LA Times LA County Financial Picture Questionnaire


List of Questions

 

The Times has asked the two major candidates competing to succeed Los Angeles County Supervisor Yvonne B. Burke about some key issues in the 2nd Supervisorial District, which stretches from Mar Vista through South Los Angeles and into Compton and Carson.

Today, Los Angeles City Councilman Bernard C. Parks and state Sen. Mark Ridley-Thomas (D-Los Angeles) offer their take on the county's financial picture.

 
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This is the last in a series before Tuesday's election.

County officials have proposed a $21.9-billion budget for the coming fiscal year that is 2.61% lower than the current budget but calls for no layoffs or major program cuts. If threatened reductions in state and federal funds require big reductions in county spending, where would you cut, and what services should get priority?

Parks: There is a common misperception that the county, through its annual budget, has discretionary control over most of its revenues and expenditures. In fact, that is not the case. Of the county's $21.9-billion budget, only 28% of the funding is locally generated, and only 17% of the total budget is discretionary. Eighty-three percent of the county's expenditures are mandated or contractually required, mainly by state and federal programs the county administers.

More often than not, the state and federal mandates are not fully funded; the county backfills with local resources to make up the difference where it can with respect to administrative costs. It does not make up the difference when there is a reduction in benefits.

County programs ranging from substance abuse and crime prevention programs to Medi-Cal-provider rates suffered a loss of $25.9 million when the governor and Legislature tried to balance the state's current-year deficit in February. The governor's proposal to balance next year's budget would reduce the county's funds by an additional $332 million, with most of his proposals resulting in reduced funding and eligibility for social service programs.

In most instances, the actual and proposed reductions adversely affect the availability, extent or recipient of the service, the county's role for the most part being the conduit for the funds.

At the federal level, the county faces a loss of $240 million in Medicaid revenue. The president's proposed budget includes undetermined but substantial reductions to health, community development, justice, homeland security and social programs administered by the county.

The county does not typically backfill with local revenue most of the money that is lost by virtue of state or federal cutbacks. Certainly the programs suffer, as do the people the programs serve, and that toll cannot be minimized. But strictly speaking, state and federal reductions do not impact on a dollar-for-dollar basis either local sources of county revenue or discretionary county spending of those revenues.

Where a state or federal program requires a local funding match, reductions by the county should generally correspond to the state or federal program that is cut. Priority protection should be afforded those programs that are part of the basic safety net of services, such as child welfare services, food stamp administration, adult protective services, homeless services, mental health services and foster care.

That said, the county itself is entering a precarious fiscal time, brought on largely by declining sales and property tax revenue on the one hand and increasing costs on the other. The county also has upward of $20 billion in unfunded liability obligations in pension and retiree healthcare costs, a ticking fiscal time bomb that must be addressed. Faced with an imbalance between revenues and demands, the county must not be allowed to emulate the state by violating cardinal rules of public finance.

The county must implement new budget policies, similar to those I proposed and implemented in the city of Los Angeles and the MTA. These policies are very basic, much as everyday people use to balance their household budgets. They are: A) Create a multi-year timeline to monitor and eliminate the existing structural deficit; B) Eliminate deficit spending programming; C) Eliminate the creation of ongoing programs that do not have a specific source of ongoing funding; D) Establish specific funding priorities for core responsibilities and obligatory expenses like public safety, prevention and intervention programs, infrastructure maintenance and upgrades, personnel health plans and pension contributions, etc.; E) Minimize or eliminate spending one-time monies on multi-year projects; F) Eliminate or minimize borrowing money to meet operating expenses or incur deficits and then borrow money to pay it off; G) Establish debt policies and a debt-ceiling percentage; H) Establish a reserve fund percentage with specific designations for declared emergencies, contingencies and budget stabilization funds; I) Establish mutual gains bargaining in future employee contract negotiations; J) Establish full cost-recovery policies for county services where appropriate, and K) Ensure that all contract services and grant applications have full recovery for both salary and administrative overhead.

Budgeting in good or bad times requires fiscal constraint, prudent stewardship, overarching policies that direct limited resources and an acute sense of spending priorities that meet basic human needs.

Ridley-Thomas: County government derives its revenue from a variety of sources, including local sales and property taxes, license and service fees, as well as state and federal funds for programs it administers.

Since Proposition 13's enactment, the alignment of government programs to their funding streams has gone astray as periodic budget shortfalls have been "solved" in a haphazard, politically expedient way rather than in the best interests of the taxpayers and the system of government finance. I support Speaker Karen Bass' bipartisan commission that includes former governors from both parties to address the issue of fundamental budget reform.

