The issues.

1. Fragile Recovery of L.A.'s Middle Class

Maybe the middle class has a future in Los Angeles after all.

After years of an ever-widening gap between rich and poor, there are some indications that the area's recent economic growth has been generating the kinds of manufacturing and construction jobs needed to maintain a healthy middle class.

"I would be very surprised if you have not seen the situation improve given the vigorous growth in 1997 and 1998, and that you would start to see middle-class incomes revive," said Assemblyman Wally Knox, D-Los Angeles. In 1997, Knox founded the Assembly Committee on the California Middle Class in order to monitor the health of that segment of the state's population.

While there are no current figures on middle-class income in Los Angeles, the number of jobs paying middle-class salaries has grown over the last two years, and such growth is expected to continue - although there are several factors that could yet derail the trend.

After bottoming out in 1995 at 638,000, the number of manufacturing jobs in Los Angeles County has risen steadily. reaching 678,000 this year and expected to hit 682,000 in 1999, according to the Economic Development Corp. of L.A. County.

Construction is also making a comeback. As low as 98,000 in 1993, construction employment reached 113,000 this year and is projected to surpass 125,000 in the year 2000.

"I would say that we have seen the problem of income disparity shrink as we see more growth in manufacturing and construction," said Jack Kyser, chief economist at the EDC. "These are jobs where you can see good, middle-class wages."

Education is another middle-income job sector that has seen a revival, largely due to the Class Size Reduction Act, which requires fewer students per classroom and thus more teachers. Employment in education this year will rise 2.8 percent in L.A. County, according to the UCLA Anderson Forecast.

Public school teachers, along with most manufacturing and construction workers, are unionized, resulting in higher wages.

Knox and others see these job figures as the first indication of a possible reversal in L.A.'s middle class - a trend that goes back a decade or more. The greatest factor contributing to that shrinkage was the withering of the aerospace industry brought on by the end of the Cold War.

Between 1987 and 1996, L.A. County lost 241,000 manufacturing jobs, the majority of which were in aerospace.

The gap between rich and poor continued to widen even after the economy recovered from the recession of the early '90s. Between 1994 and 1996, the number of Angelenos in households with incomes between $40,000 and $100,000 declined by 12 percent, falling from around 2.2 million to 1.9 million, according to a study conducted by Knox's office.

During the same period, the number of households with incomes of less than $20,000 grew by 14 percent. At the other end of the scale, the number of L.A. residents in households with incomes of more than $100,000 grew by 30 percent in those years, while the number of people in households earning more than $1 million surged 52 percent.

Faced with such numbers, the belief is that Los Angeles has become a city of haves and have-nots - a small number of the wealthy who make their money in areas like entertainment or financial services, and a large number of the working poor who earn low wages in service industries.

While the gap appears to be narrowing, analysts point out that the current growth in manufacturing and construction is dependent on the economy's continued recovery. Construction. in particular, is highly cyclical. Already, the Asian economic crisis has resulted in a sharp slowdown in job creation in the San Francisco Bay area.

In addition, there are some fundamental reasons why Los Angeles will always be vulnerable to a polarization of wealth.

The city continues to be a magnet for immigrants, especially from Mexico and Latin America, who tend to lack education and finances. That limits them to low-income service jobs, at least for their first few years in the country.

Furthermore, the fact that Los Angeles Country is densely populated and has relatively strict regulations on industrial development could put a cap on manufacturing and construction jobs here.

The weakness of the Los Angeles Unified School District could also hinder the development of a middle class. Ross DeVol, economist at the Milken institute in Santa Monica. says that poor schools mean that L.A. is at a disadvantage in training the kind of workforce needed for the new, technology-dominant economy.

"We know from (aptitude) test scores that locals do not do well," DeVol said. "That definitely is a problem when it comes to income."

