Mayor Bob Foster's Contrasting State of Long Beach Address

In July, you honored me with a second term as your Mayor. In doing so, you have again placed a great trust in me. I remain humbled by your support. You have given me the job of building a brighter future. I can think of neither a more important nor greater responsibility. Thank you for your trust and confidence and I pledge that I will do my best to never let you down.

It is hard to believe that tonight marks the fifth speech I will deliver on the state of our city. I picked a great time to be mayor! It has been an exhausting and exhilarating ride.

As I reflect on the past five years, I believe much has been accomplished under what could best be described as "less than ideal" conditions...

...We should all feel some pride in navigating the past few years. We have not only endured the difficult times but we have done so by lending a helping hand to those who need it and kept focused on the essential services government provides. The future will still challenge us and pose obstacles to our success, but we are now better able to meet those challenges...

...2010 saw many improvements to our city. You all know I believe infrastructure is important to the future of our city as it sets the very foundation for growth and a robust economy. We were able to repair 19.3 miles of streets. 14.6 miles of sidewalks were replaced. Our storm drain system was enhanced by installing debris traps at pumping stations, improving our coastal water quality. At the helm of the Public Works ship, we all owe a tremendous thanks to Mike Conway and his great team.

New developments have taken root all over the city: a brand new Vons supermarket downtown; a new Marshall's Department store in Bixby Knolls; new anchor retail outlets filled vacant space in Los Altos and we will soon have a new fire station at the Top of the Town.

Three very large construction projects moved forward this past year. Funding was secured for the Gerald Desmond Bridge replacement. This $1 billion project will generate 4,000 construction jobs and enhance the competitive future of the Port of Long Beach, making it not only more efficient but also assuring safer traffic flows for vessels, commercial vehicles and commuters. There is no more important project for the competitive future of our port and I want to draw special attention to the efforts of State Senator Alan Lowenthal and Assemblywoman Bonnie Lowenthal to help move this project forward.

The Long Beach Airport diversified its air service offerings and achieved the lowest average cost per ticket in California and the second lowest in the nation.

More importantly, we broke ground on a new terminal. The project will modestly increase the size of the terminal, consistent with the requirements of our noise ordinance. The enhancements will provide more comfort and convenience and modern concessions for dining and shopping. In the near future, passengers will be able to grab a sandwich before their flight without fear of actually eating it.

While the process was lengthy and at times contentious, this modern facility was worth waiting for. Please join me in a round of applause for Mario Rodriguez and the Airport Department staff on a job very well done.

Long Beach will soon be home to a new, state of the art Superior Court House in its new location on the North West corner of Magnolia and Broadway.

This project is being built under a complex, first of its kind financial arrangement between the City's Redevelopment Agency, the State and private developers. A land swap with the City's Redevelopment Agency made this project possible. In return, the existing courthouse location reverts to the City and will become a landmark development along Ocean Boulevard.

2010 saw the completion of Phase I of the Colorado Lagoon Restoration Project. New parks all over the city were completed. From Rosie the Riveter Park to the Silverado Park Skate Spot, we have more places to enjoy nature and recreate.

2010 was an historic year for the Los Cerritos Wetlands. Long Beach facilitated the acquisition of 34 acres of land, and just last week 100 additional acres in Seal Beach was brought into the public realm. For the first time in more than a century, the public owns 200 acres of the Los Cerritos Wetlands. Efforts to restore this natural jewel will get underway in 2011, as we begin the visioning for creating one of the largest restored wetlands in Southern California.

Water quality projects were also enhanced in 2010. In a landmark agreement with the Army Corps of Engineers, we initiated the second phase of the East San Pedro Bay Ecosystem Restoration Study. This important effort will seek ways to improve water quality along our beaches and extend its examination well up the L.A. River.

Speaking of the L.A. River, we secured the support of the 27 upstream cities for a $41 million plan to outfit storm drains along the Los Angeles and San Gabriel rivers with treatment traps. Once funding is secured, this will significantly improve water quality in the rivers and on our beaches. Meanwhile, work is already under way to install trash traps in 16 upstream cities that flow the L.A. River, essentially making those cities 100 percent trash compliant by the end of this year.

