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Speaker 1: Can'f I am six forty.

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Speaker 2: You're listening to the John Cobel podcast on the iHeartRadio app.

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Speaker 1: Welcome to the show.

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Speaker 2: Every day, we're here from one until four o'clock, and

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Speaker 2: then after four o'clock John Cobelt Show on demand. You

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Speaker 2: demanded we give it to you after four. It's the podcast,

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Speaker 2: same as the radio show, and we want to welcome

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Speaker 2: you warmly to bankrupt Los Angeles.

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Speaker 1: It is official.

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Speaker 2: LA is blown through the budget so badly that it

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Speaker 2: looks like there's going to be a lot of layoffs.

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Speaker 2: I mean, this is really not any different than what

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Speaker 2: Elon Musk is doing in Washington, d C. I wonder

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Speaker 2: if we're gonna hear just as much criticism for these

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Speaker 2: layoffs because the budget, the budget deficit is close to

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Speaker 2: a billion dollars. And Michael Monks, who never tires of

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Speaker 2: covering Los Angeles government, bless you.

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Speaker 1: I'm glad to be here.

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Speaker 3: To talking John. I've been talking about this for months.

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Speaker 3: I mean, going back to last fall. I had a

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Speaker 3: conversation with the LA City Controller looking at the numbers

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Speaker 3: that he had posted, and I said, this doesn't look good.

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Speaker 3: But I wasn't feeling a sense of urgency from city

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Speaker 3: Hall about how they were going to deal with this thing,

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Speaker 3: and all it has done since then is balloon to

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Speaker 3: the point where they had a pretty terrifying meeting at

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Speaker 3: city Hall, at the city council meeting yesterday with the

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Speaker 3: city administrator, who delivered some pretty horrifying news.

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Speaker 2: So the city controller was public that the ship was

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Speaker 2: going down, and everybody kept dancing.

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Speaker 1: That's exactly right.

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Speaker 3: I mean, he was saying, look, these are the areas

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Speaker 3: where we're overspending, particularly in their legal settlements.

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Speaker 1: We've talked about this before.

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Speaker 3: I mean, they are paying out the wazoo legal settlements.

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Speaker 3: Just this week they approved another eight million dollars in

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Speaker 3: legal payouts. This particular case involved the shooting death at

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Speaker 3: the hands of an LAPD officer, So those are always

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Speaker 3: very expensive settlements. But at the budget committee meeting after

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Speaker 3: that council meeting, they had twenty eight more lawsuits to

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Speaker 3: go through.

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Speaker 1: That's just this week. The bulk of these.

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Speaker 3: Lawsuits, what are they everything. The tyranny that I have

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Speaker 3: found in these lawsuits is they're often related to infrastructure.

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Speaker 3: Sometimes they're simple, I tripped on your bad sidewalk. Pay

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Speaker 3: me two hundred and fifty thousand dollars, or maybe a

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Speaker 3: poll fell on me and the injury was quite severe,

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Speaker 3: pay me more. And so when they pay out these lawsuits,

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Speaker 3: they find that they have less money to invest in

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Speaker 3: the infrastructure to prevent these injuries from happening in the

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Speaker 3: first place. They are hundreds of millions of dollars over

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Speaker 3: budget just in legal payouts alone. But that's not the

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Speaker 3: only problem. Sales tax down, property tax down, business tax down,

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Speaker 3: tourist tax all down. And then of course the fires came,

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Speaker 3: and now they are looking at a billion dollar budget

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Speaker 3: shortfall just as the new budget is set to be crafted.

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Speaker 1: And this is before the fire lawsuits come through. This

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Speaker 1: is only going to get worse.

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Speaker 3: Do you want to hear how city ministry man's able

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Speaker 3: to put it in perspective?

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Speaker 1: Yes, let's hear it if Eric has that sound.

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Speaker 4: The severity of the revenue decline paired with rising costs,

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Speaker 4: has created a budget gap that makes layoffs nearly inevitable.

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Speaker 4: We are not looking at dozens or even hundreds of layoffs, but.

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Speaker 3: Thousands, thousands of layoffs, thousands of layoffs. And think about

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Speaker 3: where that's going to come from, because right now, politically

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Speaker 3: impossible to lay off firefighters. Right, you can't do that.

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Speaker 3: You've already got that problem going on. The police can't

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Speaker 3: do the police. And those are the two most expensive departments.

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Speaker 3: So again, let's think about the infrastructure, your sidewalks, your

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Speaker 3: broken potholes, your overcrowded animal shelters, the people that you

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Speaker 3: need to call at the various city offices to get

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Speaker 3: permits or any of that stuff done. Those are the

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Speaker 3: departments that tend to be most vulnerable when the budget

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Speaker 3: hits the fan, which is going to.

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Speaker 1: Create more hazards, more lawsuits, and a wider deficit.

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Speaker 3: And so what I will be looking for, as you're

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Speaker 3: intrepid reporter at city Hall, yes, is will they finally

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Speaker 3: have a sense of urgency? Will I hear passion in

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Speaker 3: the voices of the council members on how they're going

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Speaker 3: to fix this? I'll tell you this much Mayor Bass

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Speaker 3: has she The way the budget works, the mayor releases

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Speaker 3: a budget first, and then the city council sort of

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Speaker 3: goes through it. The departments come in, they make their

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Speaker 3: case on what they need, the public gets the weigh in,

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Speaker 3: and it's usually about an eight billion dollar thing. They

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Speaker 3: move some things around and Ultimately they vote and approve it.

