L.A. faces $1-billion deficit by 2013; budget chief calls for pension reforms

Los Angeles could be facing a $1-billion deficit by the time Mayor Antonio Villaraigosa wraps up his second term in 2013, a dire forecast driven primarily by escalating employee pension costs and stagnant tax revenues, the city’s top budget analyst said today.

The grim budget outlook comes a day after the city’s credit rating was downgraded by Fitch Ratings, which will probably make it more expensive for the city to borrow money.

City Administrative Officer Miguel Santana, L.A.'s top budget official, told the City Council that deep, severe cuts to departments and services are unavoidable if the city hopes to repair its finances, and that both the mayor and council must consider creative ways to raise revenue, including privatizing the Los Angeles Convention Center and L.A. Zoo.

Closing the budget shortfalls in the years ahead also will require significant reform of the city pension systems, such as creating a lower tier of benefits for retiring city employees. That would require voter approval, Santana told the council.

L.A. Council will get briefing on finances, a day after city's credit rating is downgraded

The Los Angeles City Council today will get what is expected to be a sober briefing on the city's financial condition, a day after L.A.'s credit rating was downgraded.

The city’s credit was downgraded  by Fitch Ratings on $2.94 billion in debt, meaning that borrowing money will become more expensive for Los Angeles as it grapples with a $98-million current-year budget shortfall and faces the prospect of graver fiscal woes in the years ahead.

The financial ratings service credited Mayor Antonio Villaraigosa and the City Council for taking aggressive action to whittle down the budget gap but added it wasn’t enough and that the ratings outlook for the city remained negative. Fitch Ratings, in a statement released today, said the “city’s economic decline, as evidenced by high unemployment, sales tax weakness, assessed value losses and high home foreclosure ... will impede financial recovery."

Los Angeles County Fire Chief P. Michael Freeman announces retirement

Los Angeles County Fire Chief P. Michael Freeman announced Tuesday that he will be retiring in March after nearly 21 years heading the department.

In making his announcement, Freeman said he plans to spend more time with his family and pursue personal projects.

“It has been my honor and privilege to serve the people of Los Angeles County, alongside the most unselfish, caring, and courageous men and women of the department,” he said in a statement. “There were many challenges, but meeting them brought a great deal of satisfaction.”

As head of the county Fire Department, Freeman oversees an agency long considered among the leaders in firefighting tactics and strategy. In addition to traditional structure and water-rescue units, the department has a large Air and Wildland Division that includes camp crews, bulldozer units and water-dropping helicopters.
 
Freeman is the second-longest serving chief since Spence Turner, who commanded the department for 27 years from 1925 to 1952.

Judge rejects bid to sidestep L.A. contribution limit [Updated]

A federal judge turned down the request today of a political committee with close ties to the Department of Water and Power employee unions that had sought to bar the Los Angeles City Ethics Commission from enforcing a campaign contribution limit.

The group, Working Californians, said the law was preventing it from making independent expenditures for Los Angeles City Council candidate Christine Essel in her Dec. 8  runoff against Assemblyman Paul Krekorian.

Independent groups have spent more than $542,000 to boost Essel’s bid for the San Fernando Valley council seat of former Councilwoman Wendy Greuel in the last few weeks. Greuel is now city controller.

Working Californians, which is co-chaired by the heads of the International Brotherhood of Electrical Workers Local 11 and Local 18, had challenged a 1985 city law stating that a political committee cannot accept contributions greater than $500 if it intends to use that money on an independent expenditure for a city candidate. Working Californians claimed that the provision violated its free speech rights and asked the court to intervene immediately.

The executive director of the Ethics Commission had argued that the city’s contribution limits were intended “to limit corruption and the appearance of corruption so that voters can have faith in the electoral process."

L.A. credit rating takes a hit in light of grim budget outlook

Los Angeles is about to pay a price for its financial woes.

The city’s credit was downgraded today by Fitch Ratings on $2.94 billion in debt, meaning that borrowing money will become more expensive for Los Angeles as it grapples with a $98-million current-year budget shortfall and faces the prospect of graver fiscal woes in the years ahead.