We took advantage of federal stimulus dollars and spent them wisely. We used as much of the $120 million under the stimulus package as possible to improve our infrastructure and you see the results all over town. Federal training dollars were also well spent, linking training to real jobs at the port or other major construction projects in town. These major projects have strong goals for local hires, providing not only jobs for our young people, but careers. I want to thank Bryan Rogers and the whole crew at the Pacific Resource Investment Center and the Workforce Investment Board for all their hard work and their success in finding permanent jobs for over 2,000 Long Beach area previously unemployed people.

This was also a year in which the city's achievements were recognized. We again received the award for being one of the top ten green fleets in America. EPA awarded our Port with the Region's 2010 Environmental Achievement Award for its clean air technology program. And Bicycling Magazine ranked Long Beach in the top 25 Bike-Friendly Cities in America.

Our resolve to manage our finances well was also evident in 2010. We not only bridged a $23 million budget gap, but we did so while maintaining our $9 million Budget Stabilization Fund. This has helped us maintain our AA minus bond rating and has won praise from the financial community for our prudent financial management. Thanks again to our budget and finance staff for the great job they do under very difficult conditions.

So what does all this mean for our city? As you can see we have much of which to be proud. There are still, however, big issues we need to deal with. We have accomplished a great deal together and there appear to be fewer obstacles to a bright future than just two years ago. We are all no doubt relieved the dark days of 2008 and 2009 are behind us.

We need to learn from that hard experience. For those of us engaged in public policy we need to be honest in our review of the past three years. We learned several lessons that we will need for the future.

First, government was too big. While few in government want to admit it, we were all just a bit too complacent in the past. Today we perform needed services with far fewer resources. We have taken $170 million out of the budget over the past five years. We have reduced the number for public employees and now have a budget that is smaller in nominal dollars than it was in 2007. There is little doubt that some desired services have been curtailed, but the city's essential services continue successfully even with fewer resources.

Second, to "kick the can down the road" is a prescription for serious problems. There is a natural tendency for policy-making bodies and in human nature, to put off decisions until they have to be made. Often, delay, "foot-dragging," "temporary patches" are used in the hope that conditions will change or that a problem will be suspended long enough to becomes someone else's issue. I would argue that much of State budgeting over the past two decades falls in this category. But putting off a decision or to delay handling a serious problem never bears sound results.

Finally, if there is one thing that I have learned in my professional life it's that a problem should be dealt with directly and swiftly. Waiting only reduces your options for resolution and often exacerbates the problem itself. We should learn the lesson that public policy needs to be grounded in reality and needs to be implemented for its stated purpose. We should not, as has been done, adopt one policy to "make up for" the difficulties in implementing another. The cost consequences of this policy will largely fall on future generations, so that costs and benefits never are "squared up" in the same time frame.

Last year, I indicated an immediate threat to our future was the potential for the state to take funds from local government. A combination of sound legislative action and the passage of Proposition 22 have reduced this threat. But alas-we aren't done yet.

Yesterday's budget announcement has some encouraging provisions to rein in state spending, just like every city or county in California has done for the past several years. But, under a vague outline for something called "realignment," the Governor indicated he plans to eliminate local redevelopment agencies as part of a proposal to return many functions now performed by the state to local government.

Upon initial review, Long Beach will lose out annually on millions of dollars that are re-invested into areas of the city with the most entrenched poverty and crime. The proposal takes away a vital tool for lifting up our urban core and to what end? The funds don't go towards eliminating the state's deficit but instead are shifted to pay another bill the state can't otherwise afford. One thing is clear: at-risk communities across California lose out and the winners will be happy only for a while.

Policy makers may find comfort and support in satisfying the desires of interest groups in the present, but they sacrifice our future. As George Bernard Shaw said, "the government with the policy to rob Peter to pay Paul can be assured of the support of Paul."

We will all need to watch this issue closely, since it promises to be a significant part of the budget reform in Sacramento and could put local resources at risk. As we all know, the devil is in the details.