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Speaker 3: The mayor signs that, Well, the mayor has come out

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Speaker 3: with like, don't worry, We've got a plan that we're

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Speaker 3: gonna deal with this. And I'll show you. I'm holding

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Speaker 3: in my hand so you can see. I know our

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Speaker 3: listeners can't see it. But it's basically like the first

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Speaker 3: page of a PowerPoint presentation. This isn't a plan. I mean,

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Speaker 3: these are stating the obvious. We want to reduce our

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Speaker 3: liability costs. Those are those legal settlements, and that's all

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Speaker 3: it says about it. No, no one needs to reduce

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Speaker 3: the We got to lower that down because that's too much.

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Speaker 2: We got to spend a ton of money repairing all

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Speaker 2: the infrastructure that's causing people to a trip and fall,

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Speaker 2: and it's falling on their edge exactly.

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Speaker 3: And I'll point out an interestingly worded piece of this

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Speaker 3: image that she put out on social media. Realize payroll

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Speaker 3: and benefit savings. That sounds like layoffs. That's layoffs.

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Speaker 1: That sounds like layoffs, but either on the payroll or

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Speaker 1: off the payroll.

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Speaker 3: There are many unionized employees who are set to get

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Speaker 3: pay raises very soon.

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Speaker 1: There are union contracts that are in effect.

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Speaker 3: They may have to delay pay raises for these employees,

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Speaker 3: they may have to renegotiate these union contracts to bring

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Speaker 3: those costs down.

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Speaker 1: There's going to be a lot of this.

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Speaker 2: This has been a very badly managed city for twenty years,

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Speaker 2: going back to Viragosa days. He dug a hole for

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Speaker 2: them back in the late two thousands with a whacko

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Speaker 2: set of union contracts that had pay raises, and it's

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Speaker 2: been downhill ever since.

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Speaker 3: In this time last year, I was sitting through all

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Speaker 3: these budget meetings and when we think about layoffs, let

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Speaker 3: me tell you how difficult this is going to be.

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Speaker 3: There were proposals this time last year as the budget

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Speaker 3: was being crafted where the city administrator came out and said,

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Speaker 3: let's get rid of positions that are not filled. These

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Speaker 3: are positions that have just been on the payroll. They're

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Speaker 3: funded because the position could be filled, but some of

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Speaker 3: these positions had remained empty for years, and he was like,

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Speaker 3: let's get rid of these, let's put that money in

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Speaker 3: the general fund and we'll stave off some of the

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Speaker 3: problems that that we might have.

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Speaker 1: This was before the situation.

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Speaker 3: Looked as dire as it does now, and there was

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Speaker 3: a lot of pushback over that. I mean, there was

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Speaker 3: fighting over retaining some of these positions that were empty.

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Speaker 3: So think about the debate that's ahead of us about

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Speaker 3: getting rid of people that exist.

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Speaker 2: So we were paying, at least on paper, it was

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Speaker 2: in the budget for positions that were never filled. Yeah,

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Speaker 2: and what happened to that money. That money was supposed

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Speaker 2: to go in the general fund?

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Speaker 1: Yeah, and it never did.

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Speaker 3: It did, And now that money's money's gone.

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Speaker 1: And then what is worse is.

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Speaker 3: Because another another piece of Marabas's plan to deal with

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Speaker 3: is I'm sure she'll give us more details very soon.

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Speaker 3: She's supposed to release her budget in April. She wants

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Speaker 3: she here now, Yeah, she's not in Africa currently, Okay,

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Speaker 3: she is in the city.

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Speaker 1: She says.

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Speaker 3: Preserve our reserve fund. Now, this is what you might

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Speaker 3: have some savings in case you lost your job or something.

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Speaker 3: I need to have a certain amount of months. Sure

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Speaker 3: I can pay for stuff while I'm looking at it.

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Speaker 3: Fall at this place, there's nothing on my desk. Everybody

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Speaker 3: here has big savings accounts. What a business, right, Yeah? Yes,

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Speaker 3: but their reserve fun They like to keep it at

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Speaker 3: least five percent of the total budget. So about four

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Speaker 3: hundred million dollars. It's less than two and a half percent,

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Speaker 3: so less than half their goal. One of the things

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Speaker 3: they want to do before the new budget is created,

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Speaker 3: they want to fill that back up because it's raining,

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Speaker 3: the rainy days.

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Speaker 2: You know, my love about math. It's unforgivable completely, And

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Speaker 2: when stupid people fall into a big math hole, they

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Speaker 2: don't know what to do because you can't bs, you

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Speaker 2: can't put out a pressure release, you can't do a

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Speaker 2: lie and a dance and all the other tricks that

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Speaker 2: they have. Math is math, and they can't print money. See,

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Speaker 2: the federal government is printed thirty six trillion dollars. That's

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Speaker 2: why they can run up that huge debt. LA City

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Speaker 2: can't do that.

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Speaker 3: And LA doesn't expect as much federal money this year.

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Speaker 3: They ought a weird relationship right with the Church administration,

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Speaker 3: so they don't expect that. They've got to deal with

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Speaker 3: these fires and they already have their own.

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Speaker 2: So I gotta do something about you know, a billion

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Speaker 2: four they spend on homeless.

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Speaker 1: They can't keep doing that without the results.

