Happy face assumptions behind mayor's final budget plan

Well, for starters you shouldn't take an economic projection out going four years all that seriously - even six to 12 months is pushing it. And as we reported earlier in the week, Villaraigosa is proudly making note of a small surplus for fiscal year 2017-2018, which of course assumes an awful lot. Dig into the budget package and you'll come across all the caveats, many of them centered on how the economic winds will be blowing and whether the city can work out a better pay deal with its workforce. But what's really missing from the proposal is what's been missing from the mayor's entire attitude toward fiscal matters: Reality. He either hasn't the first clue about how economies work or has simply chosen to ignore the city's dysfunction. That's how both he and the council have managed to handle the last few years of deficits. Let there be no mistake: City government remains a mess. It's still bloated in some areas and virtually bankrupt in others. There's been no rhyme or reason to the many personnel and service cuts over the past five years, and zero willingness by elected officials to drill into the decayed and sometimes corrupt infrastructure. What should we keep? What should we eliminate? How can we use technology to run this place efficiently, regardless of the political fallout? None of these questions is being asked, at least by the right people. From this week's Business Update on KPCC:

Mark Lacter: You know, Steve, this budget is a little like taking a Rorschach test - it can be interpreted in any number of ways. If you're an optimist, you'll see that the mayor has proposed no furloughs, no layoffs, and he'd provide more funding for tree trimming and sidewalk repair. Maybe the best news is that the deficit for next year is expected to be quite a bit lower than expected. And that's not just wishful thinking - more tax revenue has been coming in than expected because more people are buying stuff and because L.A. has seen big increases in the number of tourists, and that means additional revenue from the hotel tax. The bet is that those numbers will keep improving, which would mean still more tax revenue that can be used to pay off higher pension and health care costs.

Steve Julian: That's quite a change from a few years back, when tax revenue was way down and the city had to make some drastic cuts...

Lacter: Yes, in order to cover those retirement expenses. Actually, they're so optimistic about higher tax revenue that by 2017 the city of L.A. is supposedly going to eke out a budget surplus (now that is wishful thinking). We need to remember that any budget is based on a set of assumptions about how much money will be coming in and how much will be going out. And budgets are not static - the numbers are always moving.

Julian: Wasn't it just a few months ago when city warned about possible cuts in emergency services if a sales tax increase wasn't approved?

Lacter: That's right - and it was not approved by voters, but city officials have done an about face and now they're more optimistic about the economy. That's why the budget isn't being chopped. The question is whether they have it right this time. Keep in mind that the unemployment rate in the city of L.A. is still 11 percent. And, let's also not forget that the city has been forced to eliminate thousands of positions and sharply reduce services. You know the real answer is to restructure city government so that business can be done more efficiently. Of course, that means breaking a lot of eggs, and many elected officials would rather just hope for the best.