While we continue to manage our budgets well, we will have shortfalls for the foreseeable future. In my budget message this year I indicated that these deficits are being driven primarily by increased pension costs. The increases are a result of massive losses by the Public Employees Retirement system and the increased benefits given to employees in 2001. Pension costs will rise to nearly 45 percent of the public safety budgets by 2014, which means for every dollar of salary we pay, another 45 cents will be needed for pension obligations. The city's total unfunded pension liability is over $1.2 billion and rising.

Indeed, the added payments recently required by PERS do not even keep pace with our growing liability. It's very similar to a mortgage with negative amortization; the principle keeps increasing every year.

These costs are the sword of Damocles hanging over our city. We simply cannot afford to pay them. If we do not reform our pension system the costs will outstrip our capability to provide essential services. Police, fire and all quality of life service will be reduced. Contracting with other agencies, such as the county, may be necessary to provide basic services.

This year, I proposed a thoughtful, relatively painless way to help solve our city's pension problem. Since employees pay little of their pension costs and are held harmless for the CalPERS fund's investment losses, I suggested that contracted raises be applied to the employee share of pension costs. Over the next several years the employee's contribution would increase until their full and fair share was reached. Employees would not see the raise in their check, but their pay would not decline and we could gradually get to a point where they were paying their fair share.

In addition, I proposed that new employees, would have new pension rules. For public safety, the new retirement age would be 55 rather than 50 and the formula would change from 3 percent per year of service to 2 percent. For all other employees the retirement age would move from 55 to 60 and the formula from 2.5 percent to 2 percent. These are reasonable changes that are consistent with a modern workforce and actuarially sound.

Importantly, these changes would have saved money now and reduced future budget deficits. Without these changes the cumulative deficit from fiscal years ‘12 to ‘14 would be approximately $59 million; with the changes, the deficit would be cut more than half, to $28 million. At these reduced levels, we could still provide for our essential services, including public safety.

I proposed these changes in the spirit of shared sacrifice and with hope that our employee groups would look beyond their immediate self-interest to a larger more sustainable and stable future. I was to be disappointed.

While I applaud the three employee organizations, including our City's management group, which agreed to the changes, the 3 largest groups -- police, fire, and the machinists -- took their raises and rejected the reforms.

I know it's difficult to explain to any organization that sacrifice needs to be made and no one wants to be first. But the future of public pensions is so clear -- they cannot be sustained. Claims were made and will be again that we are putting life and property at risk calling for reductions in all areas. Not so, it is the unreasonable rejection of reform and an ingrained entitlement mentality that puts our City at risk.

Earlier in this speech I indicated there were lessons that we should learn from the past three years. We need to put those lessons to use here. We cannot allow government to grow to pay for unreasonable and unsustainable pensions. At this time in the economic recovery, we should not encumber businesses or individuals with a greater tax burden.

We cannot and should not "kick the can down the road". To leave an even larger burden for our children and grandchildren would be immoral. They will receive no benefit from this program but will bear the painful costs.

We should and must attack this problem now. We have more options for resolution and the pain will be far less now than in the future. We created this problem and we need to solve it.

We will continue to engage in collective bargaining to bring these changes about. I know they must be made and I am determined to see them through. That is my responsibility to all of you. My job is to help protect your future and your children's future and solve today's problems today. Unfortunately, I'm not optimistic for a meaningful outcome.

Therefore, if I am unsuccessful in bargaining for these changes I will propose a ballot initiative that will constrain future Mayors and Councils from providing any more in pension benefits than those outlined above. These restrictions, if passed, will go into effect when the current contracts with our unions end.

There is too much at stake to ignore this problem or to pass it on to those who had no hand in its creation. Our future demands that we stabilize our finances and put our house in order. If we can achieve stability, have a great future ahead of us in Long Beach...

...We have weathered a great storm and been tested and tempered by hard times. We have a great place to live right on the Pacific Ocean. We have a vibrant and growing creative class whose energy will propel us into a new and robust economy. We have become a destination for travel from all over the county. We have a people willing to help one another and work cooperatively toward a better future. We have good public schools and ready access to institutions of higher learning. We have great climate, and the means to generate economic growth. I love this City; I love its people and admire its spirit.

And I am proud to lead Long Beach. I passionately accept the responsibility you've given me. Working together, we will have a bright future-and we will fulfill those ambitions.