California: In L.A., the Grass Isn’t Always Greener

Desperate times call for desperate measures. Or at least that’s what your government is telling you.

Citing perennial drought conditions in Los Angeles, this week the L.A. Department of Water and Power (DWP) is touting the success of a program called “Cash for Grass” – which frankly sounds like a place you should turn in your unused medical marijuana. But L.A.’s cheekily-named program is actually a water conservation plan that is costing big bucks – and the only ones getting soaked in this scenario are the ratepayers.

The Los Angeles utility has shelled out more than $1 million in incentives for a program aimed at curbing water usage, but at up to $2,500 per lawn it appears to be little more than a glorified lawn makeover service at the public ratepayers’ expense.  Cue the new TV series, “HGTV: Kicking Taxpayers to the Curb” edition.

The L.A. area’s “Cash for Grass” program, which has been in place since 2009 but recently upped its ante with increased financial incentives, provides cash to residents who will rip out their grass lawns in exchange for desert landscapes.

The fact that the Pacific Ocean – the world’s largest and deepest ocean – sits right next to this great city is an irony that is not lost on me. Neither is the fact that this program comes with the same tiresome and unproven claims of “global climate change” and a whole host of other problems that have long plagued L.A.’s Department of Water and Power.

For example, the agency’s Board admitted in 2010 that they were struggling with a whopping $200 million in pension liabilities for DWP employees amid budget shortfalls.  While newly-elected L.A. Mayor Eric Garcetti recently helped negotiate a new contract with DWP in which public employees forgo raises for three years, those same employees get to keep their pensions and new hires still get an unbelievable 80% of their salary annually as a pension for life. Some deal.

California Political Review

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The Impending California Pension Property Tax Earthquake

The most widespread and persistent folktale about California is that some day the entire state will break away from the North American continent and fall off into the vastness of the Pacific Ocean.  That day may not be too far off if what is unfolding in the growing number of municipal bankruptcy court cases in California plays out to its logical consequence without massive and politically legitimate pension reform.

As reported by urban economist Steven Malanga, municipal bond insurers may lose out in court in their attempt to get bankrupt California cities to reduce pension costs.  This may lead to more than just bondholders getting wiped out and much higher borrowing rate costs across the state.

If the courts uphold pensions as a constitutional right over bondholders’ rights, municipal workers will be entitled to earn more in pensions and health benefits than cities can currently pay.  About 70 to 80 percent of municipal operating costs are allocated to salaries and benefits.  And the lion’s share of salaries and benefit costs go to police and fire protection.  There is little room for large budget cuts in most municipalities.

Some municipalities with pre-existing pension bonds may be able to refinance them without voter approval and shift the explosion in pension costs into long-term debt. Issuing brand new pension bonds would require voter approval. But such cities would have to have enough extra budget cash flow to handle the added debt.

Via: CA Political Review

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