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Blog: Los Angeles Quietly Declares a 'Fiscal Emergency,' Warranting Review of Widespread Criticism of City Controller

A climate of discontent developed early in the Controller's term and continued throughout her tenure, climaxing in L.A.'s near bankruptcy.

Kevin James is a candidate for mayor of Los Angeles.

America's second largest city is in crisis. The city's Chief Administrative Officer has warned that Los Angeles is near bankruptcy. Adding credibility to the CAO's warning is the fact that the City Council very recently—and very quietly—passed a resolution "Declaring a Fiscal Emergency."

City officials have mismanaged the taxpayer's money. Chief among them is the City Controller. According to the City Charter, the Controller is the chief auditor and general accountant of the city. It is the Controller's responsibility to supervise the accounts of all offices, departments, boards and employees of the city who collect or disburse the city's money.

Because of the recent Declaration of Fiscal Emergency, questions surrounding the work performance of the Controller are warranted.

In exercising her duties, Wendy Greuel's work has created a steady stream of criticism and resulted in questions of competency from community leaders, department heads, the Mayor, City Council, the former Controller, the Chief Administrative Officer, a County Supervisor, a Deputy Mayor and the media. Research reveals that a climate of discontent developed early in the Controller's term and continued throughout her tenure. Now the city is nearly bankrupt.

Proof of the Controller's parade of errors is easy to find. Below are just a few examples, starting with the most recent.

In April 2012, after indictments of Coliseum Commissioners, Greuel audited the Coliseum Commission. In response to Greuel's audit, County Supervisor Don Knabe pointed out in a letter to Greuel that "failures have existed in the Office of the Controller" and that financial abuses could have been avoided if she had used her authority to audit the Coliseum earlier.

In April 2012, Council members questioned Greuel's ability to conduct her own audit of Fire Department response times by voting to commission an outside audit of the response times, and stated that "there is a limit to fire and emergency services expertise in the controller's office."

In March 2012, City Hall blogger and former Los Angeles Daily News editor Ron Kaye accused Greuel of doing little more than a rewrite of an old Laura Chick audit of fuel usage in the city. Kaye stated that "some might call it plagiarism since Greuel doesn't mention or cite Chick's audit on the same subject three years earlier."

In February 2012, the Los Angeles Times called out Greuel, along with other officials, for doing a "poor job" at "recouping about a half-a-billion dollars that [the City] is owed," pointing out that these same officials ignored the recommendations of their own Commission on Revenue Efficiency they created to find ways to improve debt collection.

In December 2011, CBS2 News reported that Greuels' predecessor, Controller Laura Chick, "blasted Greuel for not taking stronger action after 'SoCal Connected' first reported on questionable spending at HACLA in March."

In December 2011, in response to Greuel's audit of the L.A. Housing Authority, LA Weekly reporter Simone Wilson pointed out that Greuel was "late to the party" adding that "it's been almost a year since local station KCET first revealed rampant credit-card misuse by former HACLA CEO Rudy Montiel. And it's almost two weeks since KCET dropped the second half of its two-part HACLA investigation on similar overspending by his underlings, again scooping the vast majority of Greuel's work." LA Weekly adds that "it's a little pathetic for her to equate her powerlessness with that of a brushed-off L.A. reporter—when in the end, it's the City Controller's job to duck under the media tape and kick some executive ass."

In November 2011, in response to Greuel's audit of funds transferred to the city by the Community Redevelopment Agency for upcoming projects, a CRA spokesman said that the agency "strongly disagree[d] with the characterizations in the audit."

In May 2011, Controller Greuel released an audit on the city's "Gold Card Desk" where city politicians and their staffs improperly obtained dismissals of over 1,000 parking tickets. Greuel claimed she was unaware of the Gold Card Desk. Within hours, Mayor Villaraigosa's office released documents indicating that Greuel, who had chaired the council's Transportation Committee, voted to renew the contract of the company that maintains the program and had been briefed on its operations. "As chair of the City Council's Transportation Committee then-Councilmember Greuel was briefed on all aspects of the department's operations and was fully aware of the Gold Card Desk," according to the Mayor's spokesperson.

In September 2010, results from Greuel's audit of hundreds of millions of dollars of American Reinvestment and Recovery Act job creation funds were "sharply different" from Chief Administrative Officer Miguel Santana's numbers on the same ARRA funds.

