‘ Back to basics’ mayor
Will Garcetti’s money management skills apply to union negotiations?
Therewas a little snickering when Mayor Eric Garcetti framed his ambition as getting Los Angeles government “back to basics.” It seemedto some— including me— that this approach, while important, also allowed him to duck larger challenges of leadership in favor of smaller, easier- to- achieve management practices. Fifteen months later, you have to hand it to Garcetti: Hisway is working.
Over the last year, one major bond- rating agency has changed its outlook for Los Angeles from stable to positive. Anda second, after doing a deep investigation of the city’s budget systems, not only gave it an “AA” rating but specifically complimented the government for creating “a strong framework for managing the city’s financial operations.”
The city has boosted its reserves and strengthened “strong fiscal monitoring practices,” the Aug. 25 report by Kroll Bond Rating Agency added, with the result that it has more money on hand to deal with emergencies. Bankruptcy, which just a fewyears ago seemed all too possible, now is regarded as remote.
Those are not conclusions generally associated with Los Angeles government, which is more often criticized for overpaying workers, underestimating long- term debt and providing poor services.
Garcetti is understandably pleased by the outside appraisals.“Management matters,” he said as he wrapped up a day at his South Los Angeles field office, highlighted by a lunch of chicken andw affles. While acknowledging that he still has plenty to do, he also ticked off some of the internal changes he’s proud of having instituted: regular management reviews, quantifiable standards for measuring success, a new emphasis on accountability and creativity.
“There’s a changing of the culture,” he said.
Miguel Santana, the city’s chief administrative officer, credits Garcetti with introducing better business practices, while also noting that some of the turnaround cited by the agencies began under Mayor Antonio Villaraigosa. Villaraigosa approved major pay increases early in his tenure, but then shrank the city workforce and cut costs after recession hit.
The city’s improved outlook makes money cheaper to borrow and validates some of Garcetti’s work so far, but it also poses a new challenge for the mayor. City employee unions already are arguing that the city’s improved footing should mean pay increases for their members.
The city’s police union, for one, is demanding sizable increases over a multiyear contract. Santana countered, however, that since the city’s current budget restores overtime pay for officers, they already are making more money. Until the city eliminates its annual deficits, Santana added, city workers will be asked to hold off on raises.
Villaraigosa learned the hard way what happens when a mayor gives in to the pressure for pay hikes. In 2007, he granted city employees a five- year contract that included5% increases each year. Thatwould have been excessive even in good times, but it especially hurt the city when the recession pinched revenue. The combination of falling revenue and huge salary obligations contributed significantly to the city’s financial difficulties in the later years of Villaraigosa’s tenure. Even he eventually admitted the pay hikes were a mistake.
Salary increases not only cost the city in the short run, Santana noted, but also increase the city’s long- term pension obligations by raising the base salaries used to calculate pensions. Although the Kroll report commends the city for progress toward prepaying some of its pension costs, they remain a potentially huge obligation in the future.
In his first major negotiation with city employees, Garcetti held the line forworkers at the Department of Water and Power. They agreed to a three- year contract without any pay hikes.
But thatwas a union that feverishly opposed Garcetti’s election, so he had little to risk politically in standing firm against it. As other unions come to the table, the pressure on him will mount. For a young politician with ambitions that extend well beyond themayor’s office, antagonizing organized labor— especially in Los Angeles— is a risky proposition. Just ask Villaraigosa, whose sparring with United Teachers Los Angeles, a union for which he once worked, earned him the teachers’ undying enmity.
Garcetti knows what’s at stake here, both for the city and himself. He knows council members will feel pressure too, and he stressed the need for elected officials to be firm even when the politically expedient course might be to be generous. The reality, Garcetti said, is simple: “We have to recognize thatwe can’t afford certain things.”