Greg Nelson Remarks

NEIGHBORHOOD COUNCILS CITY BUDGET SUMMIT
1-10-10
(A binary date that must have some significance)
Submitted by:  Greg Nelson (gregn213@cox.net)

I thought it might be easier for LANCC to take specific actions if I put into writing some ideas from me and others regarding the city budget and the fiscal crisis.

In 2005, just as Mayor Villaraigosa was taking office, USC’s Neighborhood Participation Project, lead by Professor Juliet Musso, a former state budget analyst, concluded that the mayor’s participatory budgeting process “has been largely tokenistic.” 

The report stated that any such process must meet two conditions for informed civic participation. 

One, there must be a representative group of individuals who set priorities.  And two, there must be an institutionalized forum for informed and reasoned deliberation.

I’m certain that if the report were to be updated, this conclusion would not have changed much. 

Whereas some governments decided to increase public participation in the budgetary process as the fiscal crises deepened, there is a temptation for most governments to cling to the belief that only city staff are qualified to understand such a complex issue.  And therefore public involvement is a hindrance.

Speaking for a couple of minutes at public hearings that are held too far into the process to make a difference, or asking people to respond to surveys that are designed solely by mayors, and often exist only to provide cover for controversial proposals that a mayor is about to include in the proposed budget, don’t even remotely qualify as participatory budgeting.

1.  MEET WITH THE CITY BUDGET EXPERTS

Rather than having neighborhood council leaders trying to understand reams of budget materials, and realizing that so many creative ideas don’t even make it to the public discussions, a group of neighborhood council leaders should ask the City Administrative Officer and/or the Chief Legislative Analyst to sit down with them as soon as possible and brainstorm the challenges and ALL the possible solutions.  There are many options that the elected officials are too timid to have discussed, but that neighborhood councils may roundly support.  Some of them are listed in this document.

The one requirement should be that the CAO and CLA be totally frank and honest in their answers, excepting of course for any confidential information they are not allowed to reveal.

Neighborhood council members would provide them with as many questions in advance as possible so they can be better prepared.
2.  GET INVOLVED EARLY AND OFTEN

The initial budget day meeting should not be delayed until October when the Congress of Neighborhoods is usually held.  By this time, the departments are ready to submit their budgets to the mayor and CAO.  Once anything gets put in writing, it becomes increasingly difficult to change it.  As Zev Yaroslavsky said, "Those who control the drafting, control the outcome."  The city budget process is now a year-round effort.

3.  MULTI-YEAR BUDGETS

Traditionally, each year’s budget discussion is limited to the few actions that can be taken to slap a band-aid on the immediate problem.  The city needs to begin planning city budgets 3-5 years in advance as many municipalities do.  This would require the elected officials to understand the financial effects of their actions.  

4.  BETTER COMMUNICATION AND INVOLVEMENT

The neighborhood council members who serve as regional budget representatives, and those who meet with the mayor at the end of the process, should commit themselves to communicating the issues and the information they gather with their constituents.  Their actions should be reflective of those they represent, and not just themselves.  

It is not possible to go on the Internet and find the specific suggestions the neighborhood council members made to the mayor last year, what his response was, and what actions were ever taken.

The DONE website, direct e-mails to board members, CityWatch articles, a blog, or wiki would be cost-free ways to do this.

5.  GATHER BEST PRACTICES

Neighborhood councils should ask a City Council member to ask the CLA to contact the National League of Cities and the California League of Cities to determine if there exists a collection of creative best practices that other cities have used in response to the fiscal crisis.

6.  GATHER OUR BEST IDEAS

The city budget has been discussed at recent Congress of Neighborhood events, but as has been the practice only those who attended those workshops know what happened.

The workshops were videotaped, but they aren’t available online and only appear on Channel 35 without warning.  Regardless, watching videotapes can be time-consuming and time wasting.  DONE staff should review the tapes and prepare “minutes” of the important parts of each discussion.  If other people cannot easily learn from these workshops, why hold them in the first place?


7.  PERFORMANCE MEASUREMENTS

Neighborhood council volunteers should critically review the metrics used by City Hall, and printed in the city budget to measure the workload and effectiveness of city departments. 

When the mayor’s budget survey asks us to choose the amount of cuts we would tolerate from certain departments, we should know which ones are operating most efficiently.  Properly designed metrics help us know that.

For example, four metrics are used to measure DONE’s effectiveness. 

One of them concludes that the way to measure how well stakeholders provide their concerns to their elected officials is to count the number of Community Impact Statements are filed by neighborhood councils.  Not only is that silly on its face, but it ignores the fact that the City Council voted to stop printing the statements on agendas, which was the whole purpose of them.

Another metric determined that it’s important to provide more training, but measures this by the number of classes DONE organizes, and how many people attend.  This totally ignores that fact that as with the ethics training, many people are trained through the Internet and don’t attend classes.