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Speaker 3: I mean, at some point there's gonna be I mean,

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Speaker 3: the voters of La County said, yeah, we'll give you

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Speaker 3: more this time around. We'd like to see some results.

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Speaker 3: They're promising results this time, but we'll have to see it.

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Speaker 1: All those audits indicated nothing has changed. That's right.

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Speaker 3: And this is a city that has known about this

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Speaker 3: being on the horizon for a long time. If you

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Speaker 3: had known six months ago that you were gonna have

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Speaker 3: less money coming in and your expenses were creeping up,

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Speaker 3: you and your wife would have sat down and talked

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Speaker 3: about it. I think households across the county have probably

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Speaker 3: done that. Now, Like, let's think about what we can get.

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Speaker 3: What streaming service can I get rid of? Can I

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Speaker 3: get a second job?

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Speaker 2: But I don't understand. Do they live in some magic fairyland.

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Speaker 2: What do they do all day? Where do they talk

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Speaker 2: about all day? I mean when you had I mean,

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Speaker 2: when you have this kind of deficit looming, it should

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Speaker 2: be the only thing they're talking about and planning for

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Speaker 2: and gradually making the cuts leading up.

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Speaker 1: To the big moment. This is what I expressed.

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Speaker 3: You know, I try not that editorialized, but it has

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Speaker 3: shocked me since last fall, that lack of urgency, the

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Speaker 3: fact that they don't stop everything and say, oh, there

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Speaker 3: is a bad financial situation, because not only is this

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Speaker 3: just bad in general for any city government, but we're

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Speaker 3: talking about Los Angeles, one of the most important cities

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Speaker 3: in the entire world, that is going to be hosting

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Speaker 3: the Olympics in a few years, It's going to go

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Speaker 3: Super Bowls, All Star Games, the World Cup, and the

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Speaker 3: city already looks like hell yeah, and when are they

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Speaker 3: going to be able to address basic needs that residents

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Speaker 3: have when they can't pay their own bills? All right,

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Speaker 3: Michael Monks, excellent, Thank you, always a pleasure. We will

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Speaker 3: talk more about this when we come back. And this

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Speaker 3: is this is this is huge. A billion dollars for

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Speaker 3: an LA city budget is gigantic, and they're going to

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Speaker 3: have to do the big doge.

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Speaker 5: I think you're listening to John Cobalt on demand from

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Speaker 5: KFI AM six forty.

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Speaker 2: John Cobalt. I understand that the moist line has some vacancies,

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Speaker 2: and today is what is today, Thursday? Ah, we're only

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Speaker 2: twenty four hours away eight seven seven moist eighty six.

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Speaker 2: So if you've got something welling up inside you and

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Speaker 2: it needs to burst, I don't know if that sounded great.

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Speaker 2: Eight seven seven moist eighty six, eight seven seven, Moist

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Speaker 2: eighty six, or use the talkback feature on the iHeartRadio app. Well,

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Speaker 2: I hope you heard Michael Munk's report that we started

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Speaker 2: the show with. The LA City Council has got a

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Speaker 2: huge problem. And it's not the fire it's they're almost

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Speaker 2: a billion dollars in deficit for this fiscal year. Los

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Speaker 2: Angeles has overspent by about a billion dollars and it's

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Speaker 2: only a twelve billion dollar budget overall. So this is

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Speaker 2: a big cut and much of the spending is fixed.

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Speaker 1: They can't do.

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Speaker 2: Anything about the fire department is already only fifty percent funded.

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Speaker 2: You can't touch the police department and that's way understaffed.

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Speaker 2: They have a lot of union contracts that they're locked into.

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Speaker 2: They're going to have to cut a tremendous amount of jobs.

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Speaker 2: And this is I'm gonna I'm gonna enjoy this. All

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Speaker 2: the squealing about how terrible Elon Musk is and dozing

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Speaker 2: a lot of jobs out of existence, they're gonna have

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Speaker 2: to do the same thing. Because it's math. You know,

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Speaker 2: the federal government has a thirty six trillion dollar debt

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Speaker 2: and the only way to slow the rate of increase

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Speaker 2: is to cut jobs. Cut departments, stop spending money, stop

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Speaker 2: giving out grants. There's nothing else you can do. At

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Speaker 2: least we can print money, but that only goes so

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Speaker 2: far before you end up with a huge economic crisis

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Speaker 2: crash and it'll come out of nowhere. But this, this

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Speaker 2: is stupidity. I told you I have to do and

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Speaker 2: I told you so.

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Speaker 1: Dance here.

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Speaker 2: I told you Karen Bass is not up to the

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Speaker 2: job of being there because she had no executive experience,

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Speaker 2: including that executive experience in running anything in the city. Like,

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Speaker 2: she never had a budget she had to keep track of.

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Speaker 2: She was a legislator. Yeah, she had a few people

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Speaker 2: in her office whenever she was I forget. She's in

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Speaker 2: a state senate, the Assembly. She was a congresswoman. You know,

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Speaker 2: you got a small budget. You got a few people

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Speaker 2: in your office. Their salaries are pretty much set.

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Speaker 1: You don't have to think too hard.

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Speaker 2: Maybe you have to worry about how much you're going

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Speaker 2: to spend on the office Christmas party.

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Speaker 1: That's it.

