Los Angeles’ top financial official sent a letter to union officials Tuesday saying that the city cannot afford pay raises due nearly 20,000 workers July 1, according to published reports.

In the letter, city administrative officer Miguel Santana told members of the Coalition of L.A. City Unions that contract talks need to be reopened or the city will be forced to layoff 200 to 250 employees to deal with a $220 million budget shortfall projected for next year.

The raises are expected to cost Los Angeles $105 million over the next two years.

The coalition represents sanitation workers, custodians, librarians and park maintenance employees, who are scheduled to see their salaries increase by 3.75% starting July 1, according to the Los Angeles Times.

Of that total, 2.25% will be a raise while 1.5% comes from the elimination of furloughs.

Santana wrote that labor costs are increasing at a much higher rate than revenues and the city needs structural reform of employee salaries and benefits to stave off continued shortfalls.

Mayor Antonio Villaraigosa is scheduled to release his annual budget next month.

In an economic forecast released March 2, Los Angeles Controller Wendy Greuel also recommended the city focus on structural budgetary changes instead of relying on one-time revenues and expenditure deferrals.

Greuel criticized the city’ policy of allowing employees to accrue banked overtime and then cash out, because cash-outs have nearly doubled in recent years to $83 million, creating a liability for the government.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.