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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

 
Comments () | Archives (11)

Of course it would be foolish. The city council won't be able to steal our money if the city goes into receivership. Villabozo and his cronies would have to share with the federal regulators and they are too greedy to share the hundreds of millions of dollars they have stolen in the past and are planning to steal in the future.

Mayor Villaraigosa and his city hall cronies have been milking the city by not making the necessary expenditures for funding the massive pension deficit or funding the repair and maintencance of the infrastructure.

The pensions are underwater by $10 billion more than the city claims based on the market value of the assets and realistic Investment Return Assumptions. The city needs to spend $10 billion to get our roads, sidewalks, street lamps, parks and buildings back to normal.

So what does Villaraigosa do? He sells revenue producing assets like the parking lots at a huge discount to help cover the deficit instead of addressing the issue.

It will be worse next year and the even worse the year after next.

Of course that's what he's gonna say. Own up to the pension mistakes. Yeah Riordan increased it, but he's not budding in because it benefits him to say that bankruptcy is likely.

Everybody and their mom knows that's where we are heading. So instead of laying off people who actually do work, why don't we fix the system that pays people for not working.

People are living longer and the gap between actual pension funding and expected is going to grow ever bigger in the near future. You can't keep paying 90% of salaries for more than the person actually worked. That does not make mathematical sense. Think about it a person works 30 years, retires at 55 and lives to over 85. Do you really think that person saved enough for 30 years of payments? It's just not possible. The difference will be made up by taxpayers, of which we have no money left.

Santana is whistling past the graveyard. These small measures he describes don't even begin to touch the true depth of the problem. He knows it too and yet continues to spin. Pitiful.

The public union workers and illegals are two major root causes of California's financial woes. Now Pelosi is calling out the clerics to villify those of us who support AZ illegal enforcement bill. When a public health nurse can pull down 92K salary and 177K in overtime to work in the prison system we deserve to go bankrupt. Insanity breeds insanity!

The City of LA is the Greece of Los Angeles County.

Gee, Tony V. appoints his buddy. His buddy earns his keep by covering Tony V's behind.

Stop this man before he does more damage. www.RecallCityHall.org

Oh, Santana's back to work? If he thinks bankruptcy's foolish, it's probably a great idea.

I recommend joining/following the group, they are also looking for more facebook subscribers.
http://californiapensionreform.com/

I was already aware of the public pension issue, but these guys find even more stories and facts, most of which are purely mind boggling to anyone with even a bit of fiscal sense.

It is a plague. We are being robbed at threat of prison by these people. Defined benefit plans guaranteed by US!!! I don't know how the public sector unions were granted so much access to governing. It's time to fight back.

You and I do important things in our day to day jobs which keep society functioning too. Don't let these thieves guilt trip you into letting them rob you.

http://californiapensionreform.com/

They are looking for facebook followers. I've been happy with them. They're exposing public sector retirement for what it is, the means to a non-functioning society. Think I'm exaggerating? Find out more about public sector pensions, they are a disaster. There are over 15,000 Californians who have pensions over 100k a year, $8,333.00 a month!!.... GUARANTEED by the taxpayer. You and I are on the hook for that when the system inevitably melts down.

So he is 80 and for his statements lost it mentally a long time ago. There is a reason why people retire, becuase they get old and cant perform as well and becuase they dont let younger people make changes...."oh we have always done it that way since 1918". May be if Anotinio was more interested in City issues insted of his international trips and young reporters and may be if City Clownsol would have a set of testivcles to take care of problems when they are small and being preactive instead of reactive........ Hey we can only dream, I think is great that the politicians break it and they expect the workers to fix it. Ok lets reduce the number of districts!!, lets layoff have of City Clownsol!!!!, why do we need so many "counsel"man? Their retirements are very expensive, spcially Parks which has 2 or 3 salaries now????


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L.A. Now is the Los Angeles Times’ breaking news section for Southern California. It is produced by more than 80 reporters and editors in The Times’ Metro section, reporting from the paper’s downtown Los Angeles headquarters as well as bureaus in Costa Mesa, Long Beach, San Diego, San Francisco, Sacramento, Riverside, Ventura and West Los Angeles.
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