The financial ratings service credited Mayor Antonio Villaraigosa and the City Council for taking aggressive action to whittle down the budget gap, but added it wasn’t enough and that the ratings outlook for the city remains negative. Fitch Ratings, in a statement released today, said the “city’s economic decline, as evidenced by high unemployment, sales tax weakness, assessed value losses and high home foreclosure ... will impede financial recovery."

“It signals that we have some very difficult choices to make in the future," said Administrative Officer Miguel Santana, the city’s top budget official. “We simply cannot be spending at the rate that we have in the past."

Tomorrow, Santana is scheduled to brief the council on the downgrade, as well as the city’s financial status.

Council President Eric Garcetti said the rating downgrade shows that the city still needs to make sweeping structural changes to its $7.05-billion budget. Even after winning concessions from city unions, including pay cuts and an early retirement program, the city still faces a $98-million shortfall in the current budget year and a $408-million budget gap next year.

-- Phil Willon at L.A. City Hall

L.A. County fire chief to retire in March

Los Angeles County Fire Chief P. Michael Freeman announced today that he plans to retire in March after nearly 21 years as head of the department.

As head of the county Fire Department, Freeman saw two of his firefighters die after the huge Station fire broke out in late August. The firefighters were killed when their truck plunged off a canyon road.

In an interview with The Times in September, Freeman said that local, state and federal authorities needed to come up with a plan to better protect vital communications areas such as Mt. Wilson, which was threatened as the Station fire burned out of control.

"We dodged a bullet," Freeman said.

In a report earlier this month, Freeman urged the Board of Supervisors to lobby federal officials to get the U.S. Forest Service to employ such tactics as nighttime helicopter drops to prevent wildfires from raging out of control. The agency has said that it employed the "best professional practices" in its response to the Station fire.

--Robert J. Lopez

L.A. gets $60-million stimulus grant for 'smart grid' electric power system

The federal government today awarded Los Angeles a $60-million grant to help modernize the city’s electrical power system.

The money will be used for “smart grid" demonstration projects at USC and UCLA. The projects will allow the city’s Department of Water and Power, the largest municipal utility in the nation, to use advanced meters and other technology at the universities to chart how power is being consumed, forecast demand and potential outages, and seek ways to reduce energy use.

The projects will include efforts to integrate plug-in hybrid electric vehicles onto the grid.
 
The grant is among $620 million that the U.S. Department of Energy awarded for demonstration projects across the country and is funded by the federal stimulus program.

“We’ve said from the beginning that much of what we’re doing here in Los Angeles can and will be replicated nationally," Mayor Antonio Villaraigosa said during a morning news conference with Secretary of Labor Hilda Solis at Los Angeles Trade and Technical College.

Southern California Edison Co. received a $40-million grant for a smart grid demonstration project in Irvine. Edison also received a $24.9-million grant to test utility-scale lithium-ion batteries to store energy from windmills in Tehachapi.
 
Pacific Gas and Electric Co. received a $25-million grant to test underground “compressed air energy storage" near Bakersfield.

-- Phil Willon at L.A. City Hall

O.C. supervisors, in reversal, ask governor to cancel fairgrounds sale

The Orange County Board of Supervisors approved a resolution today asking Gov. Arnold Schwarzenegger to "immediately cancel the proposed sale of the Orange County Fairgrounds."

The 4-0 vote marks a reversal from July, when the board approved a resolution in favor of selling the fairgrounds to a local government agency or nonprofit. Supervisor Chris Norby was absent for today's action.

The governor earlier this year proposed liquidating half a dozen state properties to raise funds to help ease California's budget crisis, and the state put the 150-acre Costa Mesa site on the auction block last month, giving bidders a deadline of Jan. 8.

Supervisor John Moorlach said the board initially supported the sale because they thought the terms would allow it to be sold to a local nonprofit or government.

But since then, state officials have indicated through auction documents and letters that they want to maximize profit, possibly by selling the land as something other than a fairgrounds, and that has fueled speculation that it could be sold into private hands and developed.

"It's creating so much aggravation that the easiest way to keep the fairgrounds a fairgrounds — which was our overarching goal — is just to cancel the sale," Moorlach said.

But that doesn't mean the county doesn't have a Plan B: Like the city of Costa Mesa and a nonprofit formed by the governor-appointed fair board, the county is exploring making a bid of its own for the property.

After all, quipped Moorlach, "The governor doesn't always do what we ask."