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Speaker 2: Now she's inherited a city with thousands of employees, dozens

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Speaker 2: and dozens of departments, billions of dollars, and she, I

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Speaker 2: guess can't do math. The other day I saw that

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Speaker 2: sixty to seventy percent of California kids are not proficient

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Speaker 2: at math. You get up to eighth grade, right, it's

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Speaker 2: it's let's say sixty five percent kids are not proficient

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Speaker 2: at math. Well, five years later those kids are out

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Speaker 2: in the world, maybe they're going to community college for

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Speaker 2: a little remedial math. Eventually they're out in the workforce

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Speaker 2: and they still can't do math. You've heard of the

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Speaker 2: word illiterate. Illiterate means you can't read.

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Speaker 1: Right.

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Speaker 2: Well, there's another word you don't hear very often. It's

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Speaker 2: called enumerate. If you're enumerate, it means you can't do math.

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Speaker 2: You can't add some track, multiply, divide, just the basics. Okay,

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Speaker 2: we're not asking you to do high level calc. We're

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Speaker 2: not asking you do to the math required to send

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Speaker 2: a rocket to Mars. Elon Musk can do that because

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Speaker 2: he's really really smart. Karen Bass is really really not smart.

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Speaker 2: And I don't think it's so hard to read a budget,

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Speaker 2: to read a spreadsheet to see what your income is

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Speaker 2: and what your outgo is. But it was too much

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Speaker 2: for her. She's not good at this. Clearly, there was

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Speaker 2: no fire preparation. She had the bad judgment to leave

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Speaker 2: the country. She had cut the fire department quite a bit.

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Speaker 2: She has blown billions of dollars on homelessness to no

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Speaker 2: good outcome. I mean, there's only so many stupid things

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Speaker 2: you can do. And Eric Garcetti is responsible for a

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Speaker 2: lot of this. Eric Carsetti was a Karen Bass disaster

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Speaker 2: for nine and a half years. Karen Bass has been

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Speaker 2: a Karen Bass disaster for only two. So these are

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Speaker 2: bad people who make bad decisions, and they can't do math,

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Speaker 2: and they've got all kinds of excuses and nonsense. But

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Speaker 2: it really comes down to basic computing power in your brain.

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Speaker 2: How much brain power do you have? And she doesn't

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Speaker 2: have it, and neither does anybody on the city council.

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Speaker 2: Well there's a couple, but I'd say thirteen out of

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Speaker 2: the fifteen members of the city council don't have it.

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Speaker 2: And as Michael Monks pointed out, they knew about this

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Speaker 2: months ago. They knew about this, let's say six months

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Speaker 2: ago it was coming. They didn't do anything. They don't care.

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Speaker 2: They don't care. They wake up in the morning, their

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Speaker 2: brain is clouded with all their progressive political obsessions and

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Speaker 2: the nuts and bolts of governing is it's not why

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Speaker 2: they got in the business. They out of the business

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Speaker 2: is to do social justice. Nonsense. These are the people

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Speaker 2: who graduated from school without the capability of doing basic math. Now,

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Speaker 2: you can't have thirteen people on the council and the

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Speaker 2: mayor and all the administrators without the basic capability to

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Speaker 2: add and subtract. If you do, you end up with

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Speaker 2: this mess. And you know I already talked about root causes.

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Speaker 2: That's the root cause. The root cause is nothing more

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Speaker 2: than the inability to do the basic math that if

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Speaker 2: you're a good parent, you expect your child to master,

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Speaker 2: certainly by time they graduate high school. That's what you

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Speaker 2: expect of Well, Karen bask can't do that. She's had

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Speaker 2: over seven hundred days now, seven hundred and fifty days

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Speaker 2: to wake up in the morning, look at a budget

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Speaker 2: and do the addition and subtraction, and she can't. Will

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Speaker 2: We'll talk more about the specifics here. I want to

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Speaker 2: touch on some of the stuff Michael talked about, the

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Speaker 2: insane number of lawsuits and the death spiral. This is

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Speaker 2: a death spiral. You'll see.

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Speaker 1: The biggest mistake.

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Speaker 2: Let's put it to you this a way if Fort

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Speaker 2: Caruso is mayor do you think this would be a

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Speaker 2: story today?

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Speaker 1: Talk more, we come back.

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Speaker 5: You're listening to John Cobel's on demand from KFI AM sixty.

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Speaker 2: So Los Angeles city is broke. They have about a

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Speaker 2: billion dollar deficit for this year, which is big, and.

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Speaker 1: They don't know what to do.

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Speaker 2: The Karen Bass made a stupid one of many stupid

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Speaker 2: mistakes a few years ago. She gave out huge raises

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Speaker 2: which are coming due.

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Speaker 1: Uh, and.

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Speaker 2: They they're stuck in a hole here. They blow a

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Speaker 2: billion three on homelessness and gee, look at that. The

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Speaker 2: deficits about a billion dollars just with homelessness alone. If

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Speaker 2: they weren't giving away a billion three to crooked nonprofits

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Speaker 2: that steal the money and don't produce any results, just

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Speaker 2: that alone would solve the problem. But according to the

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Speaker 2: La Times, council members cannot unilaterally put a stop to

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Speaker 2: raises that are already part of an approved contract. See,

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Speaker 2: they thought when they gave away the store, they would

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Speaker 2: have labor peace as they call it, until twenty twenty six.