2. Labor Movement Basks in Newfound Power

After years of unrelenting decline. organized labor is flexing its muscles and achieving impressive results. Labor pushed the state's first and largest living wage ordinance through the L.A. City Council last year, defeated Proposition 226 on the this year's June ballot, and was a vital force in the victories rung up by Gov.-elect Gray Davis and Democratic legislators in the November elections.

The ambitions for 1999 are even bigger - including organizing efforts for 80,000 home health care workers, 3,000 airline contract workers at Los Angeles International Airport, and 1,600 more workers at Catholic Healthcare West.

Then there's politics. Next year, labor is expected to play a major role in elections for the L.A. City Council seats now held by Richard Alarcon and Richard Alatorre, as well as for the Los Angeles Unified School District's Board of Education.

There also are plans to push the Los Angeles County Board of Supervisors to adopt a living wage ordinance similar to the one passed last year in the city of Los Angeles. The target date would be late 1999 or early 2000.

The Living Wage Coalition will be pressuring employers subject to the living wage ordinance to choose the option of providing health care. City contractors currently have two options: They can pay $7.50 an hour with health benefits or $8.75 an hour without benefits. Many employers are opting for the higher wage because, with health costs rising again, it is seen as the cheaper option.

Ironically, L.A.'s labor movement as a whole may sit out what looks to be the biggest political battle next year: charter reform. The Service Employees International Union, which represents most city workers, is opposed to measures that would make it easier for union members to be fired by the mayor or his appointed managers, as the Elected Charter Reform Commission initially proposed. That puts it at odds with Mayor Richard Riordan.

On the other hand, the building trades have backed Riordan and his efforts to cut red tape by giving managers more power over their departments.

"At the end of the day, labor probably will stay out of the race," said Fabian Nunez, political director for the L.A. County Federation of Labor.

Looking into the next decade, labor has even more ambitious goals, such as organizing up to half of L.A.'s workers, extending the living wage to every jurisdiction in the region, and requiring employers to give more generous health plans to their union employees.

"We are shifting our focus from strictly servicing union members to organizing and political activism," said John Barton, organizing director at the County Federation of Labor.

As part of this push, unions also plan to pressure local jurisdictions to tie approvals of development projects to commitments to pay the living wage and allow workers the right to organize.

There are substantial obstacles to achieving these goals, especially on the organizing front. Los Angeles has never been a strong union bastion like older Eastern cities, and the new entrepreneurial economy that has emerged in the '90s is not exactly friendly to organized labor. Many of the strongly unionized manufacturing jobs - especially those in the aerospace industry - have left the region, while much of the new growth is taking place in industries that have virtually no union representation. like new media.

And while labor plans to take on some of these non-union industries, like health care, employer opposition is certain to be stiff.

"There is tremendous opposition from employers to unions, which means there will be some long, drawn-out battles that will consume huge amounts of resources," predicted Kent Wong, director of the Center for Labor Research and Education at UCLA. "There is a real debate about whether it is even possible to organize in some of these areas."

In the garment industry, for example, union pressures could prompt companies to move to Mexico or other Pacific Rim countries, where the cost of labor is often less than I percent of what it is in L.A.

"Industries today are not like the old industries, which had heavy, fixed assets that needed to be amortized over time," said Ezunial Burts, president and chief executive of the L.A. Area Chamber of Commerce. "They have to be more flexible and more nimble. And if the labor situation doesn't allow that in Los Angeles, they will go to regions of this country or the world where they don't face the labor pressure. This is something that all parties have to watch, especially with tactics of direct confrontation. There is the potential for losing everything."

3. A New City Charter for a New Century

In the coming months, Angelenos are likely to be told that L.A.'s very future rests on overhauling the city charter. But while charter reform is shaping up as the political battle of 1999, it will be far from the panacea that some of its proponents once suggested.

"The charter that is emerging represents incremental reform," said Stephen Erie, political science professor at the University of California, San Diego who closely follows L.A. city government. "It really consolidates all the various amendments that have been made over the years and makes the charter more manageable. It will improve things, but it won't fundamentally change how the city does business."