In June 2010, there was a highly publicized dispute surrounding Greuel's audit of the DWP in which she examined a fight in April 2010 between the DWP and the City Council over a rate hike and a transfer of funds from the DWP to the City's general fund. The interim chief of the DWP at the time cited errors from an early reading of Greuel's audit.

In May 2010, Sanitation Department head Enrique Zaldivar pointed out to KABC Channel 7 that two sophisticated, expensive pieces of equipment that Greuel's audit claimed were missing were "right where they were supposed to be." KABC confirmed that major equipment that Greuel claimed was missing wasn't missing at all.

And now Controller Greuel, the city's chief auditor and general accountant, wants to be Mayor. Los Angeles voters, who now live under the cloud of a declared fiscal emergency which threatens critical city services, should take the Controller's record into account in making their decision in March 2013.

Gerald Elekes June 25, 2012 at 04:22 pm
@Mr. James. Thanks for this condensed "primer" on city waste. Check out my blog on the North Hollywood-Toluca Lake Patch, "The Blue Bin Scavangers." It is another example of city waste and fiscal incompetence taking place on a daily basis-- one going on right in front of the Shepple taxpayers' faces. The mantra seems: A penny discarded is a penny not saved-- or a nickle in this case. Talk about the trickle down theory.
Elijah H June 26, 2012 at 12:35 pm
A hit-piece from a political opponent? Wow, that's news.
Scott Zwartz June 26, 2012 at 01:26 pm
Kevin James becomes more of a disappointment each time I see or hear from him.
An honest person makes very clear that he has a conflict of interest. He starts his article by saying something like, "All readers should know that Ms. Greuel and I are both running to be LA's next mayor. Please judge my remarks based upon their accuracy and do not discount them just because Ms. Greuel and I are both running for mayor." My next objection is more serious. The City Council is the fountain of corruption -- not the City Controller. The former Controller, Laura Chick, fought day and night for disclosure of wrongdoing. No mater how hard Ms. Chick tried, no matter how many audits she conducted, the City Council (while Greuel was a councilmember) ignored all warnings. The corruption which has devastated this City began years and years before Greuel become City Controller. Rather than tell the people the truth about the crimogenic nature of City Hall (see today's CityWatch LA), James focuses on Greuel. (Nothing I say should be mistaken as support for Greuel.)
Lightnapper June 26, 2012 at 02:08 pm
It's a blog. Try it.
Lightnapper June 26, 2012 at 02:14 pm
Well-reasoned comments. But isn't it politics? Since when has politics been a pure process? I don't know one politician with any "True Grit," at least since the 60's. I'm sure Ms. Greuel will get her "shots" in. And I look forward to it. (Nothing I say should be mistaken for support of ANY politician. As far as I am concerned, they are all "trained" liars, and will do or say anything to get into office-- and all at the expense of the shepple taxpayers.)
John Fallingleaf June 26, 2012 at 03:03 pm
It's sad to me that everyone is so shocked or even upset when something that is educated, backed up by facts, and makes a great point from someone running for office is posted. As if that shouldnt happen??! It Should have been all along we just arent used to it because are current politicians lie and pander and steal. Clearly James is not like typical politicians and thats a good thing for all of us. We need this, we should want this, we should support this. and instead of making any assumptions about anything do your due diligence and research the guy and his other opinions (especially you Scott Zwartz). Based on everything I've seen I fully support Kevin James, and in my mind we all should unless we are happy with the way things work, but frankly im sick of it
Lightnapper June 26, 2012 at 03:58 pm
@Zilla.... Couldn't have said it better. I'm looking forward to hearing more from Mr. James, and what he proposes for the restructuring and rehabilitation of this once beautiful and vibrant city. And how he will pull it off! I haven't researched his background yet, but if he is an educated, non-nepotistic "fresh face," anything has to be better than the inept clowns currently running the circus. After 38 years of being spoon-fed the same crap, I'm willing to hear him out. Of course, he will have to claim Hispanic heritage, as well as actively court the all-powerful ones who control and distribute the Westside and West Valley shekels to the grateful minions for him to even have a wisp of a chance in this openly sanctuary-bound and despotic-liberal city. No more ex-cops...no more sleazy lawyers...no more career politicians switching positions faster than a game of Hot Potato. A taxpayer can still dream can they not. They haven't put a GPS device on a person's dreams yet, or have they?