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Speaker 2: And that's when Karen Bass assumed she was going to

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Speaker 2: get reelected. And also six of the six or seven

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Speaker 2: of the council members. So they thought, Okay, we'll pay

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Speaker 2: off the unions to shut up and be quiet, and

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Speaker 2: then we'll all get re elected and deal with the

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Speaker 2: problems down the road. Legal settlements. The city doesn't take

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Speaker 2: anything to court. They don't challenge any lawsuits. They just

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Speaker 2: pay whatever the plaintiff wants. Yeah, sure, we'll write a check.

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Speaker 2: And now they're broke. You know, the police stuff they're

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Speaker 2: terrified of. You know, if cop goes crazy and beats

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Speaker 2: up some guy, that guy is gonna make so much

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Speaker 2: money it makes you want to volunteer to get beat

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Speaker 2: up by a police officer. It's like, yeah, give me

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Speaker 2: a beating. I'd like to walk away with many millions

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Speaker 2: of dollars.

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Speaker 1: The uh.

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Speaker 2: There's also all these people apparently are tripping over sidewalks,

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Speaker 2: or they claim they're tripping over sidewalks, and there's broken,

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Speaker 2: busted sidewalks everywhere. There's uprooted trees, you know, the roots

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Speaker 2: are coming out of the ground. Sidewalks get pushed out

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Speaker 2: a whack. People are always tripping on that, and it

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Speaker 2: adds up to hundreds and hundreds of millions of dollars.

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Speaker 2: They can't pay why is it in LA and other

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Speaker 2: cities don't have this problem because LA's infrastructure is broken.

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Speaker 2: They don't want to spend the money on it. They

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Speaker 2: give it away to unions. Well, if you don't spend

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Speaker 2: money on the infrastructure, then people are going to get

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Speaker 2: hurt because of the collapsed infrastructure, and it costs you

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Speaker 2: more money. Now, an intelligent person would figure that out.

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Speaker 2: Karen Bass doesn't have the firepower there. I'll tell you

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Speaker 2: how stupid things have gotten. You're not going to believe this.

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Speaker 2: But in the fiscal year that ended in June of

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Speaker 2: twenty twenty four, the City of Los Angeles lost money

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Speaker 2: on parking tickets. They lost money handing out parking tickets.

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Speaker 2: Now they the city gives out two million parking tickets

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Speaker 2: a year, two million tickets, and they lost money. They

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Speaker 2: lost a lot of money. The city collected one hundred

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Speaker 2: and ten million dollars in parking fines, but the costs

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Speaker 2: for salaries, equipment, processing, pensions, and other liabilities it cost

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Speaker 2: them one hundred and seventy six million dollars. They pay

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Speaker 2: so much, They pay so much money to parking enforcement agents,

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Speaker 2: that wonder those people have such a bad smug snotty attitude.

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Speaker 2: I've never the people have come across to have the

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Speaker 2: worst attitudes are these parking enforcement agents.

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Speaker 1: And now I understand why.

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Speaker 2: I don't know what the hell they're making, but it's

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Speaker 2: one hundred and seventy six million dollars in costs and

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Speaker 2: only one hundred and ten million dollars in revenue they're

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Speaker 2: getting in parking fines. Used to be a profit center

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Speaker 2: for the city, but not since twenty sixteen. And if

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Speaker 2: you can't make money handing out parking tickets and you're

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Speaker 2: handing out two million of them, that is gross and competence.

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Speaker 2: Who's in charge of that? What blockhead? What brainstem? What vegetable?

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Speaker 2: Is running a parking ticket department? And actually lost lost

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Speaker 2: sixty five million dollars. How do you lose sixty five

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Speaker 2: million dollars writing tickets? That's not that's not possible, But

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Speaker 2: they did. I mean that that's helpless.

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Speaker 1: Here.

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Speaker 2: I thought the reason they hand out somebody stupid tickets

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Speaker 2: is because it makes a lot of money. Actually, the

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Speaker 2: more tickets they hand out, the more they lose. If

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Speaker 2: they fired all the parking enforcement agents, they'd make more money.

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Speaker 2: That would be one hundred and seventy six million off

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Speaker 2: the books. Wow, they'd be sixty five million dollars ahead

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Speaker 2: on the budget if they just fired all the parking

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Speaker 2: enforcement agents. I don't know what kind of golden contracts

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Speaker 2: these people got. How could that be? I mean sometimes

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Speaker 2: things boil down they're just flat out stupidity. So they

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Speaker 2: don't have much of a reserve. And the city controller,

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Speaker 2: Kenneth Maheas said, all this is not caused by an

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Speaker 2: outside crisis, but decisions made at city hall. We didn't

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Speaker 2: have a COVID crisis or a global recession. This is

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Speaker 2: something from happened that happened from the inside. Now Zabo claims, well,

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Speaker 2: what's his name? Uh, what's his first name? Mad Zabo?

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Speaker 2: He's been a political hack for Bass city administrative officer.

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Speaker 2: He's trying to blame tariffs. There's no tariffs. No tariffs

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Speaker 2: have happened yet, what's he talking about. He's such they

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Speaker 2: blame Trump. You believe this. They lose sixty five they

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Speaker 2: lose sixty five million dollars on parking tickets and they

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Speaker 2: actually blamed Trump.

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Speaker 1: Oh. The plan to crack down and immigration.

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Speaker 2: Right, getting rid of the legal aliens who are a

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Speaker 2: huge cost to government that's creating a bunch of deficit.

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Speaker 1: What a bunch of stupid liars.

