How L.A. Can Avoid Becoming The Next Detroit

When Detroit filed for bankruptcy in July with its $18 billion in liabilities, many people predicted that Los Angeles was not far behind.

But LA is not going to tank as our City’s dynamics are very different, at least for the time being.

Since 1950, Detroit’s population has decreased 63%, from 1,850,000 to less than 700,000 in 2012.  Los Angeles, on the other hand, has seen its population increase as our diversified economy located on Pacific Rim continues to grow, although a much lower rate than in the past.

Our annual income per capita of $28,000 is almost twice the $15,000 level in Detroit where over 36% of the population lives below the poverty line.  This compares to an unhealthy 20% in LA.

Detroit, with its 78,000 abandoned buildings and 66,000 blighted and vacant lots, has seen its revenues fall by 20% over the last five years.  Unfortunately, its revenues are expected to decline by an additional 13% over the next four years while pension obligations will gobble up an unsupportable 44% of the budget, up from the current level of 20%.

Detroit does not even have access to the $500 million that it needs over the next five years to repair its epidemic of urban blight.

Meanwhile, in the City of Angels, our revenues have increased to record levels and are projected to grow by 13% over the next four years.  Meanwhile, pension contributions will chew up “only” 23% of revenues.

But this does not mean that LA is out of the woods as our City is facing significant financial issues.  LA is projecting a cumulative deficit of $800 million over the next four years if it is unable to renegotiate its contracts with its civilian unions.

Via: California Political Review

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