February 12, 2014 - From the January/February, 2014 issue

Los Angeles 2020 Commission Report ‘Time for Truth,’ Highlighted by Mickey Kantor

The Los Angeles 2020 Commission was created by City Council President Herb Wesson a year ago, and published the first of two reports at the beginning of 2014, titled “A Time for Truth.” It articulated a number of troubling conclusions about the municipality’s trajectory. TPR has excerpted a portion of the executive summary, accompanied by Commission Chair and former US Commerce Secretary Mickey Kantor’s comments from a Which Way, LA? radio broadcast on KCRW. 


Mickey Kantor

“For too many years we have failed to cultivate and build on our human and economic strengths while evading the hard choices concerning local government and municipal finance...” -Los Angeles 2020 Commission

The LA 2020 Commission’s Report, publicly issued in early January 2014, and timed with a Which Way LA KCRW interview of Mickey Kantor, the Commission’s Chair, leads with the following attention grabbing observation: 

“Los Angeles is barely treading water while the rest of the world is moving forward.  We risk falling further behind in adapting to the realities of the 21st century and becoming a City in decline. 

For too many years we have failed to cultivate and build on our human and economic strengths, while evading the hard choices concerning local government and municipal finance presented by this new century. Like the hapless Mr. Micawber in Dickens’ “David Copperfield,” our wishful response to continued economic decline and impending fiscal crisis has become a habitual: “Something, my dear Copperfield, will turn up.” The City where the future once came to happen has been living in the past and leaving tomorrow to sort itself out. 

As a consequence, Los Angeles is sinking into a future in which it no longer can provide the public services to which our people’s taxes entitle them and where the promises made to public employees about a decent and secure retirement simply cannot be kept. City revenues are in long-term stagnation and expenses are climbing.” 

The report’s conclusion rests on the following findings: 

“Year by year, our City—which once was a beacon of innovation and opportunity to the world—is becoming less livable. Consider the following: 

• As the result of two decades of slow job growth and stagnant wages, 28% of working Angelenos earn poverty pay. If you add those out of work, almost 40% of our community lives in what only can be called misery. The poverty rate in Los Angeles is higher than any other major American city. Median income in Los Angeles is lower than it was in 2007. 

• When it comes to job creation, Los Angeles has not kept pace with the nation or other cities. Our unemployment rate is among the highest for any major city. This is not just a consequence of the Great Recession. We have lagged behind in each of the three business cycles since 1990. Los Angeles is the only one of the seven major metropolitan areas in the country to show a net decline in non-farm job employment over the last decade. 

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• Activity in most of our key economic sectors is flat or in decline. We have repeatedly ignored or fumbled opportunities in one of this era’s major growth industries, the intersection of science and engineering — a field where our university-based intellectual capital ought to make us a leader. With the closure of Boeing’s plant in Long Beach, there is no longer a large-scale aircraft, space vehicle fabrication or assembly facility left in the area. 

• Three decades ago, LA was home to 12 Fortune 500 headquarters. Today, there are 4. New York, in contrast, has 43 and has continued to add major employers in the last decade. 

• We have developed a “barbell” economy more typical of developing world cities, like São Paulo, rather than a major American urban area. We are experiencing growth at the top of the income ladder and at the bottom, while the middle class shrinks year after year. 

• Los Angeles has the capacity to be one of the main centers of philanthropy in this country and impact our local community, but has not met its potential. 

• We are strangled by traffic—the most congested urban community in America and fourth worst in the world. Even if all the ambitious and expensive mass transit projects now underway are successfully completed, they will simply keep things from getting any worse. In the meantime, the economic and human costs of unchecked congestion compound on a daily basis. 

• Our public school system is failing our children and betraying the hopes of their hardworking parents. This year, the Los Angeles Unified School District will spend $7.1 billion to educate close to 640,000 of our young people, but a recent survey found less than 60% of LAUSD students graduated from high school. For every 100 LAUSD students who enter 9th grade, just 32 will complete the course requirements to enter the UC or Cal State systems. How will they compete in a globalized economy in which education and income are inextricably linked? 

• LA City revenues have been essentially flat since 2009 and, although City Hall forecasts revenue will grow about 1% next year, the only thing certain is expenses will grow by more than 5% in the same forecast. The implications of that gap are obvious. 

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• Budget constraints imposed by these realities are inhibiting the City’s ability to maintain existing services and infrastructure, let alone invest in new technology or enhanced services. Sometimes imperceptible day to day, this death of a thousand cuts has led to severe declines in service levels over the last decade. 

• While serious crime continues to decline, as it has across most of urban America, our police and fire departments are under increasing strain. Response times for both are climbing and, because of budget constraints and band-aid measures, effective levels of police deployment are down, leaving staffing levels similar to those a decade ago. 

