City Journal Spring 2014

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Spring 2014
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California

Tim Cavanaugh
Mundane Truths
The L.A. 2020 Commission diagnoses problems its members helped cause.
20 February 2014

The Los Angeles 2020 Commission (LA2020) was established “to study and report on fiscal stability and growth in Los Angeles.” Its 43-page report, “A Time for Truth,” is notable for how its strident content clashes with the distinguished backgrounds of its authors. Despite boasting a long list of high-powered signatories—including former Clinton administration Commerce secretary Mickey Kantor, former L.A. “jobs czar” and sometime mayoral hopeful Austin Beutner, and former Obama administration Labor secretary Hilda Solis—the report reads like a jeremiad.

“Los Angeles is barely treading water while the rest of the world is moving forward,” the report begins. “We risk falling further behind in adapting to the realities of the 21st century and becoming a City in decline.” The prolix document then details the city’s descent in 17 bullet points—three more than Woodrow Wilson needed to describe U.S. aims after World War I. It’s even more than Cicero thought to include in his series of orations against Antony. The list is padded out with non-problems—underinvestment in projects of interest to the report’s authors, “community plans” that are “decades old and hopelessly out of date.” At least one of its putative discoveries hardly needed all the research LA2020 claims to have done—traffic is often irritating!

“A Time for Truth” does offer some striking perspectives on L.A.’s troubles, however. Businesses are fleeing Los Angeles, which now hosts only four Fortune 500 companies (down from 12 in the 1980s). Poverty and unemployment rates are far above the average for both California and the United States. The city’s “barbell” economy—with jobs only at the top and bottom ends of the income scale—is “more typical of developing world cities, like São Paulo, than a major American urban area.” (The comparison brings to mind a scene in Robert Aldrich’s 1975 film Hustle, where Burt Reynolds describes L.A. as “Guatemala with color television.” Some of the city’s problems are older than even the commission may realize.)

The troubles go on. The city’s revenues have been flat since 2009—mostly because the local economy is moribund, though the report hints at a possible new revenue stream. “L.A. has no income tax,” the commissioners note. “Other taxes, including sales, hotel, parking and residential development, do not offer a solution to the City’s current budget gap. They have narrow bases and grow slowly.” Are LA2020’s members proposing a new city income tax? The report-by-committee doesn’t say.

The report also highlights employment stagnation, noting that Los Angeles is “the only one of the seven largest U.S. cities where the number of jobs has actually declined since 1990.” Though it goes unmentioned, L.A. County’s sleepy economy has made it less desirable for newcomers. The place Americans once thought of as a paradise has seen essentially flat population growth over the past decade, growing less than 2 percent since 2004, according to the Census Bureau. For a considerable period during the administration of Mayor Antonio Villaraigosa, L.A. actually lost population.

“A Time for Truth” can’t help misplacing its sympathies. Accurately noting that pension costs for retired government employees are eating up a rapidly growing portion of city budgets—up to 18 percent of expenditures when the report went to press in January—the authors then warn that “today’s workers are paying into a system whose benefits they’re increasingly unlikely to see.” Leave aside the fretting over public-sector workers in the same county that gave us the notorious featherbedders Robert Rizzo and Angela Spaccia. Long experience and a mountain of California case law show that Los Angeles will cut any service, borrow any amount, and dun any taxpayer to meet its pension shortfall. The city of Stockton went bankrupt in 2012, yet its reorganization plan, which included tax hikes and stiffing of creditors, fully funded its pension payments. Does anybody believe L.A., where the Democratic Party’s lock on power is even tighter, will stiff unionized workers?

The Los Angeles Times’s David Zahniser helpfully noted the conflicts of interest baked into the report’s conclusions. For example, Brian D’Arcy, head of the Department of Water and Power’s union, is one of the authors, which helps explain the crocodile tears for government-employee pensions and suggests why an arrogant and dysfunctional bureaucracy like DWP is grouped among the city’s “underinvested” public projects. Times columnist Jack Dolan chronicled the disappearance of $40 million in ratepayer funds at two D’Arcy-run nonprofit trusts meant to “improve labor relations” at the DWP. Yet D’arcy blames “right-wing apparatchiks” for the DWP’s poor reputation. “The city can’t manage anything,” he says. “DWP runs like a business.”

The special pleading for DWP is just one problem with a report that also argues for public investment in the neighborhood around the University of Southern California—a private institution whose senior vice president is one of the authors—and in a railroad represented by Kantor.

But the biggest conflict may be the commission’s allegiance to the Smart Growth axis. At least since the mayoralty of Villaraigosa, and continuing under his successor, Eric Garcetti, the city’s zoning ideas have been outsourced to an activist-developer-Democrat cohort. “The vast majority of the City’s Community Plans are decades old,” the report says, “lacking input from the people who live there and not reflective of current views about population density, access to public transportation and a modern work environment.” In English, this means that residents keep demanding to live in ways the urban planners don’t like. Judging by his tenure in the city council, Garcetti hopes to turn L.A. into a kind of New York West, supplanting the detached homes and drivability that drew most people to the city with a high-density, transit-oriented, hub-centric planned community. It’s a vision that ignores the history of Los Angeles and the preferences of people who live there.

“A Time for Truth” supposedly took more than a year to complete, but its function is only diagnostic. The same group is said to be coming out with a document on solutions later this year. Don’t expect much.

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