What is charter reform likely to mean? Dealing with City Hall might be a little easier, and residents might at times feel a little closer to their local government. But L.A. citizens are not likely to wake up one day and find their lives transformed.

Conversely, if charter reform fails at the polls in June, the city would not grind to a halt and businesses would not flee en masse. In fact, some observers and participants of the debate believe that many of the proposals that are now part of the charter reform measure could be reintroduced on a piecemeal basis and probably win passage.

In fact, despite frequent pitches by Mayor Richard Riordan and many members of the City Council about the need to overhaul city government, the emerging charter document from the two commissions - one elected, one appointed almost seems anticlimactic.

In part, that's because one of the most far-reaching reforms - elected neighborhood councils with decision-making power - was jettisoned earlier this fall after intense lobbying from the business community and officials inside City Hall.

Another far-reaching reform - expanding the size of the City Council - is likely to be tacked on as a separate measure on the June ballot, so that it could be passed regardless of the fate of overall charter reform.

The biggest fight remaining - whether to give the mayor the power to fire city managers without council approval might seem arcane to most Angelenos. With less than two weeks to go before the final votes by the two commissions, Riordan appears to be losing his battle to obtain the power to unilaterally fire department heads.

"The ability of the mayor to hire and fire department managers is several steps removed from the average citizen's concern," said L.A.-based political consultant Richard Lichtenstein. "It's going to be hard to motivate people to come out and vote for issues like this."

The same could be said for much of the rest of charter reform, like the parts dealing with city contracting and budget processes, or who can speak for the city in civil lawsuits.

Indeed, the biggest obstacle could be how to convince voters that the city's governing charter actually has relevance in their daily lives, and that it really needs fixing. That point was brought home recently when George Kieffer, chairman of the appointed charter commission, conceded that he even had difficulty explaining the need for charter reform to his wife.

Perhaps much of this was inevitable, given the city's diffuse power bases. With widely divergent and even conflicting interests, there is no consensus on what L.A. should look like, no single clear vision of the future.

"There are so many competing voices in this city that it is hard for any far-reaching proposal to succeed," Erie said. As a result, he said, "this charter gives a little something to everybody, but doesn't fully please anybody."

A joint charter reform measure that emerged this week will go back to each of the two commissions. Most of the joint measure is expected to sail through, with the possible exception of the proposal allowing a two-thirds City Council vote to block the mayor's firing of a department head. The elected commission is still divided on that one.

By early February, council members will have their say. At this point, the betting is that they will not tinker substantially with a joint measure, knowing that the elected commission could ignore the changes and put its measure directly on the ballot. Having two different charter measures on the ballot is widely regarded as a death knell for the entire effort.

Then, come June, the voters will have their say. It will take a majority vote to pass the charter reform proposal; however, with turnout expected to be less than 20 percent, anything could happen. If even one group opposes the measure, it could go down in defeat.

If it does pass, though, what will have been accomplished?

"There is no guarantee that things will change," said Erie. "There will still be a need for strong leadership to make things happen. And there is nothing in this charter that makes it inherently easier for the mayor to work with the council."

Even Kieffer concedes this point. "Charter reform is a key element in the way the city is run, but it is not the only element," he said. "It cannot substitute for electing competent representatives to public office."

Said elected commission Chairman Erwin Chemerinsky: "Charter reform can improve city government, by making it more responsive, more accountable and more efficient. But it is not by itself going to put more teachers in the classrooms or more police on the streets."

4. Breaking Away: The Quest for Valley Independence

Until now, San Fernando Valley secession has been a topic largely confined to a core of local activists north of Mulholland Drive. Most of the rest of the city has largely ignored the issue.

But that's all about to change now that secession backers have collected more than 200,000 signatures (only 131,000 valid signatures are needed) to seek a formal study of the issue. Next month, the group Valley VOTE is expected to submit a formal application to secede from Los Angeles to the Local Agency Formation Commission.