• Wishful thinking and avoidance of hard choices have endangered the secure retirements promised our public employees. Today’s workers are paying into a system whose benefits they’re increasingly unlikely to see. The City’s retirement system has seen the amount of money saved to fund the retirement of active City workers drop from 50% of the money needed to pay for their retirement to less than 10%. 

• The cost of benefits—mainly workers’ retirement and healthcare costs—have been rising rapidly and cannot be sustained at current revenue levels.  Pension costs accounted for 3% of the City’s budget a decade ago, and 18% this year.  The cost of covering further increases will continue to cut into the City’s ability to supply services. 

• We are dramatically underinvesting in the competitive modernization of three of our greatest assets—the Port of Los Angeles, Los Angeles International Airport and the Department of Water and Power. 

• Our Community Plans are many decades old and hopelessly out of date. 

• Local involvement in City government is critical, but nimbyism and special interests stand in the way of major projects at the expense of the greater good. 

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• We lack a coherent or coordinated approach to economic development and soliciting investment in Los Angeles. In fact, we do an abysmal job of identifying and servicing the legitimate needs of the employers already located here. According to a recent survey, 9% of businesses in LA are planning to leave, citing stifling regulations and an unresponsive bureaucracy. “

Mickey Kantor, in a January interview about the LA 2020 report responded to KCRW’s Madeleine Brand’s question: 

Madeleine Brand: You say in your report that the city suffers from a crisis in leadership and direction. Who are you talking about? 

Mickey Kantor: All of us. Not just elected officials or appointed officials—but also civic leaders and those in organizations, and those of us who just live in neighborhoods in Los Angeles and want to see it to be a city that’s livable and that is progressing and that frankly has the kind of jobs that people need. By the way, Madeline, over the last decade  we have gained a million people and lost 169,000 jobs. That doesn’t work. That means you structurally have a problem, as we do with our budget. A deficit—the constant and consistent budget deficit and the failure to fund adequately, for instance, LACERS. That’s the pension program for our non-uniform city employees. We’ve got very big problems, but you’re right—some of these every city faces. We just seem to do it bigger and better.

The interview continued… 

Madeleine Brand: But many of these problems fall under the purview of our elected officials, or at least, our officials in government, so there has to be some laying of responsibility. I won’t use the word blame. Someone hasn’t done what they should have been doing all of these years.

Mickey Kantor: We’re not playing the blame game. Elected officials also need support, help and backing when they try to do things. Sometimes that has been sadly lacking here in LA. There has been a sense of ennui, as the French say, here in LA over a number of years. I don’t think that only elected officials are to blame here. We need to all look at ourselves and say, “Have we done enough? Are we enough engaged? Do we really let ourselves be known?” And we need new accountability mechanisms in the city. For instance, we have these neighborhood councils. They’re underfunded, not listened to, never responded to. When I say never, I mean never responded to. That’s not healthy. We have off-year cycle election—you remember, Madeline—only 23 percent of the voters voted in our mayoral election. That is not going to keep public officials accountable and keep people invested in LA’s future. 

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Madeleine Brand: I know your second report, with your concrete recommendations, will be coming out shortly. I wonder if you could give us a preview of what you do recommend.

Mickey Kantor: I can’t give you conclusions we haven’t reached—it’ll be out within 90 days or less. We will have a second report. It will have the recommendations. The professor’s right—we should come out as quickly as possible in order to continue, if we have any momentum, to continue it. There’s no doubt that this report is a very stark report, except that there is a section talking about the strengths of LA, as the professor noted. Let me say something else. At the beginning of our news conference today, I cited five or six things that have already been done, which are seemingly problems that are important that have begun to be addressed—at the port, at the airport, at the convention center, with pensions. The council under Herb Wesson and the mayor have started to really do some things that are important. We noted that very pointedly at the beginning of the press conference. 

Madeleine Brand: Has the mayor responded to the report, and is he eager to take up your recommendations, do you think?

Mickey Kantor: We haven’t made recommendations. I saw a news report where he said that he welcomed it, that it gave him a sense of some of the things that we face in LA, if not a lot of things, and that he looks forward to the recommendations. All of our recommendations will not be implemented, that’s for sure. Not everyone will agree with some of our recommendations. But I hope, I really hope and pray, that this will not sit on some shelf and gather dust, that it will at least be addressed. And even if people don’t agree, we can argue over what should be done. 

We promise readers of The Planning Report/Metro Investment Report that LA City Council President Wesson’s LA 2020 Commission Recommendations will be shared when they are released to the public.

© 2014 The Planning Report | David Abel, Publisher, ABL, Inc.