--Tony Barboza in Orange County

State Senate leader casts doubt on lieutenant governor nominee Abel Maldonado

State Sen. Abel Maldonado’s nomination as California’s next lieutenant governor may already be in trouble.

Minutes after a Los Angeles event this morning, with Gov. Arnold Schwarzenegger hailing the moderate Santa Maria Republican as his pick for the office,  state Senate Leader Darrell Steinberg (D-Sacramento) released a statement expressing “grave doubts” about the choice. Maldonado needs the approval of the Democratic-dominated Legislature to take the post. 

Steinberg cited the $2-million cost of the special election that would be required to fill Maldonado’s Senate seat, suggesting the money could be better spent scaling back recent fee hikes at state colleges and universities.

The Senate leader, under pressure to keep the post open for Democrats running for lieutenant governor themselves in next year’s election, also suggested he would like to see the job left vacant.

“It may be both fiscally and politically prudent to permit the people to make their own selection for this statewide office next year and avoid the expense of a costly special election,” his statement said.

--Evan Halper in Sacramento
 

Schwarzenegger appears in East L.A. with his choice for lieutenant governor, state Sen. Abel Maldonado

During a ceremony in East L.A. this morning, Gov. Arnold Schwarzenegger publicly introduced state Sen. Abel Maldonado (R-Santa Maria) as his pick for lieutenant governor.

"He is a model of post-partisanship," Schwarzenegger said in a news conference at Ruben Salazar Park. "He always chooses the people of California over politics."

Standing with his family, some of whom wept, Maldonado thanked Schwarzenegger.

"I will work hard everyday for everyone in California to make this place a better California," Maldonado said.

The news conference came the day after Schwarzenegger announced Maldonado as his pick during a taping of "The Jay Leno Show." The appointment must still be confirmed within 90 days by a majority in both houses of the Legislature.

If confirmed, Maldonado would replace John Garamendi, a Walnut Grove Democrat recently elected to Congress. The 42-year-old Maldonado has long been interested in higher office and has been among the few ideological allies Schwarzenegger has had in the Legislature.

Schwarzenegger names new lieutenant governor [Updated]

State Sen. Abel Maldonado, a moderate Republican from Santa Maria who has parted with his caucus on key votes at the request of Gov. Arnold Schwarzenegger, has been chosen by Schwarzenegger to be the next lieutenant governor.

Schwarzenegger made the announcement today at a taping of "The Jay Leno Show."

If confirmed by the Legislature, Maldonado would replace John Garamendi, a Walnut Grove Democrat who was recently elected to Congress.

[Updated 6 p.m.: The governor called Maldonado “a terrific, loyal man that has worked very hard in public service.  But he’s also into bipartisanship and post-partisanship, so he can cross the aisle.

"He makes decisions based on what’s best for the people rather than what’s best for the party," Schwarzenegger said. "He has helped us...pass a budget, which was very important.”

An earlier version of this post stated that Maldonado's appointment must be confirmed by the state Senate. He must be approved by the Assembly as well.]

-- Evan Halper in Sacramento

Reddock withdraws nomination to Los Angeles pension board

The newest appointee to a Los Angeles pension board has withdrawn her nomination after a city councilman voiced concern about her refusal to name her legal clients, city officials said today.

Los Angeles Mayor Antonio Villaraigosa had named attorney Angela Reddock to the Fire and Police Pensions system, an agency whose board members have come under scrutiny in recent months regarding the potential for conflicts of interest.

Although council members were scheduled to vote to confirm Reddock today, Councilman Bernard C. Parks raised questions after reading correspondence between Reddock and the city Ethics Commission, which is charged with identifying potential conflicts of interest for new city commissioners. Reddock told the commission in an e-mail that she did not plan to name any client that had paid her more than $10,000, citing attorney-client privilege.

L.A. mayor selects new housing chief from Chicago

Los Angeles Mayor Antonio Villaraigosa today announced his selection of Douglas Guthrie to become the new general manager of the city’s Housing Department.

Guthrie, a former top official at the Chicago Housing Authority, most recently worked with private ventures focused on affordable urban development and the redevelopment of old public housing into mixed-use city centers.