The real debate will then begin in earnest - and not just in the Valley. Other communities, from Eagle Rock to San Pedro/Wilmington to Venice, are either already circulating or are about to circulate secession petitions.

But the most serious threat remains the San Fernando Valley, primarily because of its sheer size and the fact that secession advocates are better organized there.

Starting next year and continuing into early 2000, LAFCO will be conducting a series of studies to determine whether the Valley can be financially viable as a separate city and whether it could break away without draining revenues from the city of L.A. as a whole. Those studies promise to be controversial, as they will give various scenarios for how the public assets in the Valley from water to airports to tax revenues - should be divided.

As the result of a crucial victory for secession backers in the state Legislature two years ago, an initiative for the Valley to secede from L.A. can go directly onto the ballot once the studies are in, instead of having to first get City Council approval. This means that - provided enough signatures are collected, which most experts think is a certainty - an initiative could go on the ballot as early as November 2000.

More likely, a secession initiative would show up in 2002. (As part of the legislation removing the City Council's veto authority, a secession measure can only go on the ballot in even-numbered years, when turnout is generally larger.)

For such an initiative to pass, it would need to garner both a majority of voters from within the proposed boundaries of the separate city of the San Fernando Valley and a majority of all voters in the preexisting city of Los Angeles. That means a successful vote would require about 75 percent of Valley voters and 35 percent of voters from the rest of the city, according to Richard Close, chairman of Valley VOTE.

City officials - from Mayor Richard Riordan to members of the council - had hoped that charter reform would forestall such a vote by removing many of the complaints now voiced by Valley residents about being too remote from city decision-making. In fact, L.A. elected officials repeatedly urged secession advocates to wait for charter reform before pushing ahead.

But it didn't happen. And while secession advocates had been pushing for charter reform to include neighborhood councils with decision-making authority over land-use matters, both charter reform commissions are backing neighborhood councils with advisory power only.

"Charter reform has turned out to be a bait-and-switch," Close said. "They promised real reform; instead, we are getting charter amendments, tinkering around the edges, while the real power remains downtown. I don't think there are very many people in the Valley who will say that charter reform Is so good that I will no longer support cityhood for the Valley."

If that type of disenchantment with City Hall is widespread, there will be plenty of fertile ground for secession advocates in the years to come.

"The Valley secessionists have a very solid, fundamental message: self-governance and more service for their tax dollars," said L.A.-based political consultant Richard Lichtenstein. "It's a very 'me' kind of approach that has a lot of appeal, and it would likely prove easier for them to sell their message than many might think."

That could also hold true in some of the other communities considering secession, such as Eagle Rock and San Pedro/Wilmington. But these communities face a much tougher challenge in getting citywide approval for a secession.

"The Valley contains more than 40 percent of the city's total population," Close said. "That means you don't have to get as much citywide support as you would in these other, much smaller communities."

5. Bringing Downtown Los Angeles Back to Life

What will it take to turn around downtown Los Angeles? A sports arena? Cathedral? More housing?

Try all of the above, at least. Downtown, which has gradually lost its place as the city's central hub, looms as a major challenge for the city heading into the 21st century.

Over the past few decades, L.A.'s business community has become more dispersed, major corporations have been acquired or downsized, and the Westside has siphoned off several blue-chip employers. Many of the city's dealmakers simply don't feel they need to be downtown.

"Broadway and 7th Street was once the busiest intersection in the United States. It will never be that again, but it can be something successful. In trying to figure out the appropriate role for downtown, we can't look back, we have to look forward," said Dan Rosenfeld, a partner with the downtown office of LaSalle Partners and former real estate manager for the city of L.A. "What downtown should have are one-of-a-kind features that serve the entire region."

