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Former Mayor Says L.A. is Headed Towards Bankruptcy

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Richard Riordan

Richard Riordan
In the Wall Street Journal yesterday, former Mayor Richard Riordan and a president of a local investment advisory firm said Los Angeles is on the brink of Bankruptcy. That's not a surprising claim, but the two lay out why they think this and a how-to to fix it. They say the problems are related to two numbers: 8% and 5,000."Five thousand is the number of employees added to the city's payroll during Mr. Villaraigosa's first term as mayor," they claim. "According to California's Economic Development Department, when Mr. Villaraigosa took office there were 4.73 million jobs in Los Angeles and 252,000 unemployed people. Today, there are just 4.19 million jobs in Los Angeles and over 632,000 unemployed people."

About the 8% number, that's "been the projected annual rate of return on the assets in Los Angeles pension funds," they wrote. "Four years ago, we strenuously warned Mr. Villaraigosa of the dangers behind the myth of that 8%, only to be told by the city controller's office that our warnings were 'based on faulty assumptions which are largely disputed.'"

Villaraigosa hasn't done a full rebuttal yet, but has said "those representations are not based on fact" and the city will "never go bankrupt" under his administration. An official rebuttal to the op-ed is being worked on, according to the LA Weekly.