Status Quo and the Plan to Sell LAX

The only novel idea that came out of the Los Angeles City Council’s recent gloomy budget debate was Councilwoman Joy Picus’ proposal to sell Los Angeles International Airport.

I know selling LAX to some private airport management company may sound like a scheme hatched by Margaret Thatcher or the people who brought us deregulation of the savings and loan industry.

But the city administrative office has estimated that the airport would be worth more than $2 billion if it were put up for sale. A private study said that could be a one-time windfall for the hard-pressed city treasury or--more sensibly--if conservatively invested, it could earn at least 7% a year, $140 million annually. And property tax revenue would rise.

Picus’ colleagues scoffed, saying the sale was too complicated to put together for this year’s $3.9-billion budget. Instead, the budget was balanced by cuts and a tax on real estate sales of $4.50 for each $1,000 of property value. That will add about $900 to the sale of a $200,000 home--bad news for home buyers.

Picus had been searching for a new approach. Her inspiration for this particular idea came from the Reason Foundation, a Santa Monica-based conservative think tank that promotes a Reaganesque free-market philosophy. Foundation researchers had provided Picus with glowing accounts of the few airports now owned by profit-making firms, most notably the two large facilities in England--Heathrow and Gatwick.

The Reason Foundation is one of several institutions and organizations that are taking fresh, hard looks at the way city government conducts its fiscal affairs. Thursday and Friday, for example, the Urban Institute of Washington, D.C., is holding a conference at the University Hilton in Los Angeles on “Big City Governance and Fiscal Choices,” chaired by USC political science professor Michael Preston. The Los Angeles Taxpayers Assn. has sponsored several studies proposing alternatives to present city fiscal practices.

But City Hall resists those efforts.

One of the most ironic examples of resistance took place after a study actually promoted by the City Hall Establishment, Tom Bradley’s 1983 “Mayor’s Blue Ribbon Budget Revision Committee.”

I talked to committee veteran Jay Curtis, a 38-year-old attorney who is president of the Los Angeles Taxpayers Assn. He is an intense man who becomes emotional over budgets and waste, subjects he concedes might not stir everyone’s juices. In 1990, he went public with his ideas in a losing campaign for county assessor. Reporters didn’t show up at his press conferences and audiences avoided his speeches.

His initiation on local government finance came at “Blue Ribbon” committee meetings--and he’s still mad. “We met for six weeks and issued a report,” he said. “We recommended a garbage collection fee. We found the city was paying too much for its cars. There’s no management of the tens of thousands of pieces of real estate the city owns. We found serious inefficiencies in the General Services Department.”

But the committee’s work, said Curtis, “came to naught.”

Picus’ plan is similar to many of the Blue Ribbon committee proposals, based on the theory of “privatization,” that private companies can perform work better and cheaper than government.

The Reason Foundation said that private ownership of LAX could boost city revenues by developing more tax-producing at the airport and by charging higher fees to airlines for landing rights. LAX charges an airline $1,155 to land a 747, compared to $4,451 at New York’s Kennedy.

The city administrative office said that the airport’s sale could jeopardize federal aid to LAX. And the CAO was skeptical of the Reason Foundation’s claim of financial gain for the city.

But the real reason why such new ideas don’t get much of a hearing in City Hall is because they threaten a status quo that is most comfortable for elected officials, department heads and rank-and-file employees.

The City Hall family takes care of its own. Workers get annual raises. Department heads keep their empires. Department heads and employees work especially hard in districts of council members who show the family spirit.

Picus’ proposal threatens a family perk, the overseas “trade missions” so beloved by the mayor, the council and airport commissioners.

These trips are financed by airport revenues. A profit-minded corporate CEO might kill such a junket and allocate the money toward bathroom improvements or some other more worthwhile cause.

If you’re a member of the City Hall family, economy in government is fine, but it can’t compare with a week in Paris.