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

by Chris Reed | March 20, 2014 6:15 am

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[1] 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[2], focusing on the California-ness of this problem:

“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[3], 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[4]) 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[5] 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

I 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[6] of the proposal doesn’t mention the pension burden on the L.A. budget even once.

Nor does this L.A. Daily News piece[7].

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.

Source URL: https://calwatchdog.com/2014/03/20/l-a-proposal-thats-a-pension-tax-not-a-pothole-tax/

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