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Speaker 2: All right, when we come back, I want to play it.

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Speaker 2: Eric Leonard from NBC four former star KFI reporter, Uh,

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Speaker 2: he has another aspect of this. You may have heard

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00:25:03,840 --> 00:25:08,160
Speaker 2: this story about a guy in the rap music business

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00:25:09,440 --> 00:25:12,800
Speaker 2: who was a gang leader. His name is Eugene Henley Junr,

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00:25:13,400 --> 00:25:17,560
Speaker 2: also known as Big U. Well, the Big U was

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00:25:17,680 --> 00:25:21,080
Speaker 2: shaking millions of dollars out of LA. Apparently he had

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00:25:21,119 --> 00:25:25,320
Speaker 2: a set of corrupt nonprofits and the city was handing

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00:25:25,400 --> 00:25:29,359
Speaker 2: money to Big U. Handover fist. Listen to this report

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Speaker 2: from Channel four's Eric Leonard when we come back.

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Speaker 5: You're listening to John Cobels on demand from KFI Am

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00:25:37,840 --> 00:25:38,359
Speaker 5: six forty.

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00:25:39,160 --> 00:25:42,720
Speaker 2: John Cobelt's show Moistline is eight seven seven Moist eighty

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00:25:42,760 --> 00:25:45,040
Speaker 2: six eight seven seven Moist eighty six. You used the

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00:25:45,040 --> 00:25:47,880
Speaker 2: talk back feature on the iHeart app. We have vacancies.

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00:25:48,800 --> 00:25:52,120
Speaker 2: We didn't do it for a couple of weeks and

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00:25:52,240 --> 00:25:56,760
Speaker 2: we have vacancies now. We have been covering for much

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00:25:56,760 --> 00:26:02,000
Speaker 2: of the hour. This massive budget is in La. The

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00:26:02,119 --> 00:26:06,040
Speaker 2: dunches that are on the city council and Chief Karen

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00:26:06,080 --> 00:26:10,320
Speaker 2: bass have a billion dollar deficit, which is huge for

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00:26:10,440 --> 00:26:14,240
Speaker 2: a city of LA's size. It's not the federal government

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00:26:14,920 --> 00:26:18,879
Speaker 2: and it's a city, and they can't print their own money,

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00:26:19,280 --> 00:26:21,880
Speaker 2: which is how the federal government can rack up thirty

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00:26:21,880 --> 00:26:26,160
Speaker 2: six trillion dollars. Apparently, they lose money on parking tickets,

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00:26:26,960 --> 00:26:30,159
Speaker 2: and they give a huge amounts of money to the

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00:26:30,160 --> 00:26:34,040
Speaker 2: homeless industry. Much of that is stolen. They don't give

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00:26:34,040 --> 00:26:40,160
Speaker 2: money to the fire department, it's only half funded. One

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00:26:40,200 --> 00:26:42,159
Speaker 2: of the other places they give is they give to

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00:26:43,680 --> 00:26:51,160
Speaker 2: rap industry players who were formerly gang members. I'm talking

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00:26:51,200 --> 00:26:54,640
Speaker 2: about Eugene Henley Junior, known as Big U. They've heard

464
00:26:54,640 --> 00:26:59,960
Speaker 2: this news story. He used to lead the gang Rolling Six,

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00:27:01,040 --> 00:27:05,359
Speaker 2: and then he reinvented himself as a gang interventionist, among

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00:27:05,400 --> 00:27:10,840
Speaker 2: other things. Turns out, according to the prosecutors, he was

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00:27:11,000 --> 00:27:14,680
Speaker 2: shaken down the city with his fake nonprofits for millions.

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00:27:14,880 --> 00:27:17,480
Speaker 1: Eric Leonard from NBC four has the story.

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00:27:17,720 --> 00:27:20,280
Speaker 6: The most surprising discovery that we've had so far is

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00:27:20,280 --> 00:27:24,639
Speaker 6: that this nonprofit called the Ex Offender ex Offender Fellowship,

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00:27:24,640 --> 00:27:28,440
Speaker 6: which was also doing business under another nonprofit's name called

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00:27:28,920 --> 00:27:33,040
Speaker 6: Developing Options, that the city says were essentially one in

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00:27:33,160 --> 00:27:36,400
Speaker 6: the same and they say the state has told us

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00:27:36,800 --> 00:27:40,600
Speaker 6: that those entities have faced suspensions by the state tax authority,

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00:27:40,640 --> 00:27:43,919
Speaker 6: the Franchise Tax Board. Meanwhile, the City of LA has

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00:27:43,960 --> 00:27:47,639
Speaker 6: been paying millions of dollars into these organizations, and the

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00:27:47,680 --> 00:27:48,960
Speaker 6: amounts have increased in.

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00:27:48,960 --> 00:27:49,919
Speaker 1: The last few years.