Guthrie served for six years as president of Kimball Hill Urban Centers in Chicago, which built mixed-income affordable housing in many depressed city centers that most traditional developers would avoid, including a project with former U.S. Housing and Urban Development Secretary Henry Cisneros, one of Villaraigosa’s long-time political supporters.

Alleged scam aimed at African American churches in Southern California to be investigated

Atty. Gen. Jerry Brown is scheduled to announce this morning that his office is launching an investigation into an alleged scam aimed at dozens of African American churches in Southern California.

According to preliminary information released by Brown’s office, the probe will focus on whether four individuals, two businesses and three national leasing companies defrauded more than 30 Southern California-based African American churches out of tens of thousands of dollars.

Churches hit by the alleged scam include houses of worship in Compton, Los Angeles, Long Beach, Moreno Valley, Murrieta, Pasadena, Perris, Pomona, Rialto, Riverside and San Bernardino, according to Brown’s office.

Churches in at least 10 other states were also affected. At this morning’s news conference, at least two pastors are expected to describe how the alleged swindle has impacted their churches and parishioners.

-- Ann M. Simmons

More breaking news in L.A. Now:

Ventura County man arrested for reportedly paying teens to spit on him

Parts of 91 Freeway to be closed early next week

Police seek attempted rapist in Thousand Oaks

Delays expected on Metro Blue Line for track installation

Alleged scam aimed at African American churches in Southern California to be investigated

Judges to donate portion of salaries to furloughed staff

A fund created by Los Angeles County Superior Court judges who are donating a day’s pay each month will be used to offset pay cuts to the court staff, officials announced Thursday.

Monthly staff furloughs and court closures were ordered in July after the state Legislature cut court funding by more than $200 million.

Most of L.A. County’s judges, who were exempt from the furloughs because their salaries are legally protected from cuts, opted to forgo a day’s pay to help mitigate the effects of the budget cuts.

The donations, which amount on average to 4.5% of a judge's salary, will restore up to one day’s pay per quarter for the court’s 5,000 employees, beginning in January.

“We believe this is unprecedented and shows strong support to staff working under difficult conditions,” said Arnella Sims, a court reporter and union official who said the decision came as a surprise.

—Victoria Kim

Cut in lawmakers' pay is OK, in Jerry Brown's opinion

The state attorney general today said a citizens commission acted within its powers when it decided to slash pay for state lawmakers by 18% last summer, rejecting arguments of legislative leaders who had challenged the panel’s authority.

Atty. Gen. Jerry Brown said in a broad legal opinion that the state Constitution allows the California Citizens Compensation Commission, which is appointed by the governor, to reduce the salaries of legislators and other elected officials in the middle of their terms.

The commission had previously been told by an attorney for the state personnel department that salary cuts could only be applied to those elected in the future, so the panel voted to cut salaries for those elected starting next year.

UC regents approve partnership with L.A. County to reopen King Hospital

In a unanimous vote, the University of California Board of Regents today approved a plan to partner with Los Angeles County to reopen Martin Luther King Jr. Hospital by 2013.

The partnership is a crucial step in reviving the long-troubled facility, which shut down two years ago after repeated findings that inadequate care led to patient injuries and deaths.

"This is a proud day for the University of California," said UC President Mark G. Yudof to shouts of "thank you" from the audience. "The reopening of Martin Luther King Hospital will provide not just adequate care but the best care to the underserved."

Before the vote, Eddie Island, a retired attorney appointed to the board by Gov. Arnold Schwarzenegger, urged his fellow regents not to delay.

UC regents scheduled to take crucial vote on future of King Hospital [Updated]

[Updated at 10:45 a.m.: UC regents unanimously approved a partnership with L.A. County to reopen King Hospital.]

Members of the UC Board of Regents said they were “cautiously optimistic” that they would vote today to partner with Los Angeles County to reopen Martin Luther King Jr. Hospital.

King closed in 2007 after repeated findings that inadequate care at the facility led to patient injuries and deaths. Under the proposal the regents are scheduled to take up today, the county and the University of California would create a nonprofit entity to run the hospital, but the university would provide physician services and medical oversight.

“All of the regents are united in the moral imperative of this,” Sherry Lansing, who chairs the board’s committee on health services, said Wednesday. “But as you can see from today, we are facing financial difficulties.”

