L.A. proposal: That’s a pension tax — not a pothole tax

L.A. proposal: That’s a pension tax — not a pothole tax

city.la.This proposal — allegedly from Los Angeles bureaucrats but almost certainly from new L.A. Mayor Eric Garcetti — got the scorn it deserved on libertarian and conservative websites when it came out Wednesday afternoon:

“L.A.’s elected officials should put a half-cent sales tax hike on the November ballot to pay for repairs of the worst streets and sidewalks, two top policy analysts said Tuesday.

“City Administrative Officer Miguel Santana and Chief Legislative Analyst Gerry Miller recommended a tax hike that would generate $4.5 billion over 15 years — $3.86 billion for roads and potentially $640 million for broken and buckled sidewalks.”

California problem: High taxes, bad roads

Reason blogger Scott Shackford has a nice takedown of the proposal here, focusing on the California-ness of this problem:

LAPOTHOLES

“If we need the government to pave the roads, then how come government can’t actually seem to pave the roads?

“It’s a question to ask a lot in California, where citizens pay significant amounts of taxes, and yet the roads are often disasters. On the state level, the Reason Foundation notes, California spends more per mile than the national average for its highway system, yet ranks near the bottom of the list for road conditions.

“On the local level, residents may see the same problems. Los Angles has high state and local taxes (sales tax in the city is 9 percent) and yet more than a third of the streets in the city’s streets are get failing grades for road repair.”

But I think some of the focus should also be on why the nation’s second-largest city is in this mess: the cost of ridiculously generous pension benefits.

L.A. in an immense pension hole

If you look at the numbers, it’s obvious that this is a pension tax, not a pothole tax. The city can’t fund basic services because of pension costs, so it has to look for alternatives to pay for basic services.

This is from a December analysis by City Watch LA:

“As of June 30, 2013, the City’s two pension funds, the $17 billion Los Angeles City Employees’ Retirement System and the $20 billion Fire and Police Pension Plans, were only 74% funded. As a result, over half of this year’s pension contribution of $950 million (19% of the budget) will help to amortize a small portion of this unfunded pension liability.

“Over the next three years, the City’s pension contributions will increase by $250 million (over 25%) to $1.2 billion, representing 23% of the City’s budget.  This is after a 150%, $650 million increase during the Villaraigosa era, fueled primarily by a four time, $475 million increase in the contributions to the Fire and Police Pension Plans.”

When just under one-quarter of your operating fund budget goes to pensions, desperation sets in. So you pitch higher taxes and pretend they’re about potholes, not pensions.

Newspaper accounts don’t even mention pension anvil

dd-posterI doubt voters will be dumb enough to not see through this shell game.

But when it comes to the mainstream media, who knows?

The fiscal reasons driving the tax-hike trial balloon are pretty plain to anyone with even a cursory knowledge of L.A. government. Yet this lengthy L.A. Times’ account of the proposal doesn’t mention the pension burden on the L.A. budget even once.

Nor does this L.A. Daily News piece.

Dumb de dumb dumb. How green and naive can these reporters be? If there is no money available for a typical routine government service, shouldn’t a journalist’s first question be “why?”

Instead, the reporters covering L.A. City Hall go along with the establishment’s framing: “How can we get new money to pay for these routine services?”

We need an encore: Dumb de dumb dumb.

29 comments

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  1. Donkey
    Donkey 20 March, 2014, 06:59

    I stopped buying anything in LA county when they did away with plastic bags from vendors. This just gives me more of a push to never go there again. 🙂

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 20 March, 2014, 11:23

      Stockton and Vallejo BOTH passed a similar sales tax, as did the state with Prop 30.

      Vallejo will be filing their second BK in 6 years in the next 24 months.

      Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 20 March, 2014, 08:08

    Donkey

    LA is truly too far from Adelanto anyway!

    Reply this comment
  3. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 March, 2014, 11:20

    The old “bait and switch” always works, or almost always.