Boosters tout the coming sports and cultural projects - Staples Center, Disney Concert Hall and the Cathedral of Our Lady of the Angels - as catalysts that will bring back downtown's prominence. These venues will undoubtedly attract more people to downtown, and if restaurants and other amenities are developed, those visitors might be enticed to extend their stay.

Cardinal Roger Mahony sees the Cathedral of Our Lady of the Angels as the northern anchor of a cultural corridor along Grand Avenue, which he and others would like to make more pedestrian-friendly. The idea of converting obsolete office buildings into loft-style housing is also generating interest.

But questions remain as to whether such projects will be enough to bring the area back. Several obstacles must be overcome, not the least of which is the perception among some Westsiders that downtown is inconvenient or unsafe.

And while the new sports and cultural facilities will certainly attract people downtown, will they bring them in for business purposes and help fill downtown office buildings?

Downtown's office sector, which was greatly expanded during the building frenzy of the late '80s and early '90s, remains soft. The overall vacancy rate for the central business district was 21 percent in the third quarter, among the highest in the city.

"If you look at a good percentage of major law firms downtown, they're here for historical reasons, but they're not coming here because it's the business address of choice. That should be of concern to people," said Michael Meyer, chairman of the L.A. office of Pillsbury Madison & Sutro. "If the only way of getting people to come here is because we have low rents, that's nice, but it's not the best way of getting people."

Also lacking is a strong leader in the political or business arena to serve as downtown's standard bearer, akin to what Nations-Bank's Hugh McColl (now chairman and CEO of BankAmerica Corp.) did to attract businesses to downtown Charlotte, N.C.

While downtown tends to conjure up images of skyscrapers, a different - and more encouraging - picture emerges if the parameters are extended to include the industrial areas to the east and south. The vacancy rate for downtown industrial space, for example, is less than 5 percent. Importers, produce operations and garment makers are prominent there, and new construction and upgrades of older buildings has been taking place, said Robin Bieker, vice president at the Donaty Group real estate firm.

But for all of downtown to be bustling, housing is a must. Housing has played a key role in other cities where revitalization has followed the development of a new sports venue, like Staples Center.

But so far, there has been more talk than action. Efforts have been made for decades to establish a larger residential community downtown. But part of the problem has been the lack of amenities in the area, such as grocery stores, as well as competition from other urban, pedestrian-friendly districts, such as Santa Monica's Third Street Promenade and Old Town Pasadena. Also, the cost of converting older buildings and making them seismically safe can be prohibitive.

Steps are being taken to lay the groundwork for converting older office buildings into loft-style apartments. The City Council is expected to vote next month on a code change that would facilitate such conversions.

"You've never been able to get anybody to talk about housing. It's finally coming of age," said Christopher Martin, managing partner of A.C. Martin Partners architecture firm.

Several entrepreneurs are eyeing older office buildings for conversion to housing. Tom Gilmore of Gilmore Associates is assembling a block of buildings along Fourth Street to convert to 250 rental apartments. And owners of at least five other properties are considering residential conversions as well.

What this all adds up to will become clear in the coming years. Downtown could become a sort of cultural theme park that eventually stimulates the office sector - or it could continue to tread water and merely retain the sectors that have traditionally been concentrated there: government and professional services.

Kathy Schloessman, president of the L.A. Sports and Entertainment Commission, believes downtown is already on its way back. She points to the example of downtown Denver, where Coors Field opened in 1995. A range of housing and numerous restaurants have also opened in the area since then.

"That's exactly what I see happening in L.A.," Schloessman said. "If you give people something to do, they will come."

6. The New Power Elite: Latino Lawmakers

1999 will be the year of the Latino lawmaker.

For the first time in state history, Latinos will represent nearly 20 percent of the state Legislature, with 17 in the Assembly and seven in the Senate. Last session, there were 13 in the Assembly and four in the Senate. Beyond the increased numbers, they hold some of the most sought-after and powerful positions in state government.