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00:27:50,040 --> 00:27:53,439
Speaker 6: The California Franchise Tax Board issued a suspension notice in

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00:27:53,480 --> 00:27:57,040
Speaker 6: April twenty twenty four for one of the nonprofits operated

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00:27:57,080 --> 00:28:01,400
Speaker 6: by Eugene Henley Junior, who federal secutors in LA announced

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00:28:01,440 --> 00:28:06,720
Speaker 6: wednesday faces racketeering and corruption charges for allegedly misusing money

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00:28:06,800 --> 00:28:10,720
Speaker 6: meant for the city's gang intervention efforts. Henley's most recent

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00:28:10,800 --> 00:28:13,479
Speaker 6: contract with the city shows a payment of nearly eight

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00:28:13,600 --> 00:28:17,000
Speaker 6: hundred thousand dollars due in July twenty twenty four, the

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00:28:17,040 --> 00:28:20,159
Speaker 6: final installment of a four year agreement that paid his

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00:28:20,280 --> 00:28:24,520
Speaker 6: groups more than two point two million dollars for intervention. Henley,

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00:28:24,680 --> 00:28:27,439
Speaker 6: seen here in a red carpet photo, began forming the

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00:28:27,480 --> 00:28:30,560
Speaker 6: nonprofits in two thousand and nine. According to state records,

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00:28:31,000 --> 00:28:34,680
Speaker 6: they began receiving city gang intervention funding as far back

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00:28:34,720 --> 00:28:35,600
Speaker 6: as twenty eleven.

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00:28:35,920 --> 00:28:38,280
Speaker 1: Between twenty eighteen and twenty twenty three.

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00:28:38,400 --> 00:28:42,160
Speaker 6: LA Controller payment records show Henley's groups received around half

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00:28:42,200 --> 00:28:45,360
Speaker 6: a million dollars a year then in twenty twenty three,

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00:28:45,440 --> 00:28:49,560
Speaker 6: a significant increase that followed then Mayor Eric Garcetti's efforts

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00:28:49,720 --> 00:28:53,080
Speaker 6: to increase funding for intervention work after the rise in

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00:28:53,160 --> 00:28:57,120
Speaker 6: violent street crime that followed the COVID nineteen pandemic. Looking

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00:28:57,120 --> 00:29:00,520
Speaker 6: at the tax records for the Ex Offender Fellowship, which

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00:29:00,560 --> 00:29:04,200
Speaker 6: includes the city money and private donations, you can see

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00:29:04,200 --> 00:29:06,520
Speaker 6: its revenue went from around half a million dollars a

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00:29:06,600 --> 00:29:09,280
Speaker 6: year to nearly eight hundred thousand, then to nearly two

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00:29:09,360 --> 00:29:12,880
Speaker 6: million for twenty twenty three, the last tax return available.

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00:29:13,240 --> 00:29:16,080
Speaker 6: Where was the money going? The tax return show while

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00:29:16,160 --> 00:29:19,360
Speaker 6: Eugene Henley Junior was paid ninety five thousand dollars as

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00:29:19,440 --> 00:29:22,640
Speaker 6: president and director, nearly all the money collected went to

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00:29:22,680 --> 00:29:27,959
Speaker 6: compensate unnamed top staff members, including corporate officers, directors, and trustees.

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00:29:28,440 --> 00:29:31,440
Speaker 6: According to the criminal complaint, Henley diverted much of that

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00:29:31,520 --> 00:29:33,760
Speaker 6: money to his personal bank accounts, and.

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00:29:34,000 --> 00:29:36,080
Speaker 1: The FED say he allegedly.

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00:29:35,600 --> 00:29:39,000
Speaker 6: Pocketed tens of thousands of dollars in donations intended for

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00:29:39,080 --> 00:29:42,600
Speaker 6: the groups, including a twenty thousand dollars contribution from an

512
00:29:42,720 --> 00:29:46,520
Speaker 6: NBA All Star. As part of this wide ranging criminal complaint,

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00:29:46,600 --> 00:29:49,200
Speaker 6: Henley is also accused by the FEDS of failing to

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00:29:49,240 --> 00:29:52,400
Speaker 6: file accurate tax returns for many years and a scheme

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00:29:52,520 --> 00:29:55,720
Speaker 6: that was designed to boost his apparent income in order

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00:29:55,760 --> 00:29:57,280
Speaker 6: to qualify for a home loan.

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00:29:57,520 --> 00:29:58,160
Speaker 1: Now, we asked the.

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00:29:58,120 --> 00:30:00,640
Speaker 6: Mayor's office about it's oversight of the U the programs.

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00:30:00,640 --> 00:30:03,720
Speaker 6: The Mayor's office didn't respond to our specific questions, but

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00:30:03,800 --> 00:30:06,800
Speaker 6: said in a message this afternoon the city has strict

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00:30:06,920 --> 00:30:12,000
Speaker 6: oversight over these programs, but the complaint alleges a sophisticated

522
00:30:12,040 --> 00:30:15,200
Speaker 6: effort to thwart the rules. The state's Franchise Tax Board

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00:30:15,240 --> 00:30:18,120
Speaker 6: gave us some general information about what should happen to

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00:30:18,160 --> 00:30:21,000
Speaker 6: a nonprofit that's been suspended from doing business, but said

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00:30:21,200 --> 00:30:23,160
Speaker 6: it could not discuss this specific case.

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00:30:23,320 --> 00:30:29,320
Speaker 2: Of course, nobody can discuss it the mayor's office. Why

527
00:30:29,360 --> 00:30:32,880
Speaker 2: did you call up any random kindergarten. You could probably

528
00:30:32,920 --> 00:30:36,440
Speaker 2: get those five year olds to give you a better guidance.

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00:30:37,680 --> 00:30:40,360
Speaker 2: They know that these people are ripping off the city.

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00:30:40,400 --> 00:30:43,480
Speaker 2: They don't care, and I think that's a hard.

