California and Illinois are continuing down their anti business path while Michigan is going in exactly the opposite direction.
Surely the hemp fiber basket weaving industry can find a home in LA.
“The simple fact is that many cities are already in as bad or worse shape than Detroit. The difference is that cities like Chicago and LA are racking up debt at an astounding rate with every intent of the feds bailing them out.”
The problem with a federal bailout is that the numbers will be astronomical. Further, Detroit and LA are only on the front page because of their size. I submit that cities throughout the country large and small are in the same straits. Apart from the pension costs, there is the bonded indebtedness to take into account. I mean I read recently that Poway, CA school district borrowed $100 million and will have to repay $1 billion! This is not going to end well anywhere!
I’m sure Michigan is on the Obama sh!tlist, with a Republican governor and legislators, RTW, etc.
Only devout Barrqqi states will get the bailout.