8.  REWARD MERIT

If layoffs are necessary, the only criteria used to determine who stays and who goes is seniority.  That makes it impossible to keep the best workers, and makes it difficult to attract the best and brightest when the city begins hiring. 

The city should infuse merit into the way it develops layoff lists, and how it promotes employees.  A “360” system is one way that won the acceptance of unions in some governmental agencies.  Have a joint labor, management, and neighborhood council committee examine the possibilities.


9.  KNOW THE AFFECTS OF THE BUDGET SURVEYS

The mayor's office is driven by how many people respond to the budget survey. 
It's their only measurement of value. 

Neighborhood councils should ask to be told how their input changed any of his decision-making.

10.  OPEN THE DATA SETS

Los Angeles should follow the example set by the President’s Open Government Directive and begin determining how many data sets of city services and statistics can be released to the public.  This would allow enterprising individuals to develop apps that would give the public greater access to the information it needs to monitor the city budget and the delivery of city services.  

11.  IMPROVE PENSION AND RETIREMENT SYSTEMS OVERSIGHT

The mayor appoints 4 of the 7 members of the Los Angeles City Employees’ Retirement System’s board of Administration, and 5 of the 9 members of the Board of Fire and Police Pension Commissioners. 

The mayor should be asked to appoint one member to each board from a list of qualified members supplied to him by the neighborhood councils.

12.  AUDIT THE POLICE DEPARTMENT FOR COST SAVING EFFICIENCIES

Any city department that has been held in such high regard for so long, but has never been audited for cost saving efficiencies is likely to have areas of redundancy and waste.

No department commands as big slice of the city budget dollar, so finding ways to save money without compromising effectiveness would be a win-win for everyone.  When there is a new chief, it’s a great time to implement change.  To begin getting some ideas just ask any officer.

13.  LET NEIGHBORHOOD COUNCILS SET CAPITAL EXPENDITURE PRIORITIES

In the well-studied city of Porto Alegre, Brazil (population 3,000,000+), neighborhood councils determine how 100% of the city’s capital improvement money is spent.  Actually, the elected officials make the final decision, but rarely override the public’s priorities.

To a lesser degree, the same process allows neighborhood councils in Minneapolis to determine how millions of dollars in community projects are spent.

Neighborhood councils should demand that they (perhaps by region) are able to work with city agencies to recommend priorities, as was done in pilot project with the Bureau of Street Services, for a variety of capital improvement projects.  It’s their money and their city.

14.  REVIEW CONTRACTS

Some departments should be contracting for services they perform with city staff, and others use too many contracts or are providing services that aren’t critical.

There should be a thorough review of the contracts entered into by city departments.

15.  PUT SOME MEAT ON THE BONE

Neighborhood council volunteers should work with city officials to draft a ordinances that would be more specific about how four goals of the City Charter can be met:  (1) that neighborhood councils monitor city services; (2) that they present budget priorities to the mayor; (3) that City Hall provide enough early warning to neighborhood councils that they can discuss and weigh in before decisions are made; and (4) that DONE only assist them in organizing Congress of Neighborhoods events if they request DONE’s help.

16.  CONSIDER SELLING SPONSORSHIP RIGHTS

The city should renew its research into the possibility of selling certain sponsorships to the private sector, and now include neighborhood council members.

San Diego awarded a 12-year contract to Pepsi that’s based upon sales.  The University of Maryland landed a 15-year, $58 million partnership with Pepsi. 

New York City, which also operates the public schools, approved a five-year, $166 million marketing deal with Snapple to be the city’s official drink. 

In Los Angeles, each city department strikes its own deal for soda machines at its facilities.

Deals don’t always need to produce cash for a city.  In return for allowing a company to call itself the “Official Automated External Defibrillator Partner” of the city of San Diego, the firm gave the city 1,000 defibrillators that are spread throughout the city, and it maintains them, and trains people to use them.  At last count, 14 heart attack victims have been saved.

The city should retain the services of an experienced consulting firm to identify the reasonable options and present them to the public.  The revenue should be designed for a specific purpose and not dumped into the General Fund for City Hall to play with.

16.  USE SECRET SHOPPERS

Neighborhood council members should tell City Hall that some of them want to volunteer to be trained to visit, call, or e-mail city service agencies and report back on the quality of service.

17.  COLLECT THE TRAVEL REPORTS

During a fiscal crisis in the ‘80s, City Council members wanted a better understanding of how much money city agencies were spending on travel and what they did on the trips.  An ordinance now requires city employees (excluding elected officials) who travel using city money to file a report on what they did AND what they learned.

If neighborhood councils were to request those reports from each department they would learn who’s violating the law, or what valuable ideas staff brought back that got ignored by management or the elected officials.

Seek an amendment that would include elected officials.

18.  DETERMINE ACCEPTABLE FINANCIAL RISK

To some city staff and elected officials every penny must be accounted for.  As a result, the city spends dollars to save pennies.  In 2000, the city purchasing system was overhauled.  One of the changes was to increase the petty cash limit from $100 to $500 because research showed that it cost more than $100 to process a $100 payment check.

