At the beginning of the decade, Angelenos like me exuded a kind of smug superiority about our (mostly adopted) hometown. We had sunshine, beaches, high-paying jobs and all of the glamour of Hollywood. Who wouldn’t want to live here? Then the bottom dropped out of the economy, leaving more Californians unemployed than the rest of the country and more of our homes underwater, thanks to our enormous housing bubble.
Add to that a massive money-losing trifecta of city, state and school district budget deficits, and a swelling number of have-nots, and you have a world of pain and instability in the city of angels.
Of course, we aren’t alone in our struggles: Three in four U.S. city officials surveyed by the National League of Cities in February reported that overall economic and fiscal conditions have worsened over the last year.
Bankruptcy LA-Style
Los Angeles, true to form, has just failed in a more spectacular fashion. Nobody wants to trade places with us now, as we all scramble to find work and shoulder our large burden of taxes and higher cost of living.
Things that people in most big cities take for granted — like libraries that are open most days of the week, sidewalk and pothole repair, and arts and recreation programs — are now falling by the wayside as the city’s budget deficit soars to a record $485 million. Other cuts are landing with a thud, as well.
The city childcare center that provided after-school recreation at my son's elementary school is closing this month, along with 25 other licensed day care programs around the city. My local branch library will shutter its doors another day of the week, even after trimming its hours of operations last year and opening at noon some days. We’re lucky, I suppose that we get to keep our police force on the payroll. (Nearly a quarter of cities surveyed by the League were cutting public safety to balance their budget.)
Roots of the Problem
How did our once high-flying city get in such dire straits? Its problems stem from two numbers, says investment advisor Alex Rubalcava — 8 percent and 5,000.
Eight percent was the projected annual rate of return on the assets in Los Angeles’ pension funds — returns the city’s two main pension funds have not come close to getting in the last decade, he says. And 5,000 is the huge number of employees hired by the city during Mayor Antonio Villaraigosa’s first term.
Rubalcava argues that the city’s staff needs to be cut down to a size that’s proportional to our languishing economy. And the city needs to reform its very generous pension and health plan for government employees — requiring much larger contributions by workers — so taxpayers aren’t bearing the brunt of these payouts.
And that’s just the city budget. Our local school district — the second largest in the country — has an even bigger shortfall of $640 million, thanks to the loss of funds from the state.
Fighting Back
That’s meant letter writing, phone calls and other campaigning to keep a full-time principal at my son’s elementary school and someone in the front office. We had already swallowed a shorter school year just to keep our already large class sizes from growing.
Everyone’s facing tough times: 82 percent of school districts are expected to cut more than 275,000 teachers from their payrolls next year, according to the American Association of School Administrators. Our school district will claim about 1,600 of those cuts, officials say. And only high schools will get to keep their district-funded librarians. That’s bad news for kids that rely on libraries as a safe haven.
More Pain Ahead
I’d like to think that this is the extent of the layoffs and other cuts that will affect us. But officials say more are likely in the years ahead if city voters don’t approve a parcel tax to raise money for our schools.
Great! More taxes and fees, on top of the half-million dollars many parents shell out here to get a two-bedroom bungalow near a decent elementary school. In times like these, you start adding up all the negatives of living in a place like LA. Let’s see … the average commute time is long, air quality is poor and food and auto insurance is expensive. But hey, it’s 72 degrees in December!
The Exodus
Increasingly, that’s just not enough. More people are leaving the city, either because they’re chasing work, or because they’re sick of chasing the dream. Of the 26,860 shipments posted last year in Los Angeles by the American Moving & Storage Association, 55 percent were headed out of the state, compared with 45 percent coming in.
I’ve watched this outbound migration play out on my own street, with a young couple several doors down who moved their family to Grand Rapids, Mich., only to be told they would be picking up again this summer and moving to Louisiana in order to hold onto a movie job that’s bouncing around to lower-cost locales.
For others, the exodus out of LA has been more of choice. Brand strategist Eli Portnoy, CEO of the Portnoy Group, left Los Angeles last year in favor of Miami, because he was disillusioned by LA’s promise and tired of paying more for everything. He says he never knew just how pricey the city was until he tallied up his expenses last year and found his cost of living near the beach in Miami to be almost 40 percent cheaper than LA. “And I didn’t take a cut in my lifestyle at all,” he says.
Death of the Dream?
It could get a lot worse if the economy doesn’t rebound quickly enough and the city doesn’t start making some difficult decisions about its pension system and budget. Rubalcava and former mayor Richard Riordan would like to see LA formally declare bankruptcy so the city can adjust its pension and benefits contracts in court, something that many analysts say is unlikely to happen. “LA is not even close to that,” argues Fred Silva, fiscal policy advisor to California Forward, a nonprofit focused on state and local fiscal reform.
Sure, I know that things will eventually look up here in Los Angeles. How can they not? After all, it’s a hub for trade, an incubator of entertainment talent, and a center of innovation for all kinds of new technology.
Like most people, I’m just not looking forward to the long crawl back. I’m the one with city envy. I want the dream machine back!
The following statistics from the National League of Cities shed further light on the LA situation:
- 84 percent of city officials report that unemployment has worsened over the past year, and nearly nine in 10 say it is either a major (41 percent) or moderate (47 percent) problem for their community.
- 63 percent of city officials report that poverty has worsened over the past year — the largest percentage reporting worsened poverty since the question was first asked in 1992.
- To deal with their fiscal problems, seven in 10 city officials report making cuts to personnel (71 percent) and delaying or canceling capital projects (68 percent.)
- One in two city officials (52 percent) report that service levels will continue to decrease next year if city tax rates and fees are not increased.
Has LA been hard on your wallet? Tell us about it in the comments.