    Prop 30 was also a pension tax.

    Reply this comment
    • SeeSaw
      SeeSaw 20 March, 2014, 21:58

      Prop. 30 was for the general fund so that it could free up needed education funds. The pension funds are line items on all public budgets, and they are going to be funded, whether there was Prop. 30 or not. You can belch and whine till your dying day, about the fact that pensions are going to be funded, if that’s how you want to spend the rest of your life.

      Reply this comment
      • Mr. Bubble
        Mr. Bubble 21 March, 2014, 14:17

        Well actually pensions will not be fully funded–ever–because the money just isn’t there. CalSTRS needs $240 billion which is twice the state budget. If it comes to a municipal bankruptcy, then all bets are off. Cops and firemen in Detroit got to keep 90% of their pensions, but I was reading a piece in cnnfn.com about one retired fireman who was expecting a $4000 a month pension and now he’s getting $3600, and he also lost his health insurance, so I’d say that is a significant hit to his retirement benefits. We have one big buffer to pension costs reaching taxpayers, and that’s education. It’s very easy to cut funds to education and I’m glad more cuts are coming to schools. BTW I’m sure municipal workers won’t mind paying $4500 a quarter for their kids’ UCLA tuition. UC has a very big pension bill, too.

        Reply this comment
  4. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 March, 2014, 11:24

    “On the local level, residents may see the same problems. Los Angles has high state and local taxes (sales tax in the city is 9 percent) and yet more than a third of the streets in the city’s streets are get failing grades for road repair.”

    Over HLAF of their sidewalks need to be repaired or replaced also. Maybe they can boost the sales tax (and keep the poverty rate sky high) a fill point to cover those.

    Reply this comment
  5. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 March, 2014, 11:26

    And do NOT forget that LA jacked their garbage and sewer fees through the ROOF to pay for police and their pensions just 4 years ago under Tony.

    Reply this comment
  6. Ulysses Uhaul
    Ulysses Uhaul 20 March, 2014, 12:46

    Poodle……why worry about a pit like LA?

    By the way…..since your a mudder……no need for sidewalks at the trailer park!

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 20 March, 2014, 19:10

      YOUR= possessive pronoun.

      You’RE= contraction of “you are”, as in “you are a mnudder” 😉

      Reply this comment
      • Donkey
        Donkey 20 March, 2014, 20:18

        Rex!! I have told you a thousand times, “The RAGWUS feeders only have the capacity of a GED, nothing more.” 🙂

        Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 20 March, 2014, 21:43

    “Your correct”.

    What diff does any of this all mean anyway?

    You two are burrowing so deep in the troll’s cave their may be no way out bro’s.

    Reply this comment
  8. SkippingDog
    SkippingDog 20 March, 2014, 22:41

    Money is fungible. The bills have to be paid and the potholes filled.

    Reply this comment
  9. Mr. Bubble
    Mr. Bubble 21 March, 2014, 14:28

    I recently added Starbucks (SBUX) to my Ameritrade portfolio because it pays a dividend and I see firemen taking their long coffee breaks there every day. I figured if SBUX is a tax-supported business, I can’t go wrong with it. Unfortunately SBUX hasn’t been growing as fast as I had hoped. Now the Feds are ending QE and we may be entering a bear market. Pension funds are really going to be desperate for some way to achieve their assumed Bernie Madoff/Charles Ponzi 8% growth.

    Reply this comment
  10. SeeSaw
    SeeSaw 21 March, 2014, 18:50

    Mr. Bubble, CalPERS has earned 8.9% for the first seven months of the current fiscal year. Firemen are on duty 24 hrs a day–they do have to take time to stop for coffee–they might have to leave it sitting when the emergency call comes in though.

    Reply this comment
  11. Ulysses Uhaul
    Ulysses Uhaul 21 March, 2014, 22:19

    Saw…….be nice to new trolls…

    Reply this comment

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