First order of business for Mayor-elect Garcetti

Well, it's the budget, of course, which is still $100 million or so in the red because the city has to keep paying out those out-sized pension and health care benefits. Looking to stem the deficit, the City Council had signed off on a an increase in the retirement age, along with a reduction in benefits for workers who are hired after July 1. But the public unions are fighting those changes. There is also a 5.5 percent pay raise that outgoing Mayor Villaraigosa had proposed to eliminate - though what the new mayor decides to do is anyone's guess. Frankly, the two candidates had been their usual vague selves during the campaign on how exactly they'd deal with budget issues. Maybe we'll finally find out. From this week's Business Update on KPCC:

Steve Julian: Where does the city stand now in terms of debt?

Mark Lacter: Well, L.A. is obligated to help cover retirement and health care costs - even if it means cutting back on city services. The good news is that the economy has been improving, which means that more tax revenue will be coming in. But, that's not expected to fully offset the pension obligations, and those obligations might actually increase over the next few years, which puts city officials in a tough spot. Do they try cutting back on employee benefits even further, which would surely create more animosity with the public unions, or do they keep things more or less status quo, which will continue to put the squeeze on services. One more thing: will the new mayor be able to work in concert with the LA City Council (which - after all - has the final say in all budget matters)?

Julian: It's a reminder that the mayor has only limited power, isn't it...

Lacter: Some might argue that it's City Council President Herb Wesson who will be really in charge. This is the challenge that's been faced by previous mayors, and that's why it's so important for [Garcetti] to establish some sort of working relationship with the council. One area that's bound to come up is the city's business tax, which both candidates would like to eliminate. They think dropping the tax will help attract and retain businesses, which is totally at odds with what you'd expect from these two liberal-leaning Democrats. But they are convinced that doing away with the business tax will mean more jobs for L.A.

Julian: If you drop the tax, can that lost revenue be made up?

Lacter: Well, not likely - and, as we see with the pension problems, L.A. needs all the revenue it can get. More broadly, there's the matter of doing business in L.A., which still can be a minefield of rules and regulations (though, in some areas it's a little better than it used to be). In years past, mayors have tried to attract industries into the city - biotech was one, electric cars was another - though incentive-type programs don't have a great history of working out well.

Julian: What about tech or Silicon Beach, as they're calling it?

Lacter: That's certainly a success story - you have all kinds of software firms and Web designers setting up shop on the Westside. But, that's not the result of anything the city did - it's just young entrepreneurs wanting to be close to other young entrepreneurs, and all of them wanting to work near the beach.

Julian: Is there one challenge facing the new mayor that's more challenging than all the others?

Lacter: The same thing that faces any elected official in L.A.: controlling the influence of special interests (an issue, by the way, that didn't receive much attention during the campaign, perhaps because both candidates were receiving contributions from those same special interests). You know we rely on elected officials to consider all sides, and the two candidates were talking a good game during the campaign. Of course, what's promised before an election and what happens once they're in office are not always the same thing.