James June 26, 2012 at 11:29 pm
Blaming the Controller for the budget crisis is ridiculous. She does not set the budget. Her office only makes sure that expenditures have legal authority. She can't order layoffs or even block departments from spending money appropriated by the council. The fiscal emergency itself is merely a routine measure used by council to force renegotiation of labor contracts.
I can't vouch for the quality of the audits, but if they attract criticism, that could just be someone playing defense. I do know that there's a big problem with lack of resources, and that routine audits aren't being performed any more.
Deb June 26, 2012 at 11:53 pm
Maybe James wanted to say when former Councilwoman Gruel was the Housing Chair, why she did not uncover the waste, or audit at the time but only when she became the Controller and decided to run for Mayor, she suddenly did an audit and found the waster and abuse, I believe the reported stated. I have never been able to figure out how you could be housing chair then a few years later uncover a problem? Not to mention allowed a high destiny building to be built on Sherman Way after the community said No. Although, SB1818 was repealed, it was too late for that project.
http://articles.latimes.com/2010/apr/09/local/la-me-housing-audit9-2010apr09
Peter Choi June 27, 2012 at 04:29 pm
This is Mr. James 2nd blog post. In his 1st blog post he declared that "In the coming weeks, I will be publishing my detailed plan to make LA great again. Many details of my plan will be published here and through other outlets..."
Mr. James, where is the plan? Instead we are presented with a negative-politics-as-usual hit piece on his opponent. There is not one piece of a detailed plan on how he proposes to fix either how the City Controller's office is run or the waste that the City Controller has dug up. Blog FAIL.
John Fallingleaf June 28, 2012 at 02:33 am
Peter, I found this on his 1st blog and his website.
"To grow employment in Los Angeles, I will take a "business improvement package" directly to the voters if necessary. In order to obtain business tax reform I will be presenting a business improvement package to the City Council immediately upon taking office. It will contain two primary parts: (1) business tax reform; and (2) streamlining the permitting process. The business improvement package will include the elimination of the burdensome "gross receipts" method of calculating the City's business tax and a complete revision of the way the business tax is formulated. The City's most recent Business Tax Advisory Committee has done a good job of demonstrating how burdensome the City's business tax has become. But while the Council "ponders" ways to implement BTAC's recommendations, businesses continue to leave our City. The time for real reform, not simply window-dressing, is long overdue. My plan will contain a fair and equitable across-the-board reduction in our business tax burden and simplification of our business tax structure. The Los Angeles business tax will finally be brought in line with the most business-friendly cities in the region in order to make LA competitive again." http://www.kevinjamesformayor.com/news.php http://centurycity.patch.com/blog_posts/publishing-a-detailed-plan-to-make-los-angeles-great-again-e88194dd
Peter Choi June 28, 2012 at 04:40 pm
@JohnFallingleaf
Mr. James promised a "detailed plan", not the usual broad strokes/sounds good statements. There are NO details in your lengthy quote. Mr. James' vague promise that his business plan would eliminate the gross receipts method and revise how business tax is formulated does not offer any details on how and with what he would replace it. He promised details. Further down, past the gobbledly gook, you quote Mr. James stating "My plan will contain a fair and equitable across-the-board reduction in our business tax burden and simplification of our business tax structure..." Again, NO details as to the reduction numbers nor how he proposes to simplify the tax structure.
John Fallingleaf June 28, 2012 at 05:13 pm
Peter- I really liked the part of the plan i shared with you, sounded good to me. I'm sure there will be further specific numbers to follow if your just patient as it states, but as for a plan, show me one piece of info from any other candidate that is remotely as detailed as that segment was, i dont think you'll find anything. what does any other candidate offer in terms of any opinion or plan whatsoever?????? i read the whole original blog seemed like a damn good start to fixing la. also peter, what do you think of this article alone that we are commenting on, and all of the apparent problems with greuel???? to me this says why would we elect someone with that track record. also found these on his site i think everyone should check these out theres a lot of ideas and plans for you!
