On Tuesday, Mayor Antonio Villaraigosa will address Angelenos on the state of their city and propose a budget for dealing with the coming 12 months, a period that probably will feature continued cash-flow problems, service cuts, layoffs and policy disagreements. The city deserves, and in his speech and budget the mayor must at long last provide, evidence of the kind of mature and cool-headed leadership that has been conspicuously lacking at City Hall over the last several weeks. He must demonstrate to Los Angeles why its people should once again repose in him the confidence that he and others have been frittering away.
Los Angeles is facing a budget crisis. It’s a result of both a national recession and overly optimistic program expansions that began before, but have continued into, Villaraigosa’s tenure. The mayor used the extraordinary revenue produced in good times to achieve such important objectives as enlarging the Los Angeles Police Department and improving residents’ quality of life by things as mundane as filling potholes and as essential to families as lengthening library hours. But the bill is now due, and to pay it, Villaraigosa must undo some of the enhancements he has made.
The mayor has wisely declined to stop hiring police officers and instead has proposed other painful but necessary cuts. But his recent ham-handed dispute with the City Council over the Department of Water and Power electricity rate hikes has taken what should have been a serious but manageable policy dispute and made it into global news. From CNN to the pages of the Economist, reports depict Los Angeles as a city with no grown-ups in charge.
There are direct consequences. Wall Street firms rate local governments, just as they rate corporations, according to their creditworthiness. They look at cities’ ability to make good on such obligations as bonds, and they sometimes are seen as the adversaries of taxpayers because they reward governments that back their credit, when necessary, by raising taxes and fees. If the rating agencies don’t like what they see, they drop credit scores, which means the city’s cost of borrowing money goes up.
But taxpayers must also size up a city’s leaders. Just as a rating firm’s confidence can mean lower interest rates, confidence from residents and local business can mean they will be patient as their leaders draw up a plan and execute it. No confidence means no patience, no willingness to sacrifice, no sense of common mission.
Villaraigosa instilled no confidence last month when he floated a plan for electricity rate hikes, ostensibly to begin a program to stop burning cheap but dirty coal but actually to achieve a series of goals that seemed to change constantly, from shoring up the DWP’s finances to back-filling a de-funded conservation program. The City Council rightly rejected the increase but turned the disagreement into a political grudge match. The DWP then reneged on a commitment to transfer $73.5 million to the city’s budget. City Controller Wendy Greuel named a date on which Los Angeles would run out of cash. Villaraigosa called for a contingency plan to shut down city government two days a week. He took the issue to national television. Then some council members said new revenue figures meant the crisis was over. Then they said it wasn’t. The mayor, council members and others blamed one another. Just when everyone in City Hall was making things worse, former Mayor Richard Riordan got in on the act, suggesting that the best way to deal with mounting pension obligations would be to declare bankruptcy.
Los Angeles leaders unnecessarily drove the city closer to collapse. Last week they calmed down and agreed to a compromise rate increase that should allow the DWP to meet its financial commitment to the city, but would leave residents with rising rates and still no plan for getting out of coal.
To earn back confidence, Villaraigosa must do the following:
* Explain his long-term plan for fiscal sustainability. The plan should include how he will ensure that the city has enough cash to meet its obligations through the end of the fiscal year on June 30; how it will eliminate the projected $485-million shortfall in the coming year’s budget; and how to address mounting pension obligations.
* Explain to taxpayers, without soft-peddling or obfuscation, how much they should expect to pay in higher water and electricity rates over the next several years and for what purpose: to secure reliable supplies of water and sustainably produced and affordable electric power into the future. He must explain, in a way that he thus far has not, why ending our burning of fossil fuels and relying more on saved and reclaimed water are not frills or unaffordable luxuries.
* Articulate a mission for city government, including which services (such as law enforcement) will remain immune from cuts, which (such as library hours) must be restored when the budget rebounds, which (such as day care at parks) should be taken over by others and which (such as employee pensions) require long-term restructuring.
Finally, Villaraigosa must demonstrate that Los Angeles is being run by an experienced leader and accomplished negotiator capable of managing a city in crisis with steady hands and a cool head.