LOS ANGELES — Los Angeles’ city administrative officer asked department heads to prepare contingency plans in case Congress fails to act and automatic spending cuts are triggered eliminating up to $115 million in federal funding to the city.
Los Angeles CAO Miguel Santana warned city leaders in a report sent to the city council and Mayor Antonio Villaraigosa that the loss of funding could increase the city’s already projected $216 million deficit for 2013-14.
“The impacts of sequestration to the city are very much a possibility if Congress fails to act on a plan to reduce the deficit by $1.2 trillion over 10 years by March 1,” Santana said in his report to Mayor Antonio Villaraigosa and the Los Angeles City Council.
The Congressional compromise reached on Jan. 1 dealt with the tax components of the so-called fiscal cliff — permanently extending several Bush-era tax breaks set to expire Dec. 31 and adjusted the alternative minimum tax — but the legislation merely delayed until March 1 the issue of the automatic cuts proposed through sequestration.
If certain housing, public safety, community development and homeland security grants are not exempted from the automatic cuts included in sequestration, Los Angeles will likely see an 8% to 9% decrease reducing the amount received by the city by as much as $115 million, Santana said. If that occurred and the general fund or reserve fund were used to replace funds, the city’s structural deficit will increase beyond the projected $216 million for 2013-14, he said.
The city could lose $92 million from housing programs such as Section 8 and community development block grants. Another $23 million provided to public safety programs and community building programs through the Community Oriented Policing Services and Byrne Justice Assistance Grants would also be lost according to the report.
Federal funding that bolsters the city’s transportation, infrastructure and street improvement projects appear safe for now as those funds were exempt from projected cuts, according to the report. If transportation reductions were imposed, it would impact $739 million in Los Angeles highway and road funding, Santana said.
Santana recommended that department heads develop contingency plans that don’t ask that money from the general fund or reserve fund be used to replace grant money if the federal cuts are enacted.