CITY HALL : Mayor’s Bent for Private Sector May Undo Him

The Riordan Administration may be remembered as the last great attempt to run city government from the private sector. But there are serious governmental and ethical problems in taking this route.

There is a long history of business interests dominating public decisions in Los Angeles. But the city is a different place today--big corporations are not the city’s economic engines anymore--and, consequently, odds are that Riordan’s style of governance will not turn Los Angeles around. The fact that the mayor’s chief of staff, William G. Ouchi, devotes only 15% of his time to city administration--and 85% to writing a book about the city and counseling his graduate students because that portion of his salary is paid by private sources--is symbolic of the ambivalence of this administration’s commitment to the public sector.

True, the City Charter limits the mayor’s powers. At the very least, he needs to be able to hire and fire his own department heads, as an April ballot proposition would allow. True, the governmental structure is an unwieldy amalgam of conflicting rules and regulations. True, there are not enough resources to go around, and help from other levels of government is declining. But the Riordan Administration’s preference for the private solution is ill-suited to deal with the city’s long-range problems.

At its core, Riordan’s approach is to create a shell of private interests and private resources around a public problem. Private task forces are assembled to raise millions of dollars to research ideas, lobby the City Council and pay for pet projects. There was the task force on public finance, chaired last year by Michael Tennenbaum; the technology group, chaired by Patricia Nettleship, and the most recent committee, chaired by Dan Garcia, on streamlining the permitting process. One of the highest-profile projects is the installation of computers in the Police Department, which will require a private task force to raise $15 million.

There is a danger hovering over these private-public shells. It is a basic premise of democratic governance that those who serve government have only the public interest at heart. Those who do pro-bono work for the city and end up with lucrative contracts raise eyebrows. Lobbyists who do business with the city while serving on commissions raise eyebrows. Contracts awarded to the spouses of commissioners sitting over the contracting department raise eyebrows.

And there is the question of money. If the mayor, or someone close to the mayor, asks a company that does business with the city to make a donation to one of the task forces, or some other voluntary association developed to campaign for task-force recommendations, how can it refuse? Even when there is agreement with the goals of a task force, the solicitation of financial support to achieve them verges on extortion. It is especially suspect when neither the sources of the money raised nor the interests of the participants involved on the task forces are made public.

No doubt such efforts are well-meaning. But Riordan’s approach to governance runs serious risks of outright abuse or, at the very least, the appearance of abuse. Riordan’s personal altruism and commitment cannot be assumed to be shared by all who go to bat for him. Nor should it be. That is why the lines between public and private interests are defined in law.

The need to change the way government works is better served by trying to motivate those in public service. There are no conflicts of interests, and they know what and how things work.

Mayor Edward Rendell of Philadelphia wants to create a “productivity bank” of $25 million, raised mostly from a bond measure. City departments could borrow from it, at current interest rates, to upgrade their services, buy new technology, whatever. If a department fails to repay the bank, the funds would be deducted from its annual budget. If it succeeds in reducing costs, the department keeps its savings for other uses.

The difference in the approaches of Rendell and Riordan says volumes about each’s understanding of government and how it operates. Rendell took over a city on the verge of bankruptcy and produced a multimillion-dollar surplus in a surprisingly short time. He did it by working with government, not against it.

By contrast, Riordan does not seem able to make the transition from private to public sector. However much he came to respect city workers after the Northridge earthquake, he did not follow through and develop an effective continuing relationship with them.

Los Angeles simply cannot afford amateur tinkering with city functions that does not substantially involve the people and the institutions that run the city. The task forces’ ideas have been creative and important. But that will not matter if they cannot be implemented--which means engaging city government. There is a role for private expertise and goodwill, but it must be carefully circumscribed and supportive. It cannot be the government.

Riordan will probably be reelected if he chooses to run again. Who else could raise the money to oppose him? But the mayor will lose if his administration is overrun by charges of corruption. In Los Angeles history, it is mostly the private sector that has been corrupt --not the civil service. Riordan needs to succeed as the leader of the public sector.