Neighborhood councils should ask to know about further cost saving reforms that involve increasing the chance of small-scale fraud and theft so that they can make risk-benefit recommendations to City Hall.

19.  POST THE EXPENDITURES

Elected officials should be required to post on the Internet how they spend their millions of dollars discretionary money, and have a public discussion before spending any of it.  Neighborhood councils have to do it.

20.  SHARE THE BOOTY WITH DEPARTMENTS

A city agency that finds ways to save money on a one-time basis is likely to be punished by having its budget reduced in the following year.  That’s why the culture in so many agencies is to spend everything you’re given even if it’s for something you don’t need.  City agencies should be able to “rollover” a portion of unexpected savings they generate, with the rest going to the General Fund.

21.  SHARE THE BOOTY WITH EMPLOYEES

In Baltimore County, Maryland some employees took home an extra $5,000 a year due to a program that rewarded them for cost saving ideas.

22.  ALLOW SOME CITY EMPLOYEE GROUPS TO PRIVATIZE THEMSELVES

Faced with layoffs years ago, the employee investigations unit of the U.S. Office of Personnel Management formed their own corporation and sold their services back to the federal government.  It saved the taxpayers’ money and became a big moneymaker (gross revenues near $80 million) for the employees.

23.  ECONOMIC DEVELOPMENT EFFORTS

Ask if the city’s economic development efforts need further consolidation.

24.  RESELL MUNICIPAL BONDS

If the city’s bond rating were good enough, it could save millions by reselling its municipal bonds.  It could save more by doing what Pittsburgh did in 1997 and selling them on the Internet.  Competition for the bonds was increased by making them available to a broader group of buyers.

25.  ISSUE ILLEGAL SIGN WARNINGS

City crews remove illegally posted signs and try to collect costs from the person it believes put them up, but it doesn’t have enough employees to adequately do the job.  The city should send written warning notices to violators because many of them may not be aware of the law and its consequences.  Volunteers could be sought to send in photos of the signs.  Some cities use cell phone apps that automatically send the city the GPS location of the sign.  The city’s defunct CodeWatch program used this warning letter system and achieved an 85% compliance rate.

26.  ALLOW REAL COMPETITIVE BIDDING

The process through which big contracts are awarded by the city is open to corruption.  After the impartial city staff evaluation there is often one winner and several losers.  The losers often hire lobbyists who go to work on city commissioners and the City Council and mayor.

A better process would have the impartial panel determine all the qualified bidders of product in which the determining factor is price.  Those would be “tossed into a room” and invited to bid against each other until all but one drop out.  The city would save time and millions of dollars.

Although it would probably cause contracts the cost a little more, the city should report on how often it exercises its ability to provide bonus points to local vendors in order to vitalize the city’s economy.

27.  BUILDING AND SAFETY AND PLANNING DEPARTMENT FEES

If permit fees were charged by the hour, instead of being a fixed rate, people would have a reason to ensure that their paperwork is in order, thereby requiring less staff time.  Claremont does this.

28.  REVIEW THE PAST SUGGESTIONS

Somewhere there is closet filled with dynamic cost saving and efficiency ideas from city employees and outside sources.  Many of them have been ignored by a city government that was only interested in proposals that could be implemented immediately.  The CAO and CLA should be asked to make those available to neighborhood councils.

29.  OUTSOURCE OR INSOURCE THE ENTIRE WORKERS’ COMP PROGRAM

Part of the workers’ comp program is run by a third party administrator, and part by city employees.  This “splitting of the baby” was done for political reasons, mainly to avoid laying off any city employees.  The city should review the two programs and determine whether or not one of two methods would work better for the entire system.

30.  GET OUT OF THE WORKERS’ COMP BUSINESS

The CAO or an outside firm should analyze a recommendation made by one of its past risk managers to do a “portfolio transfer.”  The city would sell all of its outstanding and future workers’ comp claims to a private insurance company or companies that would run the program.  Workers would be ensured of a high quality of service because of the standards set by the state.  The city’s costs would be fixed and known.  Future liability costs would be paid by the insurer.  Millions of dollars in salary savings could occur in the Personnel Department and the Office of the City Attorney.  The action might improve the city’s bond rating. 


31.  LEASE PARKING OPERATIONS

Rather than selling city parking lots and operations, and losing a valuable asset, consider leasing them.

32.  PARTICPATORY BUDGET SURVEY DESIGN

Neighborhood councils should be actively involved in the design of the annual city budget survey.

33.  LEASE LAX

City taxpayers get no financial benefit from operating LAX because federal law prohibits airport revenue from going to the General Fund.  It’s a $34 billion asset that provides little benefit to its owners.  Conservative estimates are that a 50-year lease could generate an extra $100 million year that could be used for specific purposes or to reduce taxes.  The financial benefits and legal obstacles should be analyzed.