Part Time City Council http://www.dailynews.com/opinions/ci_18870107 Parking Fines http://citywatchla.com/lead-stories/3177-parking-fine-increases-more-parking-enforcement-officers-is-bad-for-business Transportation http://centurycity.patch.com/articles/kevin-james-position-paper-on-key-transit-issues Is LA Stealing City Hall? http://www.huffingtonpost.com/kevin-james/los-angeles-city-hall_b_1398152.html Convention Center http://www.huffingtonpost.com/kevin-james/la-convention-center_b_1386295.html Live Within Its Means http://www.citywatchla.com/4box-left/3249-live-within-its-means-charter-amendment-good-start-in-fiscal-reform-for-la
Peter Choi June 28, 2012 at 07:45 pm
@John Fallingleaf
I expect candidates to do what they promise. Mr. James promised details - and then delivered l-o-n-g diatribes that contained ... no details. This does not bode well for future promises from Mr. James. You get one chance to make a good impression and he is not living up to his promise to deliver detailed plans. As for Ms. Greuel, I would have to read a more nuanced and balanced report on her work as City Controller before I offer an opinion. Certainly I would and could not make one based on Mr. James attack blog.
John Fallingleaf June 28, 2012 at 08:58 pm
so your only gunna give him one week to provide you with a detailed plan to fix LA from the mess that greuel and the insiders created?? he gave you an intro with many many good ideas and said theres more to come. he didnt say hey peter, I'll have that whole mess solved in a week and make sure to turn it in to you on time. now a week has passed, and the next thing he does is prove to everyone the incompetence of his opponent.and your mad because you want numbers and you want them now! he's probably working on it as we speak! why do I believe this?
"He regularly puts out statements and has released more detailed plans and position papers than his established competitors, City Council members Jan Perry and Eric Garcetti and City Controller Wendy Greuel." - Jon Regardie, downtown news http://www.ladowntownnews.com/news/kevin-james-is-the-man-who-would-be-king/article_ca4742b8-b73a-11e1-98fe-001a4bcf887a.html Peter read the links im sending you and you'll quickly learn James is our only hope to save LA from bankruptcy and the culture of corruption, if you disagree i'd like to know why and who else can do better?
John Fallingleaf June 28, 2012 at 09:15 pm
also, You SHOULD use this blog to form your opinion of greuel fyi....its not an attack blog from James. The entire paper is a research paper not opinion, cited with links to their original articles, where "questions of competency from community leaders, department heads, the Mayor, City Council, the former Controller, the Chief Administrative Officer, a County Supervisor, a Deputy Mayor and the media" can be found. Kevin James isnt included in that list he just put it together for you and the public to see so they can vote accordingly. these are cold hard facts...sucks to hear if your a greuel supporter....
Brian Aherne June 30, 2012 at 05:46 pm
Quick, name three competent current city officials, elected or major department heads. OK, out of those three, if you could name any at all, name just one who was not or is not a part of the union coalition that controls Los Angeles. Please post the name or names if any.
This, the city of my birth almost 70 years ago, will continue down hill until the basic problems are corrected. City bankruptcy will occur unless there is a national and state turnaround, the latter improbable, and either way there is no sign that a solution, human or organizational to the problems of our city is on anyone's horizon. Sad.
Kenneth Lowndes July 19, 2012 at 12:39 am
We have a much LARGER problem to deal with.
The "petro dollar" system is the Last and Final Pillar that remains propping up the alledged USD. And it is presently, being dismantled. It is the system that requires european nations to make their Midle East crude purchases in USDs. WHEN that pillar is removed, we will see a 40% DROP in purchase power, literally overnight. Afterwards, we will also see the "USD" undergo additional devaluations of 40% or MORE, many times, through out each day. Thank God this is a pre-election season. But what happens when WW III - beginning against Iran is launced? Your grocery stores will suddenly not continue to contain that abundance of food. Then what? There are NO truck companies that can afford to continue their regular deliveries to your local stores, after fuel spikes up to $7.00 per. We are in dire straights, very soon. The DoD says the (non)Federal AND (no)Reserve economy is the greatest national security threat we face. They also say we are never more than 9 missed meals from Revolution, (3 days), And then guess what they say follows that, and how soon? It will look and feel like a real Zombie Apocalypse. Off the screen an din your face. But, despite this Doom and Gloom being forecasted, visit the Proposed Solution, - While you still can: http://www.ivamu.com/ Honest money equals much more honest government.

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