Los Angeles Mayor Antonio Villaraigosa on Wednesday told the City Council to agree to quick layoffs of public workers or face a “financial tailspin” in the face of an “immense budget crisis” in the nation’s second-biggest city.
Villaraigosa ordered city administrators to begin the process of laying off 1,000 workers last week to address a $212 million general fund budget deficit in the current fiscal year and a $485 million budget gap in fiscal 2010-11.
The Personnel Department began the process of cutting the general fund budget by transferring 300 workers to non-general fund departments, but the council has not yet approved layoffs and last week passed a resolution deferring layoffs for 30 days.
“These are tough decisions, and I do not take them lightly,” Villaraigosa told the council. “I recognize that every layoff represents real people with real families, but I am moving forward with these tough decisions because we simply have no time to waste.”
The city is facing possible downgrades to its double-A rating because of its growing deficits. Its financial advisers have warned that the city will have trouble borrowing to meet its cash-flow or deficit borrowing needs next year if it doesn’t balance the budget in a way that preserves reserves.
“The depletion of the city’s cash and an over-reliance on one-time solutions in the absence of a clear commitment to the city’s long-term fiscal health could have dire consequences for the city’s credit ratings, as well as access to the capital markets for borrowing purposes,” Jocelyn Mortensen, a managing director at Public Resources Advisory Group, one of the city’s financial advisers, said in City Council testimony.
Such warnings and admonishments from rating agencies have convinced Villaraigosa, a former union organizer, that it’s time to cut city payrolls, but council members continued to argue this week that the loss of 1,000 jobs would harm the local economy.
“When we lay off a thousand people, that’s a thousand people who aren’t paying their mortgage. That’s a thousand people who aren’t shopping in our stores. That’s a thousand people who are not contributing to our economy, and aren’t we just contributing to this downward spiral?” council member Janice Hahn said to the applause of a crowd full of public workers gathered for the council meeting. Hahn is running in the Democratic primary for lieutenant governor.
But chief administrative officer Miguel Santana told lawmakers that the number of necessary job cuts grows each day they wait to make layoffs.
“This council has made it clear that layoffs can only be considered as a final option,” he said. “We are at a point where we have no other options.”
Villaraigosa is also pushing for the privatization of the city’s convention center, zoo, and some parking assets, as well as the return of council discretionary funds to the general fund’s reserves.
“In my view, the principal objective between now and the end of the fiscal year should be to close the current year’s deficit while maintaining a healthy reserve fund,” the mayor said.