But as Latino power multiplies, it begs the question: How will it be used? And will a divide between some of the state's most influential Latino lawmakers undermine the group's power to effect change?

Of the 24 Latinos in the Legislature, only four are Republicans. For the most part, the Latino bloc is expected to toe the Democratic party line, although there are some signs of a rift in what was formerly a highly unified group.

A generation ago, Latinos were a minority with little or no clout. The group's politics consisted mainly of old-fashioned '60s-style activism: a minority group that applied pressure on decision-makers.

But as their numbers have swelled statewide, many Latino leaders have tried to recast themselves as more moderate and mainstream, and shed their previous roles as activists in order to appeal to the masses.

Assembly Speaker Antonio Villaraigosa, D-Los Angeles, typifies the new generation of Latino politician; the former Chicano activist pushes the idea that Latino and California issues are one and the same.

"The Latino agenda is an American agenda," said Villaraigosa. "Education, improving the quality of life and access to health care affect all Californians. I think obviously that when you get elected to the job of speaker, that excites and inspires the Latino community, and that is good. But I have to appeal to a broader community. I am focused on bringing people together on what we have in common."

While Villaraigosa touts unity between Latino and mainstream interests, Sen. Richard Polanco, D-Los Angeles, leader of the Latino Legislative Caucus and head of the majority in the Senate, is more outspoken about issues involving the Latino community - and is determined to bring more Latino legislators into the state capital.

Some have distanced themselves from Polanco after he sent out a mailer to Latino voters before the November elections accusing Richard Katz, who was running for Assembly against Richard Alarcon, of being involved in an incident in which a Republican party leader was accused of trying to keep immigrant voters away from polling stations.

Katz, who is Jewish, was outraged by the mailer and accused Polanco of "race baiting." Even former State Sen. Art Torres said he was concerned that the mailer would incite hostility between Latinos and Jews.

Villaraigosa and Polanco are said to dislike each other, and their stylistic differences have served to split Latino legislators into two camps - the old-fashioned, "Us vs. Them" camp, and the will-of-the-majority camp.

Some speculate that the result of this split will be a fragmentation of the Latino power base. Indeed, as minority groups assimilate with the mainstream, they tend to lose their ability to form unified coalitions.

Despite the stylistic differences, insiders agree that Latino lawmakers remain united on most issues. Only a few areas particularly the way crime-related issues are addressed - have emerged as contentious.

"Issues like crime and drags are the most divisive. There is not a consensus on how to deal with the problem," said Antonio Gonzalez, president of the William C. Velasquez Institute, which works to increase voter turnout by Latinos. "Law and order, or prevention and health? No one can say that they have the magic bullet."

Polanco said he is unconcerned with the fact that some in the Latino caucus are trying to distance themselves from him. "I know them and have helped many of them," said Polanco. "It is not the posturing that matters, but what the actions are of the members, and our members have done an exceptional job."

Polanco was referring to members of the Latino Legislative Caucus, which brings together all 20 Latino Democrats in the Assembly and Senate. The caucus, formed in 1973, has become one of the most influential political powers in the state Legislature - and has sponsored, created or helped pass a variety of laws to benefit the state's Latinos.

Assemblyman Martin Gallegos, D-Baldwin Park, agreed that despite minor differences, Latinos remain a unified political force.

"Now, with the growing numbers of Latino legislators, the voice is stronger than it has ever been," he said. "We may not all have the same style, but we stand together on the issues."

And the extent of Latino political power is likely to grow. Locally, a group of activists called the Los Angeles City/County Latino Redistricting Committee is involved in a multi-pronged effort to increase Latino representations on the City Council, the county Board of Supervisors and smaller groups like the community college board.

The coalition is working with the charter reform panels to increase the size of the City Council, a move they believe would result in greater Latino representation, and with the Legislature to increase the size of the Board of Supervisors.