As specific program cuts are contemplated, comprehensive budget reform must take place at both the state and local level. The reform process should re-evaluate revenue sources and expenditures and realign funding streams to services provided by each level of government.

The $6 billion in corporate tax loopholes, credits, exclusions and exemptions, ostensibly to stimulate the economy and produce jobs, must be reviewed. Known as tax expenditures, these special interest exclusions and credits cut into the county's tax base and are never evaluated to determine whether they are achieving the objectives for which they were originally enacted.

The county must pursue a more strategic approach to budgeting issues to match policy initiatives with advocacy, particularly for healthcare, which should include the formation of public/private partnerships to lessen the strains on county funding.

I recognize that government can't do everything. But it can do a whole lot. For example, the current downturn in the economy is the result, in large measure, of predatory lending in the subprime loan markets.

Local ordinances, such as the one I wrote while on the L.A. City Council that afforded consumers protection beyond what the state and federal government provided, would have helped avoid the present circumstance. Unfortunately, federal and state preemption and court rulings struck down this important local protection.

Aggressive enforcement of existing laws and appropriate regulatory supervision of our financial markets could have limited, if not avoided, the impact of the current real estate-driven downturn on our economy.

If threatened reductions in state or federal funds trigger a need to make sizable cuts at the county level, I would work to make public safety, health services, foster care and delivery of municipal services to the unincorporated county areas of the district my priorities for funding.

I will work to educate 2nd District constituents about our budget circumstance and mobilize them to ensure that we receive a fair and equitable share of whatever resources are spent.

No matter how deep any proposed or potential cuts may be from another level of government, L.A. County must always be in a position to tell its residents, "We will do our utmost to fulfill our county's obligations to keep you safe from harm and protect your property; 24 hours a day, seven days a week."

Concurrently, our county's message to violent criminals must be equally clear: "We will find you. We will prosecute you. You will go to jail or state prison. And if you think there's not enough room in our jails for you or persons like you, you'd better think again."

Health services cannot be shortchanged unless we are all willing to live sicker, die sooner, risk the threat of widespread public health epidemics, or close our county's hospital doors to people who need care but lack health insurance. None of those examples are acceptable in a county of over 10 million men, women and children that has a budget greater than many states.

Children placed in the county's care due to parental abuse or neglect cannot be subjected to further calamity and disregard by budget cuts to programs that shield them from further harm and sustain their lives. They reside in our foster care system through no fault of their own.

We must be compassionate and caring guardians. We must protect them in their present circumstances. We must seek to reunite them with their families whenever appropriate or help them secure permanent adoptive parents.

In any case where family reunification is inappropriate, unsafe or impossible, and adoptive parents cannot be found, we must always find the means to raise these children as if they were members of our own family.

Basic municipal services provided by the county in the unincorporated areas must be protected. There is no alternative to garbage collection, graffiti abatement, animal control and other vital neighborhood services.

There is growing evidence our county economy is heading for a prolonged recession. Job losses countywide continue to mount and the decline in our housing market has yet to hit bottom. Cuts in services are never popular, but at times like these they often become unavoidable.

But before specific program cuts are contemplated, comprehensive budget reform at both the state and local level that reevaluates revenue sources and expenditures, and realigns funding streams to services provided by each level of government, must take place.

We must pursue a strategic approach to budgeting issues, particularly for healthcare, which should include the formation of public/private partnerships to lessen the strains on county funding.

Under what circumstances, and for which services, would you be willing to ask voters for a tax or fee increase?

Parks: As a member of the MTA board, I voted to place before the voters in November a one-half-cent increase in the sales tax to generate $700 million annually for transit and transportation projects. Over the years, I have supported bond measures for school construction, fire and police facilities, storm water and urban runoff mitigation, and I would entertain future property tax-based bond measures that directly relate to infrastructure needs.

The county's fee structure needs to be evaluated annually as part of the budget process to assure that the fees charged by the county are properly aligned with the costs of providing the service, assuring the full recovery of costs for services.

The county's concession agreements also warrant periodic review to assure that the county is getting a fair return on third-party operation of its golf courses and airports and beach and marina concessions, for example.

The county must establish internal systems to monitor and recover all fees and accounts receivable and where necessary have outside resources available on a contingency basis to ensure all funds due to the county are recovered.

The county must install new parking meter technology that allows parking rates to be monitored and increased based on the usage and parking capacity.

The county must evaluate increases in parking citation revenues and illegal sign enforcement to determine how they rank in a general regional comparison.

I do not foresee a need to raise taxes to meet county operating expenses.

Ridley-Thomas: My years in public service have taught me not to be captive to rigid, ideological positions that do not advance the interests of the constituents I represent. Those who suggest that taxes or fees not be raised under any circumstances do not appreciate that we may all be a major earthquake away from the need for extraordinary measures or significant shifts in priority.

