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	<title>Scott Shackford &#8211; CalWatchdog.com</title>
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		<title>L.A. proposal: That&#8217;s a pension tax &#8212; not a pothole tax</title>
		<link>https://calwatchdog.com/2014/03/20/l-a-proposal-thats-a-pension-tax-not-a-pothole-tax/</link>
					<comments>https://calwatchdog.com/2014/03/20/l-a-proposal-thats-a-pension-tax-not-a-pothole-tax/#comments</comments>
		
		<dc:creator><![CDATA[Chris Reed]]></dc:creator>
		<pubDate>Thu, 20 Mar 2014 13:15:34 +0000</pubDate>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[California economy]]></category>
		<category><![CDATA[Demographics]]></category>
		<category><![CDATA[Infrastructure]]></category>
		<category><![CDATA[Inside Government]]></category>
		<category><![CDATA[News Media]]></category>
		<category><![CDATA[Pension Reform]]></category>
		<category><![CDATA[Waste, Fraud, and Abuse]]></category>
		<category><![CDATA[Chris Reed]]></category>
		<category><![CDATA[Eric Garcetti]]></category>
		<category><![CDATA[Los Angeles]]></category>
		<category><![CDATA[pothole tax]]></category>
		<category><![CDATA[pension tax]]></category>
		<category><![CDATA[Scott Shackford]]></category>
		<guid isPermaLink="false">http://calwatchdog.com/?p=60884</guid>

					<description><![CDATA[This proposal &#8212; allegedly from Los Angeles bureaucrats but almost certainly from new L.A. Mayor Eric Garcetti &#8212; got the scorn it deserved on libertarian and conservative websites when it came]]></description>
										<content:encoded><![CDATA[<p><img decoding="async" class="alignnone size-full wp-image-60889" alt="city.la." src="http://calwatchdog.com/wp-content/uploads/2014/03/city.la_..jpg" width="280" height="140" align="right" hspace="20" />This proposal &#8212; allegedly from Los Angeles bureaucrats but almost certainly from new L.A. Mayor Eric Garcetti &#8212; got the scorn it deserved on libertarian and conservative websites <a href="http://www.latimes.com/local/lanow/la-me-ln-la-street-repair-sales-tax-hike-20140318,0,4675985.story?track=rss#axzz2wLQvT9hM" target="_blank" rel="noopener">when it came out</a> Wednesday afternoon:</p>
<p style="padding-left: 30px;"><em>&#8220;L.A.&#8217;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.</em></p>
<p style="padding-left: 30px;"><em>&#8220;City Administrative Officer Miguel Santana and Chief Legislative Analyst Gerry Miller recommended a tax hike that would generate $4.5 billion over 15 years &#8212; $3.86 billion for roads and potentially $640 million for broken and buckled sidewalks.&#8221;</em></p>
<h3>California problem: High taxes, bad roads</h3>
<p>Reason blogger Scott Shackford has a nice takedown of the proposal <a href="Los Angeles Cannot Find Funds in Its $7-Plus Billion Budget to Care for Roads" target="_blank">here</a>, focusing on the California-ness of this problem:</p>
<p><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-60891" alt="LAPOTHOLES" src="http://calwatchdog.com/wp-content/uploads/2014/03/LAPOTHOLES.jpg" width="332" height="212" align="right" hspace="20" srcset="https://calwatchdog.com/wp-content/uploads/2014/03/LAPOTHOLES.jpg 332w, https://calwatchdog.com/wp-content/uploads/2014/03/LAPOTHOLES-300x191.jpg 300w" sizes="(max-width: 332px) 100vw, 332px" /></p>
<p style="padding-left: 30px;"><em>&#8220;If we need the government to pave the roads, then how come government can’t actually seem to pave the roads?</em></p>
<p style="padding-left: 30px;"><em>&#8220;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 <a href="http://reason.org/news/show/1013695.html" target="_blank" rel="noopener">notes</a>, California spends more per mile than the national average for its highway system, yet ranks near the bottom of the list for road conditions.</em></p>
<p style="padding-left: 30px;"><em>&#8220;On the local level, residents may see the same problems. Los Angles has high state and local taxes (sales tax in the city is <a href="http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=L&amp;LIST=CITY" target="_blank" rel="noopener">9 percent</a>) and yet more than a third of the streets in the city’s streets are get failing grades for road repair.&#8221;</em></p>
<p>But I think some of the focus should also be on why the nation&#8217;s second-largest city is in this mess: the cost of ridiculously generous pension benefits.</p>
<h3>L.A. in an immense pension hole</h3>
<p>If you look at the numbers, it&#8217;s obvious that this is a pension tax, not a pothole tax. The city can&#8217;t fund basic services because of pension costs, so it has to look for alternatives to pay for basic services.</p>
<p>This is from a <a href="http://www.citywatchla.com/lead-stories-hidden/6105-pension-reform-what-will-eric-do" target="_blank" rel="noopener">December analysis</a> by City Watch LA:</p>
<p style="padding-left: 30px;"><em>&#8220;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.</em></p>
<p style="padding-left: 30px;"><em>&#8220;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.&#8221;</em></p>
<p>When just under one-quarter of your operating fund budget goes to pensions, desperation sets in. So you pitch higher taxes and pretend they&#8217;re about potholes, not pensions.</p>
<h3>Newspaper accounts don&#8217;t even mention pension anvil</h3>
<p><img decoding="async" class="alignnone size-full wp-image-60895" alt="dd-poster" src="http://calwatchdog.com/wp-content/uploads/2014/03/dd-poster.jpg" width="302" height="448" align="right" hspace="20" srcset="https://calwatchdog.com/wp-content/uploads/2014/03/dd-poster.jpg 302w, https://calwatchdog.com/wp-content/uploads/2014/03/dd-poster-148x220.jpg 148w" sizes="(max-width: 302px) 100vw, 302px" />I doubt voters will be dumb enough to not see through this shell game.</p>
<p>But when it comes to the mainstream media, who knows?</p>
<p>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 <a href="http://www.latimes.com/local/la-me-city-street-tax-20140319,0,3698676.story#axzz2wRsvFhXv" target="_blank" rel="noopener">lengthy L.A. Times&#8217; account</a> of the proposal doesn&#8217;t mention the pension burden on the L.A. budget even once.</p>
<p>Nor does this <a href="http://www.dailynews.com/government-and-politics/20140318/sales-tax-hike-proposed-to-pay-for-los-angeles-street-repairs" target="_blank" rel="noopener">L.A. Daily News piece</a>.</p>
<p>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&#8217;t a journalist&#8217;s first question be &#8220;why?&#8221;</p>
<p>Instead, the reporters covering L.A. City Hall go along with the establishment&#8217;s framing: &#8220;How can we get new money to pay for these routine services?&#8221;</p>
<p>We need an encore: Dumb de dumb dumb.</p>
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