The Next Mayor Will Need to Capitalize on Ideas

Despite fine talk of “turning L.A. around” and “bringing L.A. together,” how much can a mayor of Los Angeles do to heal the city? He can do a great deal, but it depends on energy and will, not on money. Because whether Richard Riordan or Michael Woo wins the June 8 runoff election, he will find little room for movement in the city budget.

A mayor’s discretion over Los Angeles’ annual budget is slim. Almost half the $4-billion budget, for the fiscal year beginning July 1, is mandated expenditure on facilities, such as sewers, covered by bonded indebtedness.

That leaves $2.2 billion, of which 65% goes to police and fire departments. So the mayor is left with roughly $770 million for sanitation ($132 million), parks and recreations ($176 million) the city attorney’s office--almost $60 million because people sue the city--and so forth.

On top of that, the incoming mayor could face a $480-million budget shortfall because the cash-strapped state government wants to take back funds from the city.

Still, the mayor of Los Angeles, as elected leader of the nation’s second-largest city, has vast political clout. And he’ll have to use it to convince political leaders and financial markets in the rest of California, the nation and the world that L.A. is getting its act together.

With that in mind, here’s advice for the mayor, gleaned from business people and others in Los Angeles who are concerned that the city not become a New York with palm trees, a dispirited, disputatious memory of its former confident self.

None of the ideas are original, most concern jobs and the economics of making the city safe, welcoming and prosperous--making it, as L.A. investment banker Michael Tennenbaum puts it, “a city in which the strong want to stay and the weak are helped to participate.”

The new mayor should:

* Privatize the Department of Water & Power by issuing stock to investors. R.T. McNamar, who heads the L.A. office of Oppenheimer & Co., estimates a public offering could bring $2 billion, which the city could invest in U.S. Treasury bonds to earn some $130 million a year, which could be used for other purposes.

* Declare Los Angeles a capital city for entrepreneurs. Celebrate people who want to go into business as they are being celebrated and helped at a Funding Your Dream conference this weekend, sponsored by USC and the L.A. investment firm Houlihan Lokey Howard & Zukin.

* Pressure the state to solve the problems of workers’ compensation insurance. It hurts small business most.

An example is Barbara Sullivan, president of T.E.M.P.S., Inc. an employee service she started last year after a similar firm she worked for failed. Sullivan, 50, with a long record in business and a master’s degree from Tuskegee University, was hit immediately with a demand for triple the normal premium for worker’s comp insurance. Why triple? Because the State Compensation Insurance Fund has had a “very poor” loss experience with temporary help firms, the president of the fund explained in a letter to Sullivan.

Sullivan, who recruited staff for the 1984 Los Angeles Olympics, has fought back by asking help from politicians she knows. “If you’re not connected, you’re nowhere,” she says.

But a fraud-free, sensibly administered worker’s comp system would not be placing prohibitive burdens on new businesses; being politically “connected” wouldn’t be so crucial.

* Encourage financing innovations for small business and home ownership, especially in poor neighborhoods. Don’t listen to grumbling bankers who often object to such innovations. Remember that most bankers are not real financiers but timid job holders like the rest of us. Remind them that A.P. Giannini started Bank of America by lending poor fishermen money to buy their boats because he knew ownership made them the best credit risks.

Remind them also that Lawrence Lindsey, a conservative Federal Reserve governor, commends the Community Reinvestment Act, which requires banks to lend in low income neighborhoods. And take notice of some of the loan programs city councilman Mark Ridley-Thomas has working in his south L.A. district.

Reform zoning restrictions which keep land values artificially high, even in poor neighborhoods, and thus discourage business. Listen to the ideas of losing mayoral candidate Nick Patsaouras on mixed-use commercial-residential combinations.

Be out front on changing L.A.’s transportation systems, solving the snarl. This is an important item to business.

Demand quick government response on business permits, loan guarantees and so forth. Ernest Paper Co., a Vernon-based distributor of industrial boxes, applied last June to expand, with a government loan, in an enterprise zone in southeast L.A. Ernest’s President Tim Wilson gave up this month after almost a year of delays and runarounds. The City of Vernon now promises Ernest an answer on its application in three weeks. That should be enough for any city.

Make the city safe and welcoming for residents and visitors, which in the minds of most business people, voters and both candidates means hire more police.

Riordan would hire 3,000 police and pay for them by leasing the airport, setting up a $175 million a year revenue stream from the operator, perhaps a Lockheed subsidiary that already manages Toronto’s airport. Woo would add 1,000 police and join the nearly 60% of voters who accepted the idea of a hike in property taxes. Both approaches merit consideration.

Examine other privatization options, for garbage collection as well as for the airport. London’s Heathrow has been privatized, pumps out revenue to the British government and remains one of the world’s busiest and best-run airports.

* Take a stand against efforts by Jarvis-Proposition 13 supporters to stymie a wage settlement on the schools or the will of a majority of voters on taxes for more police. Prop 13 is 15 years old; times and problems change, so should the city’s responses.

Give all city staff copies of the book “Rethinking Government,” which advises city and state employees to think of the citizens as customers to be pleased, not subjects to be ruled or endured.

Focus community colleges and state universities to work directly with employers on training and job support. State colleges in New Mexico, the Carolinas and elsewhere garner a lot of credit and investment doing this. Meanwhile Los Angeles and California have the nation’s most extensive college system already in place. Focus it, use it.

Bring Germany’s Audi car company into the vacated GM plant in Van Nuys. California didn’t get BMW and won’t get Mercedes, but Audi remains a possibility. Get Gov. Pete Wilson and the state’s giant Congressional delegation to go to Germany with you.

Use L.A.’s cache and image to focus its industries. L.A. is a fashion place, “so L.A. should be making high fashion furniture, like the Italians and Scandinavians,” says Allen Scott of UCLA--editor of “Policy Options for Southern California.” “That would train L.A. workers to higher skills and pay levels.”

See that L.A.’s work force receives up-to-date training. The mayor should enlist George Lucas or Steven Spielberg to train L.A. youngsters on digital equipment and techniques, so they don’t train for traditional movie making methods that are phasing out.

* Push L.A.’s tourism industry to take better advantage of L.A.’s matchless position as global entertainment capital. Get Michael Eisner of Disney and Michael Ovitz of Creative Artists Agency to help; they’re good at their jobs and can afford to do pro bono work.

The new mayor will hear many more and better ideas, because L.A. has always been a place where people work from imagination and build out of dreams. Fortunately for the new mayor and all of us, that spirit remains alive in all parts of the city today.