7. Overhauling L.A.'s Disastrous School System

Contentious politics, a bloated bureaucracy, low test scores, union squabbles it's all part of public schools, Los Angeles style.

Meanwhile, many of the 700,000 students in the L.A. Unified School District are being inadequately prepared to enter the workforce. California schools, once the pride of the nation, have become a national laughing stock.

But this may be the year something is done about it.

A powerful political movement has emerged to reform the education system - and driving that movement is the normally fragmented business community, which finally seems to have found an issue that everyone can get behind.

Standing in the way are differing notions about what the most pressing issues are, and how to best address them. Dozens of business groups, government task forces and the school board itself are meeting to discuss the issue, but the problems are so complex and the opinions so diverse that a kind of paralysis has surrounded it.

Gov.-elect Gray Davis said repeatedly during his election campaign that education was his top priority. But he made few concrete proposals to fix the system, beyond things that the Legislature and Gov. Pete Wilson have already implemented. Davis called for a bigger investment in textbooks; Wilson has already approved a plan to spend $1 billion on textbooks over the next four years. Davis called for an end to the practice of letting students advance to a higher grade when they haven't met academic standards; a bill was passed this year to do just that.

Davis' reform agenda apparently will be decided by a task force he created soon after his election. The 13-member group is working on specific proposals that will be introduced to the Legislature during a special session on education in January.

The task force is likely to concentrate on improving teaching, having children read proficiently by age 9, and making schools more accountable. Davis is also pushing for a summer elementary teacher training program.

Closer to home, two ongoing political battles will have a major impact on the future of L.A. schools: the movement to split off the San Fernando Valley from the rest of Los Angeles, and the April election for the Los Angeles Unified School District board.

A group called Finally Restoring Excellence in Education, or FREE, has latched onto the ongoing Valley secession movement with a new plan of its own: In addition to making the Valley a separate city, it wants to split off from the LAUSD. The new district would then in turn be split in two, with about 100,000 students in the northern district and 90,000 in the southern district.

The FREE plan has powerful support: the Valley Industry and Commerce Association, the Valley's most prominent business group. VICA leaders point to a 1993 audit of the LAUSD by Arthur Andersen that found evidence of shoddy management and a bookkeeping system so disorganized that the district isn't even certain how many employees it has on its payroll.

But the powerful teachers union - which virtually controls the LAUSD board through both financial support and a potent voter bloc opposes the breakup. Union officials say it would simply add to the bureaucracy and cost more money, creating more back-office positions instead of less.

Meanwhile, Mayor Richard Riordan has waged a controversial campaign against the LAUSD board. Last fall Riordan announced fiat he was seeking candidates to run against incumbent board members, whom he criticized as lacking the "fire in the belly" to make real reforms.

"If you don't solve the education problem, particularly education of the poor, we're going to have problems in the future," Riordan told the Business Journal. "The economy won't have the workforce you need for the technological age."

Riordan has lashed out at a system that he says protects the jobs of bureaucrats and shuffles sub-par principals to inner-city schools. Last week, he announced his slate of candidates, whom he will back with "whatever they need" including advice and campaign funding. Three are newcomers, though Riordan surprised observers by backing incumbent David Tokofsky, whom he had previously criticized.

Riordan and other business-community reformers repeatedly point to merit pay for teachers and "accountability" - meaning rewarding schools that improve their aptitude-test results and changing or sanctioning schools that do not - as central to reform efforts.

But again, those ideas will encounter fierce opposition from the teachers union. Its leaders have said they would reject any evaluation based on test scores, although they wouldn't oppose evaluations of performance done by other teachers. The California Teachers Association says it would be unfair to require schools to perform at certain levels on test scores until teachers receive training in the state's new academic standards.

Riordan, though, is confident that reformers and teachers can come to an agreement on ways to improve the schools. Both have a common enemy: the school district bureaucracy, which critics agree is bloated and diverts far too much money from the classroom to the back office.