As she spoke, regents were voting to raise student fees as hundreds of students protested outside.

A partnership with the UC system is key to a plan to reopen the troubled hospital in South Los Angeles, but many hurdles would remain, including upward of $300 million in needed seismic repairs to the campus.

When the hospital shut down to in-patient and emergency services two years ago, county supervisors promised to have it operating again by this year. Earlier this month, county officials pushed back the reopening date again, this time to 2013. And the hospital they are planning to reopen will be considerably smaller, 120 beds instead of the 233 the facility once had.

John Stobo, senior vice president for health sciences and services for the UC system, said the agreement the regents are considering includes a promise from county officials to secure a $100-million letter of credit for six years, which will guarantee the $63 million a year it will cost to operate the hospital.

“That will go a long way toward addressing the regents’ concerns,” Stobo said.

Regent George Marcus, of the Palo Alto-based Marcus & Millichap Co. investment firm, had expressed doubts about the proposal’s financial stability. On Wednesday, Marcus said he was reassured by the hospital’s proposed nonprofit board structure, so that “if there’s a financial crisis, it doesn’t spill over to us, because we have our own financial crisis to deal with.”

Marcus said he expected the proposal to “sail through” today.

Placentia officials, Caltrans reach tentative settlement over failed rail project

Placentia officials said Wednesday that they have tentatively agreed to pay $5.5 million to settle a claim by Caltrans that the north Orange County city misspent more than $36 million in state funds to finance a now-defunct rail corridor project.

The dispute involved the $650-million OnTrac project, which was shelved in 2006 after failing to receive federal funding. The proposal, which included sinking 5 miles of railroad tracks into a concrete trench, dragged the city deep into debt and forced officials to cut services and sell park land to recoup their losses.

After almost two years of negotiations, Caltrans agreed to reduce its claim to $5.5 million — a move, city officials say, that spared Placentia from filing for bankruptcy protection.

“It is a great relief that this chapter in the city’s history is about to be closed,” said Mayor Pro Tem Joseph V. Aguirre. “Everyone in the city has been focused on resolving this and the stigma it has left.”

O.C. Fair board's actions regarding sale of fairgrounds may be illegal, county counsel says

The top attorney for the county of Orange is urging an investigation of the local fair board, saying its hiring of a lobbyist and law firm to influence the sale of the Orange County fairgrounds by the state may have been illegal.

In a Oct. 30 letter, County Counsel Nicholas S. Chrisos asked the state attorney general’s office to investigate the Orange County Fair Board, saying members’ use of public funds to lobby state officials over the terms of the fairgrounds sale appeared to violate a state law prohibiting public officials from having a financial or personal interest in a contract or sale.

The state put the 150-acre Costa Mesa property up for auction last month in an attempt to raise funds to help ease California's budget crisis.

At its July 29 meeting, the fair board hired former state Senate Republican Leader Dick Ackerman and the law firm Nossaman, Guthner, Knox and Eliot to lobby the governor’s office, Chrisos wrote.

Group tied to DWP employee union sues L.A. Ethics Commission to block fundraising limit [Updated]

A nonprofit group closely tied to the Department of Water and Power employee union has filed a federal lawsuit against the City’s Ethics Commission, saying a city campaign fundraising law is unfairly limiting its ability to advocate on behalf of City Council candidate Christine Essel.
 
The case comes during a two-week period when outside groups have poured more than $280,000 into independent expenditures to boost Essel’s bid to replace former City Councilwoman Wendy Greuel, who is now city controller. Among those groups is the political arm of the International Brotherhood of Electrical Workers (IBEW) Local 18, which has spent more than $93,000 in support of Essel’s campaign. The union is headed by Brian D’Arcy.

Working Californians, the group suing the city, is co-chaired by D’Arcy and Marvin Kropke, the business manager of IBEW Local 11. The group devised the solar energy proposal known as Measure B on the March ballot, which was supported by Mayor Antonio Villaraigosa but was defeated by voters. And D’Arcy showed his political clout last month when he negotiated a five-year package of raises for DWP employees at a time when the police union agreed to forgo pay increases for two years because of the city’s budget crisis.
 
The legal challenge is to a 1985 city law that bars political committees from accepting contributions of more than $500 if the group plans to use that money to make an independent expenditure for a city candidate.
 
