Signposts of the Riordan Revolution

The bus strike and last week’s shake-up in Mayor Richard Riordan’s office are signs of a fundamental revolution in Southland government.

On the surface, the events may seem unrelated.

One is an internal reshuffling of the sort that preoccupies executive suites. The mayor assigned his chief of staff, William McCarley, to run the Department of Water and Power. He replaced him with another Bill--William Ouchi, a UCLA business professor and management expert who is one of Riordan’s most influential advisers. This sounds like inside politics, of interest only to City Hall denizens.

The strike, on the other hand, is painfully public, affecting the lives of the million-plus people a day who ride the vast Metropolitan Transportation Authority bus system, as well as their families and employers.

But there’s a thread that connects these disparate events. It’s spun by Riordan around his vision of a smaller government that farms out many of its tasks to private companies that pay lower wages and can do the job less expensively. Government would be just another merchant--although a big one--in a huge, deregulated marketplace.

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McCarley’s job is to turn the DWP into an organization that can compete in the marketplace.

The department provides electricity to all Los Angeles residents and businesses. Residents pay an average of $42 a month. The electric bill for a small business, such as a grocery store, may run about $150 a month. For the biggest industries in L.A., the monthly cost could be about $1 million. A report to the City Council in March said DWP’s industrial rates were 5.5% higher than those charged by private utilities in urban areas. But its residential rates were 17.3% lower.

Even before Riordan took over last June, the department was criticized by City Councilman Joel Wachs and others for inefficiency. Riordan’s election intensified pressure on the department to cut costs when he proposed using some of the department’s sizable revenue to help pay for hiring of more police officers.

Riordan got the money, but his Administration felt the DWP was dragging its feet in supporting the mayor’s push for money. At the same time, the state Public Utilities Commission began moving toward deregulating such private utilities as Southern California Edison. Riordan aides foresee a day when Edison and others will offer lower rates to L.A. companies, forcing the DWP to cut prices. Lower business rates would mean higher residential rates, unless the DWP can cut costs.

Under the Riordan vision, public transit is also moving into the marketplace era.

In the days preceding the strike, he fought hard as a member of the MTA board for contract provisions making it easier for the agency to give routes to competing agencies--such as the San Gabriel Valley’s Foothill Transit--as well as having private companies do work now performed by MTA employees.

In addition to serving on the MTA board himself, Riordan appoints three members to it. His efforts to bring in private companies was an important step in the evolution of the strike, and a marked change from past policies. When Tom Bradley, a liberal, pro-union Democrat, was mayor, he and his allies settled disputes on terms more favorable to the unions.

After the strike has passed, Riordan will press ahead with his agenda. He believes that the MTA alone isn’t capable of providing good public transit to the region. And the mayor has company. The agency’s critics range from the libertarian Reason Foundation to the more liberal Environmental Defense Fund. In general, they favor a flexible MTA not bound by old rules.

They see a transit marketplace with buses, trains, jitneys, vans--some publicly owned, some privately operated--as part of a mix of public transportation more accessible and less expensive.

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Anyone who has watched our public transit officials bumble through years of building and running bus and train systems knows the merit of the idea. But there’s also a downside.

Deregulation and privatization mean lower wages, fewer benefits, more part-time workers and a smaller full-time work force. Corporate America is heading down this path. Do we want government to follow?

There’s also the potential for corruption. Private businesses bidding for government work hire lobbyists, start political action committees and begin to shower contributions on politicians. There are so many lobbyists at MTA meetings now that it’s impossible to keep track of them. Imagine how difficult it will be to also track them at the Department of Water and Power.

Revolutions are high-risk enterprises. The Riordan revolution is no exception.