With school board elections less than six months away, these issues are sure to be aired in early 1999. At the same time, the newly formed Committee for Effective School Governance, a group of 23 business, civic and education leaders, will be drafting a set of principles that candidates for the school board will be asked to abide by. And any candidates who are elected and don't abide by those principles will hear about it, said committee member Virgil Roberts.

"We'll be creating public accountability," he said.

8. The Question of Congestion

Somebody has got to do something about all this traffic. And they are . . . sort of.

Transportation planners have billions of dollars worth of improvement projects on the drawing boards - everything from more highway message boards broadcasting alternate routes to large-scale infrastructure projects like the Alameda Corridor.

How those projects fare could have a significant impact on L.A.'s economy in the years to come.

Of course, when it comes to large-scale transit projects, ambition can far outstrip execution. Just ask the folks at the Metropolitan Transportation Authority - which, after spending hundreds of millions of dollars over the course of more than a decade, have seen its long and expensive love affair with a fixed-rail subway system draw to a close.

In November, L.A. County voters overwhelmingly approved Proposition A, a measure authored by supervisor and MTA board member Zev Yaroslavsky that banned the use of local sales-tax revenues for subway construction. The move effectively puts the spotlight on the agency's overcrowded bus system.

That's where the focus should have been all along, local transit analysts say.

"People think of Los Angeles as an auto-intensive place. But we move more people by bus than any other city in the country," said James E. Moore II, a professor of urban planning at USC. "We have a large transit-dependent population. By making some very poor decisions, we have managed to hurt the people who are least able to sustain economic injury."

No one bears the brunt of traffic congestion more than the region's hundreds of thousands of bus riders, many of whom are forced to travel long distances on a deteriorating fleet of buses. The Bus Riders Union, an activist group, claims that some 40 percent of the buses in the MTA's fleet are eligible for retirement, meaning that the vehicles are either 12 years old or have driven 500,000 miles.

The MTA last month authorized the purchase of 2,095 buses over the next six years to replace its ailing fleet. Moore and other urban planners say those vehicles might be best deployed along a series of busways - new lanes either on freeways or on streets solely dedicated to buses, which could move commuters more efficiently.

That appears to be the most cost-effective option. The per-mile cost of a busway at ground level ranges from $12.4 million to $14.9 million, according to a recent MTA study, compared with $51.7 million to $81.6 million for light rail and as much as $271 million a mile for subways.

But don't rule out rail forever. A light-rail line connecting Pasadena to downtown is still on track, administered by a newly formed agency. The MTA, meanwhile, continues to study future light-rail and even subway extensions on the Eastside and Mid-Cities areas.

Fixing mass transit is only one small piece of an increasingly confusing puzzle.

Traffic counts on the freeways have been climbing steadily since bottoming out during the depths of the recession in 1994. Caltrans plans to add a carpool lane to all of L.A. County's freeways by 2000 in an effort to ease congestion. The agency also plans to expand its so-called "smart freeway" program, which uses electronic message boards to inform drivers about traffic snares and direct them to alternate routes along city streets.

On those streets, the MTA and the city Department of Transportation are expanding their system of electronically synchronized traffic signals. According to a 1994 study by the city, such systems lead to a 12 percent improvement in travel times, a 32 percent reduction in delays and a 30 percent drop in stops.

Meanwhile, the Alameda Corridor, the $2.4 billion expressway for trains that will link the ports of L.A. and Long Beach to the distribution centers near downtown, finally broke ground in 1998 and is scheduled for completion in 2002. The project, which moves slow-moving trains below grade, is expected to significantly reduce the number and duration of traffic jams throughout the industrial areas of South Los Angeles.

Still, congestion is destined to be a fact of life for a long time to come. The Southern California Association of Governments projects that by 2020, Southern California's population will increase by 6.7 million people - the equivalent of two Chicagos. And it's a safe bet that most of those newcomers will be driving to work, just like the rest of us.