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00:30:43,240 --> 00:30:47,360
Speaker 1: Thing for people to understand. I am sure many people

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00:30:47,520 --> 00:30:54,080
Speaker 1: in office knew that Eugene Henley Big U was ripping

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00:30:54,240 --> 00:31:02,560
Speaker 1: off Garcetti's gang intervention funding programs. They don't care. This

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00:31:02,680 --> 00:31:04,840
Speaker 1: is part of the social justice movement.

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00:31:07,960 --> 00:31:10,360
Speaker 2: By the way, what they laid out, that's the blueprint

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00:31:10,360 --> 00:31:12,040
Speaker 2: for all the homeless nonprofits too.

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00:31:12,920 --> 00:31:14,080
Speaker 1: You take a big chunk.

538
00:31:13,840 --> 00:31:19,400
Speaker 2: Of money, several million dollars, you pay yourself, then you

539
00:31:19,440 --> 00:31:23,560
Speaker 2: pay all your friends and relatives. You make them board

540
00:31:23,600 --> 00:31:27,840
Speaker 2: members and trustees, and you give them titles, and it

541
00:31:27,840 --> 00:31:30,840
Speaker 2: looks like you have a busy, corporate style operation going on.

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00:31:32,640 --> 00:31:34,680
Speaker 2: None of the money went to gang in revenge, like,

543
00:31:34,760 --> 00:31:37,160
Speaker 2: none of the money goes to get the homeless off

544
00:31:37,160 --> 00:31:40,760
Speaker 2: the streets, like, none of the money goes to lay

545
00:31:40,800 --> 00:31:45,320
Speaker 2: down high speed rail. These are all criminal rackets that

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00:31:45,360 --> 00:31:48,360
Speaker 2: the people handing out the money in government know is

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00:31:48,400 --> 00:31:51,560
Speaker 2: going on. I mean, they know the homeless people are

548
00:31:51,560 --> 00:31:55,320
Speaker 2: still on the street. They know that the gangs are

549
00:31:55,360 --> 00:31:58,680
Speaker 2: still doing what gangs do. They know there's no high

550
00:31:58,720 --> 00:32:02,880
Speaker 2: speed rail built. They're in charge of handing out the money.

551
00:32:03,080 --> 00:32:05,360
Speaker 2: You don't see them complaining, do you. It's always some

552
00:32:05,520 --> 00:32:09,920
Speaker 2: outside investigation. It's always a federal investigation or an audit,

553
00:32:10,360 --> 00:32:13,560
Speaker 2: or maybe a media expose. You notice the people handing

554
00:32:13,560 --> 00:32:15,520
Speaker 2: out the money, never say hey.

555
00:32:15,440 --> 00:32:18,960
Speaker 1: We've been robbed. I mean, if.

556
00:32:20,520 --> 00:32:25,080
Speaker 2: If I was robbed, I'd know and I'd say something

557
00:32:25,080 --> 00:32:28,400
Speaker 2: about it. I'd try to do something about it. Report

558
00:32:28,440 --> 00:32:32,200
Speaker 2: the crime. The people who are victims of the crime, Well,

559
00:32:32,400 --> 00:32:34,760
Speaker 2: the public is the victims of the crime. But the

560
00:32:34,880 --> 00:32:38,000
Speaker 2: people who are supposed to be safe keeping our money,

561
00:32:39,800 --> 00:32:42,560
Speaker 2: the money is stolen right out from under their noses.

562
00:32:42,680 --> 00:32:48,160
Speaker 2: You notice they never complain, like Karen Bass, never says, Wow,

563
00:32:48,440 --> 00:32:50,320
Speaker 2: look at all that homeless money that was stolen by

564
00:32:50,320 --> 00:32:54,240
Speaker 2: the nonprofits. Wow, look at all the money gang invenged

565
00:32:54,320 --> 00:33:00,560
Speaker 2: money stolen by this Eugene Henley Jr. You never see

566
00:33:00,560 --> 00:33:02,760
Speaker 2: the high speed rail executives gone, hey, hey.

567
00:33:02,800 --> 00:33:04,720
Speaker 1: Who took the money? We don't have any high speed rail.

568
00:33:06,600 --> 00:33:12,760
Speaker 2: No, all that COVID unemployment money did Did the labor

569
00:33:12,800 --> 00:33:14,880
Speaker 2: secretary say, hey, people stole millions?

570
00:33:14,920 --> 00:33:17,000
Speaker 1: What we come back?

571
00:33:17,040 --> 00:33:19,560
Speaker 2: We're going to have Brad Garrett on from ABC News.

572
00:33:21,120 --> 00:33:24,360
Speaker 2: Brad is the crime and terrorism analyst. He's been looking

573
00:33:24,360 --> 00:33:31,000
Speaker 2: at this huge release of JFK papers on the assassination.

574
00:33:31,920 --> 00:33:35,680
Speaker 2: There's some interesting stuff in here about Lee Harvey Oswell

575
00:33:35,720 --> 00:33:38,480
Speaker 2: being tracked by the CIA for years before the assassination.

576
00:33:38,840 --> 00:33:39,440
Speaker 1: Tell you about it.

577
00:33:39,440 --> 00:33:42,480
Speaker 2: Debormark live in the KFI twenty four hour Newsroom.

578
00:33:42,680 --> 00:33:47,000
Speaker 5: You're listening to John Cobels on demand from KFI AM

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00:33:47,040 --> 00:33:47,600
Speaker 5: six forty