If the county were faced with a financial crisis that threatened to force the closure of Harbor/UCLA Medical Center due to the prospect of draconian cuts to our health services system, I would ask the state Legislature to give the Board of Supervisors the immediate authority to ask voters to approve a county ballot measure creating a County Health Authority Special District with revenue-raising capability; but I would want it to be subject to vigorous auditing mechanisms to root out fraud, waste and abuse within the county Department of Health Services. That is why I supported passage of Measure B to help finance the trauma and emergency services network and avoid its collapse.

With slowing growth in property and sales taxes, what tools would you use to add revenue to county coffers?

Parks: In addition to fighting to protect state and federal funding sources and continuing the opposition of local government to unfunded mandates, the county must adamantly oppose state raids on city and county resources.

As we have seen before, the state does not hesitate to balance its budget at the expense of cities and counties. The result of their last effort to solve the state's budget crisis cost Los Angeles County and its cities $1 billion in property tax revenue. Local government cannot continue to be the ATM machine for a state government that cannot keep its checkbook straight. And while the current state budget-balancing proposal to address a $15.2-billion deficit does not rely on "borrowing" local revenue, the budget has not been adopted and it is an option that should not see the light of day.

The county and Southern California as a whole are typically short-changed in the allocation of state bond monies, as we have recently seen with respect to bond funds for housing and port-related transportation infrastructure and as we have seen historically with respect to water bond and park monies. The county can benefit financially by more aggressively insisting, with the support of its state legislative delegation, on the equitable distribution of state bond funds to the region and to the county.

I also think the county can do a better job of taking advantage of state and federal grant-funding opportunities by creating a centralized database of grant-funding opportunities, real-time status of grant applications and programs, and projects that receive grants and establishing competent teams of professional grant application writers. I want to ensure that the county receives the grant funding it deserves by assuring that the process for securing grants does not stand in the way of actually receiving them.

The county must also be diligent and persistent in recovering money it is owed in fines, property taxes and concession fees. Failure to have a diligent collection system not only costs the county revenue but is also unfair to those who do pay their obligations fully and on time.

The county can also generate revenue by reining in costs. An example of an opportunity to do that exists in the fact that the county has not put out a competitive Request for Proposals for healthcare coverage for its 150,000 employees and retirees in years, simply bargaining with the same group of providers year after year. That is a practice that simply must change.

The county must invest in the latest technology and software to ensure that their reserve fund investments are returning the greatest available interest rate to its general fund.

The county should consider participation in naming rights, franchise fee and advertising opportunities that would create new revenue streams that are connected to county property, right of ways and air rights.

Finally, as we have seen with the efforts of the Los Angeles city controller, millions of dollars in savings can be realized by virtue of periodic financial and performance audits of city departments. Any organization and the constituency it serves can benefit from critical scrutiny, fine-tuning and periodic restructuring. Independent performance reviews can showcase strengths, weaknesses and reveal where efficiencies are possible.

While county departments do have in place a system of management and political accountability, they are not, as a rule, vetted by independent audits. To assure that county departments are structured as they should be for the respective services they provide, to assess whether the respective services of the departments are logically cross-fertilized and integrated, and to satisfy ourselves that taxpayers are getting good and efficient service for their money, I will work for an independent performance review of all county departments within the four-year time frame of my first term in office.

Ridley-Thomas: As chairman of the Business and Professions Committee in the Senate and the Committee on Jobs, the Economy and Economic Development in the Assembly, I was an award-winning legislator because of my commitment to small business and job growth. Small businesses are the economic engine of our county. My plan is to bring more jobs and business to L.A. County. I believe that is our best hope for surviving our current economic downturn. I will insist that county departments responsible for issuing business licenses, conducting inspections and processing applications and permits do so in an efficient, accessible and customer-friendly manner and that complaints and/or disputes are handled with the care, respect and attention to detail successful small businesses provide to their customers and expect from the government they support and finance through their initiative and enterprise.

I further intend to develop partnerships between businesses, communities and the county, to leverage public resources with private funds to generate urban revitalization projects that will create additional jobs.

Following this business development roadmap as an L.A. City Council member enabled me to bring $500 million in economic development and housing projects, and 2,800 new jobs, to the city's 8th Council District over a 12-year period. With the right kind of leadership, the same accomplishments can be attained at the county level.

I will also continue my advocacy of reviewing state tax expenditure policy. The $6 billion in corporate tax loopholes, exclusions, exemptions and credits provided to special interests by the state has an impact on local revenue. These should be evaluated to determine their continued effectiveness, need and impact on the local economy.

 

 

 

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