L.A.'s top budget expert says filing for bankruptcy, as Riordan suggests, would be foolish
The top budget expert at Los Angeles City Hall said Friday that the municipal government is climbing out of its fiscal sinkhole –- and would be foolish to file for bankruptcy as a way of solving its problems.
City Administrative Officer Miguel Santana, acting at the request of the City Council, gave his take on the series of warnings from former Mayor Richard Riordan that the city is on the brink of seeking federal bankruptcy court protection.
Appearing before the council, Santana said the city already has taken steps to cut the size of the work force by laying off 100 workers, closing small departments and letting 2,400 workers retire with full pension benefits up to five years early. Another 761 job cuts are planned in coming weeks -– a move that is controversial among some council members.
“We are on our way to financial stability,” Santana said. “So bankruptcy is further away now than it was possibly a year ago.”
Riordan has been waging a campaign to roll back some of the benefits given city workers, warning that retirement costs threaten to sink the city financially. He has been arguing that public pensions should be replaced by self-directed 401(k) investment plans and the retirement age should be lifted to 65.
“I’m 80 and I’m working 10 hours a day,” he told The Times earlier this week. “I teach at UCLA at the business school. I run five restaurants … and own other companies. People are living a lot longer and they’re active a lot longer, so it’s ridiculous to use 50 or 55 as the retirement age.”
Over the last two days, Santana has pointed out that Riordan played a major role in creating the pension costs he now decries by securing passage of a plan to allow public safety employees to retire as early as age 50. That plan also allowed those employees to receive up to 90% of their salaries every year upon retirement, up from 70%.
On Friday, council members voiced their fears that Riordan’s campaign could jeopardize the city’s bond rating, which determines how much it pays to borrow money.
“I think it does affect our credit rating because it’s obvious the circles he runs in and the people he has direct contact with,” said Councilman Ed Reyes. “I don’t know why he would want to make it more expensive to run the city.”
Despite those comments, Santana said he agreed with Riordan’s demand for pension reform. In January, Santana pushed without success to place a measure on the June ballot that would roll back the public safety retirement benefits that were backed by Riordan in 2001.
Since then, Mayor Antonio Villaraigosa said he is looking to do the same by sending voters a proposal for the November ballot that would scale back the benefits of newly hired police officers and firefighters.
--David Zahniser at Los Angeles City Hall