In practice, the law prevents outside groups or individuals from contributing to each other to pay for independent expenditures that support city candidates. Contributions that are not earmarked for a specific city campaign are not subject to that $500 limit. (If violations are suspected, the City Ethics Commission’s enforcement division determines whether a contribution was for an independent expenditure).
 
In a court hearing Thursday, Working Californians plans to ask a judge to immediately bar the Ethics Commission from enforcing what it characterizes as an unconstitutional violation of their free speech rights. If they are successful, it could open the door for a flood of outside contributions, not only in the Dec. 8 contest between Essel and Assemblyman Paul Krekorian, but in future city elections.
 

D.A. opens inquiry to see if City of Industry mayor has conflict of interest

The Los Angeles County district attorney has opened an inquiry into the mayor of Industry’s business connections with the city to determine if conflict-of-interest laws may have been violated, The Times has learned.

The review is focusing on Mayor David Perez and was prompted by a complaint lodged in September, said David Demerjian, head of Dist. Atty. Steve Cooley’s Public Integrity Division. The complaint alleged that Perez “may have a financial interest in contracts between the city and companies he’s affiliated with,” said Demerjian, declining to identify the complainant.

Perez said he was not aware of the probe. “I feel confident that I’m doing everything legally,” he said in a telephone interview.

Last month, The Times reported that companies partly owned by Perez, a member of a prominent, deeply rooted family in the San Gabriel Valley town with less than 100 voters, held multimillion-dollar contracts with the city to collect trash and provide public maintenance services.

Perez stressed the agreements were in place long before he joined the council in 2001, when he says he removed himself from any business dealings with the city. He also says he has relied on the advice of city lawyers and their reviews of agendas to avoid ethics problems.

Both the City of Industry and Perez have raised their profiles recently with a controversial push to bring a professional football team and an $800-million stadium complex to the eastern end of the heavily commercial city, near the junction of the 57 and 60 freeways.

L.A. City Council puts off marijuana vote until next week at the earliest

The Los Angeles City Council this afternoon postponed a vote on a medical marijuana ordinance until next week at the earliest.

Councilman Ed Reyes, who is overseeing efforts to craft a law, introduced a motion that would make a series of major changes to the proposal, and asked that the council take more time to review them.

He also noted that other council members had proposed numerous amendments. "This is only the tip of the iceberg," he said.

L.A. City Council lists top 10 places where bureaucracy makes it hard to film

The Los Angeles City Council, in an attempt to stem runaway production and make television and motion picture filming less of a hassle in the city, ordered up a list of the 10 most popular locations where bureaucratic regulations and other factors make it hard to film, with hopes of eventually fixing the situation.

The worst of the worst are, in no particular order: the

• Hollywood sign.

• Griffith Park Observatory.

• Los Angeles Zoo.

• Los Angeles Area Chamber of Commerce headquarters.

• AT&T Building downtown.

• Los Angeles County/USC Medical Center.

• Farmers and Merchants Bank downtown.

• Japanese American National Museum.

• Library Park, also known as Maguire Gardens, at the Los Angeles Central Library.

• Terminal Annex Post Office near Union Station downtown.

The city’s financial analysts compiled the list with the help of film industry location managers through their union, the Motion Picture and Theatrical Trade Teamsters Local 399.

The location mangers said those sites are difficult to film for a variety of reasons, including rental costs, difficulty securing permits, government regulations restricting public access and even things such as restrictions on providing food for crew members.

“Los Angeles is the film capital of the world, but there are too many places in which we tell filming to go away,’’ said Council President Eric Garcetti.
 

Study finds high air pollution levels around Santa Monica Airport

A new UCLA study shows that people who live and work near Santa Monica Airport are exposed to unusually high levels of air pollution — a significant health concern that has been largely associated with major commercial airports such as LAX.

The study, published today in the journal Environmental Science and Technology, found that emissions of so-called ultrafine particles were 10 times higher than background levels about 100 yards downwind of the airport. The levels were 2.5 times higher at a distance of about six football fields.

Less an 1/500th the width of a human hair, ultrafine particles can travel deep into the lungs and penetrate tissue. Research has shown that elevated levels are associated with increased deaths due to respiratory and cardiovascular illnesses.